Blog

Gold & the Dollar are Less Correlated than Everyone Thinks

Understanding the impact of Triffin's Paradox
Tuesday, November 13, 2012, 11:03 AM

Whenever I make the case for a stronger U.S. dollar (USD), the feedback can be sorted into three basic reasons why the dollar will continue declining in value:

  1. The USD may gain relative to other currencies, but since all fiat currencies are declining against gold, it doesn’t mean that the USD is actually gaining value; in fact, all paper money is losing value.
  2. When the global financial system finally crashes, won’t that include the dollar?
  3. The Federal Reserve is “printing” (creating) money, and that will continue eroding the purchasing power of the USD. Lowering interest rates to zero has dropped the yield paid on Treasury bonds, which also weakens the dollar.

The general notion here is that, given the root causes of our economic distemper – rampant financialization, over-leverage and over-indebtedness, a politically dominant parasitic banking sector, an aging population, overpromised entitlements, a financial business model based on fraud, Federal Reserve monetizing of debt, and a dysfunctional political system, to mention only the top of the list – how can the USD appreciate in real terms?

All of these objections are well-grounded. Let’s look at some charts to discern what factors are “pricing” the dollar, domestically and internationally.

Before we start, though, let’s spend a few moments thinking through what a declining dollar means in the real world.  Since the USD is the world’s reserve currency, we have to ask the question in two contexts: the domestic economy and the global economy.  The Triffin Paradox explains why the domestic monetary policy of the nation that issues the reserve currency will conflict with the needs of the international community using the currency for reserves.

Let’s say that thanks to a depreciating dollar (what many call “inflation”), gasoline that once cost 40 cents a gallon now costs $4 a gallon.  Back when gasoline cost 40 cents a gallon, the average wage was $1.60, so an hour of labor could buy four gallons of gasoline.

This ten-fold rise in the cost of fuel would certainly be catastrophic if earnings didn’t rise as well.  But if earnings rose to $16 per hour, then an hour’s labor would still buy four gallons of gasoline.  If gasoline rose to $4,000 a gallon, if earnings per hour also climbed to $16,000 per hour, then the purchasing power of an hour’s labor would remain constant.

If wages rose such that an hour’s labor bought five gallons of gasoline, the wage earner’s purchasing power has actually increased despite the apparent 90% drop in the value of the currency.

This suggests that a depreciating currency is not a domestic catastrophe unless earnings (and assets) do not rise in lockstep with the price of goods and services.

In terms of the international community, a depreciating dollar means oil exporters paid with dollars (so-called "petro-dollars") will have to raise the price of oil to offset the depreciation, and this could wreak havoc on other nations importing oil.  In other words, the U.S. “exports inflation” by depreciating its currency, which is precisely what happened in China: Inflation leaped in China while it remained placid in the U.S. (at least by official calculations).

No wonder understanding the dollar’s value is so complex; it plays a duel role as the reserve currency and the U.S. currency, and it is influenced by a large number of domestic and international forces.

Charting the Dollar and the Metrics That Influence Its Value

Let’s start with two charts showing the dollar’s massive decline in domestic value over the past century and half-century.

From the long view, the USD had already lost 30% even before the Federal Reserve was founded. The much-discussed end of the gold standard (when the USD was no longer backed by gold) in 1971 had little effect.

Here is the dollar from 1947 to 2008.  In 1970, it was worth $0.60, and it has since slumped to $0.10 in constant 1947 dollars.  This is confirmed by the BLS inflation calculator, which equates $1 in 1970 with $6 in 2012 dollars.

That is a nasty decline in 42 years, to be sure.  Now let’s look at gross domestic product, earnings, and the size of the population and workforce.

According to the Census Bureau, the population of the U.S. was 203 million in 1970, and it is now 307 million, a roughly 50% increase.

The number of workers has risen 75%, from 80 million in 1970 to 140 million today.

If productivity remained constant, we might expect that gross domestic product would rise by 75% due to a larger workforce and the six-fold increase due to depreciation of the dollar. Since GDP was $1.038 trillion in 1970, we could expect $1T X 1.75 = $1.75T X 6 = $10.5 trillion. Actual GDP is over $15 trillion, a 50% increase over the adjusted-for-workforce-inflation result.

Here is the adjusted (real) GDP:

Adjusted for inflation/dollar depreciation, the GDP has tripled since 1970. Even if we discount half of this as official under-reporting of inflation, that is still a significant increase.

Next, let’s look at the critical metric of employee compensation. Did earnings rise along with prices?

It appears that earnings rose almost fourteen-fold while costs rose six-fold.  Thus “real” earnings increased despite the depreciating dollar.  Here is a chart of real household income, courtesy of DShort.com.

Here we see income disparity at work.  Lower-income workers saw their real (adjusted) earnings rise by about 20%, middle-class employees registered gains of around 40%, while the top 20% realized gains of about 70%. The top 5% has seen real income almost double.

Note that the income in all brackets has declined or stagnated since 2000.

Now let’s look at some other basic measures of economic activity: corporate earnings and government spending.

Corporate profits have zoomed over thirty-fold since 1970, while Federal spending has increased about eighteen-fold.

Federal tax receipts have increased about twelve-fold.

What does all this mean? It appears that a steadily depreciating dollar did not harm the nation’s output, earnings, corporate profits or government spending.  Though rising income disparity is troubling, it cannot be traced to the depreciating dollar.

Next, let’s look at the three factors most often mentioned as setting the value of the dollar internationally: interest rates, the monetary base, and gold.

Interest rates, measured here by the yield on the ten-year Treasury, topped at 16% in 1982.

If interest rates drive the value of currencies, we would expect to see the dollar rise and decline along with interest rates. Here is the trade-weighted dollar, valued against a basket of our trading partners’ currencies.

The correlation is not perfect, as the USD peaked in 1985, triggering the Plaza Accord, a concerted campaign by central banks to depreciate the dollar against rival currencies. Nonetheless, the USD has trended lower as interest rates fell.

Here is the monetary base of the dollar, which skyrocketed as the Fed ramped up the base in response to the global financial crisis of 2008-09.  If this was a dominant force on the dollar, we would expect to see a corresponding decline in the trade-weighted dollar and a leap in the USD price of gold.

The trade-weighted dollar is about where it was before the three-fold expansion of the monetary base.  Gold did skyrocket, roughly doubling from its 2008 price range to about $1,750 per ounce today.

But if the price of gold were correlated to the trade-weighted dollar, we would expect to see a rise in gold as the dollar fell from its 1985 peak.  It did not, but it did rise as the USD declined from its 2002 peak. In other words, the correlation of gold to the trade-weighted USD is very inconsistent; the USD has remained in a small range since 2008 while gold doubled.

Gold and the USD have actually risen together in some timeframes.

If we step back, what do we notice about the charts of GDP, employee compensation, corporate profits, government expenditures, and gold?  Roughly speaking, all have increased ten-fold or more from 1975. From this point of view, gold has simply “caught up” with earnings, GDP, profits, government spending, etc.

While the dollar’s value against other currencies has declined as bond yields dropped, from the long view its 2009 value places it back in a range going back two decades to the early 1990s.

Though the monetary base roughly doubled from 1990 to 2005, gold in 2005 was still around $400 per ounce, same as its price back in 1990.

In other words, the price of gold is not consistently correlated to the monetary base, the trade-weighted dollar, or interest rates. Gold appears to march to an independent drummer.

A Distinct Lack of Consistent Correlations

Where does this comparison of charts leave us? With a distinct lack of consistent correlations.

It would seem that the commonly touted drivers of the dollar’s value, measured in either trade-weighted USD or in gold, are inconsistent; none of them correlate consistently over time.

The three metrics of interest rates, gold, and the trade-weighted dollar appear to have minimal impact on productivity, profits, output, earnings, or the domestic standard of living, as these three have jumped around with no visible impact on broad measures such as GDP or earnings.

We have seen interest rates leap to 16% and fall to near-zero; gold collapse, stagnate, and then quadruple; and the dollar gain and lose 30% of its trade-weighted value in a few years. None of these huge swings had any correlation to broad measures of domestic activity such as GDP.

Clearly, interest rates occasionally (but not always) affect the value of the trade-weighted dollar, and the monetary base occasionally (but not always) affects the price of gold, but these appear to have little correlation to productivity, earnings, etc., or to each other.

In Part II: Why Gold & the Dollar May Both Rise from Here we explore the key question: Given the low correlation of the dollar’s value to gold or broad measures of the domestic economy, what will its relative rise or decline mean in the domestic and international economies?

Click here to read Part II of this report (free executive summary; paid enrollment required for full access).

Related content

30 Comments

raw milk mike's picture
raw milk mike
Status: Member (Offline)
Joined: Jan 10 2012
Posts: 6
gold and the average man

The value of gold, like anything else, is determined by supply and demand, neither of which is constant. The value of the dollar is determined by the federal reserve and I personal have no idea what their plans are. This means, for the average man, investment will always be a gamble.

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 375
gambling and lack of correlation

I wish I still believed any value in our economy was determined by supply and demand. The problem with supply and demand is that our models are based on a instantaneously informed consumer as well as the assumption that manipulation doesn't occur. The more our markets are manipulated by the powers that control them, the less relevance supply and demand has (take the LIBOR manipulation as an example). Why do we assume that gold is any different??.. I think general wisdom can apply in this case (hypothecating?). You are correct that investment usually is accompanied by risk, or a gamble. But in the case of the world derivative markets, it's a casino that is so rigged beyond the normal Foxwood's level it's immoral. You know when you step into a casino that the house always has the odds and that you are trying to beat those odds, but what we are seeing on a global scale is, again, immoral and devastating. The predicament now is that this world casino has been keeping the markets afloat for the last 20 years (since about 1991) and to try and regulate it will cause the house of cards to collapse. This is why politicians don't want to talk about it. If we try to fix it, it will collapse (which will eventually happen anyway).

It is estimated that only 7 percent of the world's economy is based on actual exchange of goods and services (wealth creation). 7 percent! The derivatives market (which is a zero sum gain market, and a wealth extracting market (not a wealth creating)) is around 60 percent of the global market. The other roughly 30 percent is laundering and the black market (not easy to know if this is wealth extracting or creating, but more likely to be extracting).

I'm saddened by what is going on, but if we are honest with ourselves, we are all to blame. There are those at the top who share more responsibility by nature of the power they hold, but we all have supported these people along the way.

I'm saddened by the limited discourse. Conservatives want less government which is unreasonable in a ever expanding global society. More people + more stuff + more energy + etc. = more government. Liberals don't mind bigger government which is unreasonable because it drives up debt and deficits (usually) which is hitting our limits as to what we can afford. Now we have to discuss the fiscal cliff...Conservatives don't want more taxes on the rich because that becomes a wealth extraction, but isn't that what the system has been doing to the middle class and poor through it's manipulation for the past few decades? Our wealthy have gotten wealthier and the rest of us... well, it's not so clear?? Remember in the casino, those with the most cash usually outlast the rest and end up with the pot. Of course the issues are more numerous than this, but in the end I don't think they matter. They matter only in the short term.

What I see the crash course teaching us is that we cannot think of ourselves as conservative and liberal anymore, these ideologies are much too small when it comes to facing the reality of a global "mass society." Our old economic models that we still arm our arguments with were never based on a global market. Adam Smith's invisible hand sailed out to sea 150 years ago. Why? because he never evisioned a market that would have a significant global impact on the environment and its resources. During his time the impact of his markets were negligable or non-existent on the world. The world felt as if it were infinite.

Science and technology is the driving myth of this globalization. You can use economics as an example. Economics is a man-made technology or technique, but we believe it is a "natural" phenomenon. There is nothing natural about it. Nature did not hand us economics (although I'm sure those who love the markets will try and disagree). It is a man-made technique that is applied to Nature, not the other way around. We see Nature as something that is not a part of us (or us a part of it), but rather as Heidegger puts it.." as an object that stands in reserve"... which can be transformed into something else at a later time.  What this means is that a river is not a river, it is something that we hold in reserve until we are ready to dam it and transform it into power. Trees are not trees, they are wood ready to be chopped and used for our own purposes. We don't see ourselves as a part of Nature and haven't for hundreds of years, which now is what is coming back to bite us.

But we continue to argue within the confines of outdated models. We should ask ourselves bigger questions. Do we even want to try and devise models in the first place? Do we want to try and quantiy/demystify our entire existence? If we know that continuing down the road of globalization is not sustainable, then why do we continue down it? If we don't have a choice in the matter anymore, then are we in control of our system/technology or is it in control of us? I don't see what's coming in the near future as the end of the world, but rather a shift in consciousness. We will hopefully find our way out of this mess, but it probably won't be by applying economic, scientific or technological models/solutions to our predicament, but rather by bringing spiritually (not to be confused with religious) moral people back to the table of power to hear their points of view in addition to our "scientific experts."

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 3359
gillbilly wrote:What I see

gillbilly wrote:

What I see the crash course teaching us is that we cannot think of ourselves as conservative and liberal anymore, these ideologies are much too small when it comes to facing the reality of a global "mass society." Our old economic models that we still arm our arguments with were never based on a global market. Adam Smith's invisible hand sailed out to sea 150 years ago. Why? because he never evisioned a market that would have a significant global impact on the environment and its resources. During his time the impact of his markets were negligable or non-existent on the world. The world felt as if it were infinite.

(...)

If we know that continuing down the road of globalization is not sustainable, then why do we continue down it? If we don't have a choice in the matter anymore, then are we in control of our system/technology or is it in control of us? I don't see what's coming in the near future as the end of the world, but rather a shift in consciousness. We will hopefully find our way out of this mess, but it probably won't be by applying economic, scientific or technological models/solutions to our predicament, but rather by bringing spiritually (not to be confused with religious) moral people back to the table of power to hear their points of view in addition to our "scientific experts."

Great post, I gave it a thumbs up in hope that more people will read it.  Two parts stuck out for me, they are excerpted and bolded above.

The first notion is that politics are no longer useful distinctions as the predicament transcends not just party affiliations but borders and cultures as well.  Since we need to reach as many people as possible with the messages contained in the Crash Course, we cannot afford to lose audience because we happen to "belong to the wrong party" which also translates more broadly into "hold the wrong beliefs."

The second point is really at the heart of the matter and connects to beliefs.  Right now most people in the west, and probably the east, hold a firm belief in technology.  Crudely boiled down, that belief is "technology can solve or fix anything."  What is disorienting to me in that belief is that even the the smallest amount of curiosity will reveal that technology both gives and it takes.  It has both gift and shadow.  

One of the defining attributes of beliefs, though, is that they have a magical ability to gather supporting information while not even seeing unsupportive information, let alone wrestling with it and actively rejecting it.  

Can we easily make the case that our culture has gone off the rails in many cases thanks to technology serving to entertain us (the gift) while it existentially and literally isolates us from each other (the shadow) resulting in profoundly unhappy people that numb themselves with drugs and idle distractions (and many other things not mentioned here) to avoid having to confront the fact that it is their beloved technology that is creating the disconnect?

Could we note rising levels of obesity and incarceration, psychoactive drug use and addiction in children, falling and in many cases failing educational outcomes, and/or societal violence to perhaps make the case that something is out of whack, and less than ideal?

The answers to both questions is 'yes.'

While experts troll through the data and come up with useless enemies to battle ("It's Grand Theft Auto's fault!!") almost never is it pointed out that coincident with all these outcomes happens to be rising and better technology.

Wait a minute, I thought technology was supposed to make our lives better?

Well, if it does, that supposed benefit is not well supported in our cultural data.

The only thing that is going to change this terrible trajectory of ours is a shift in consciousness.  Perhaps that sounds too profound and unlikely, maybe involving higher beings or UFOs or something, so let me note that the thing we are trying to do around here - shift our national and global narrative - is sometimes all that is needed to create a shift in consciousness.  This is true on the personal level so I have to assume it is equally true on a grand scale.

So the question I sit with every day is, 'what's the best way to relate the evidence so as to have the best chance of re-framing the story?'

It is at once both that simple and that complicated.

thc0655's picture
thc0655
Status: Platinum Member (Offline)
Joined: Apr 27 2010
Posts: 531
Agreed, gillbilly

The financial and political systems cannot have the corruption reformed out of them, because corruption IS  the system.  If you take away the corruption, there's nothing left.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Great post. gillbilly

Great post.

gillbilly wrote:

We will hopefully find our way out of this mess, but it probably won't be by applying economic, scientific or technological models/solutions to our predicament, but rather by bringing spiritually (not to be confused with religious) moral people back to the table of power to hear their points of view in addition to our "scientific experts."

But concerning the above statement, how do you define a "spiritually moral" person?  What definition of moral is apropos?  What is the standard?  And would a religiously moral person be excluded from your criteria?

John Lemieux's picture
John Lemieux
Status: Silver Member (Offline)
Joined: Mar 2 2012
Posts: 223
ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
confusion

"spirituality is personal to each individual - it is not organized like religion!"  Ed and Deb Shapiro

So spirituality is personal and individual?  So does that definition then validate as spiritual an individual who wants to practice their own individual spirituality drawing from a mix of paganism, Kali worship, Molech worship, and Satanism?

And is spirituality, if not classified as organized, considered ... disorganized?

I admit to find this artificial spirituality/religious duality and separation entertaiing and not infrequently, hypocritical.  To me, many of the folks claiming spirituality seem as confused as the folks claiming religion.  Where do they draw their spiritual practice from?  By and large, whether they realize it or not, they often seem to cherry pick from one or more established religious practices.  And how do they establish their standard as to what is right or wrong?  And if what's wrong for me is right for you and vice versa, then logically speaking, won't we inevitably run into conflict when interacting on certain issues?   

treebeard's picture
treebeard
Status: Gold Member (Offline)
Joined: Apr 18 2010
Posts: 362
dangerous territory

They say you should never talk about religion or politics, well here we go.  I would argue that all human beings are inately "spiritual".  We all express that in various ways. Religion is the collective cultural expression of that spirituallity (no one cultural expression is better than another).  When religions become corrupt you see a fracturing of spiritual expression like you see now.  That rejection leads to people fishing around looking for something that works, drawing on a variety of traditions.  It is a messy process no doubt and leads to conflict.  What it important is that we respect one anothers process, what ever that might be.

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 375
Beliefs.

" What is disorienting to me in that belief is that even the the smallest amount of curiosity will reveal that technology both gives and it takes.  It has both gift and shadow."

I agree, it does have both gift and shadow. Within the current narrative (I use the word "myth," but either word works), the shadow or unseen is often not considered because it is too difficult to quantify/objectify within the systemic models. Most of the messiness of "real life" is subtracted out (just think back to our college econ classes). The current narrative supports the notion that the only things that matter are effeciency, profit, and productivity. These three equal 'progress.'

An example of this would be that of a corporation that is considering moving their manufacturing to another part of the world because the cost of labor is cheaper in real terms. The costs are usually only looked at in regard to the closed system of micro economics. These decisions often do not include the social, cultural, and environmental costs because they are costs that come into play after the decision has been made and the corporation is no longer responsible for that fallout. We can't paint corporations out to be evil because they are only doing what they need to do (or required by law to do)  to survive within the current system we have ALL created. But it is these delayed costs that are now outweighing the immediate returns and so you're right we need a new narrative as well as a system that reflects that narrative.

Often seeing the immediate effects of how a technology will make things more effecient, profitable, or productive is, as you point out, "magical." I am thankful for so many of our technological innovations. My wife probably wouldn't be alive today if were not for the technological advances in breast cancer research. But again, the shadow side of technology often takes time to reveal itself, which you also point out...the alienation/disconnection, and with it the ways in which we compensate for it  - drugs and alcohol, entertaining ourselves to death, projecting ourselves out into mass society through the internet and social networks, not living in the moment but continually mediating our experience through a gadget/smart phones. By the time the shadow side does reveal itself the response is often "but we can't go backwards," so more technological/systemic solutions are applied to the problems which only starts the process over.

Many authors have written about this (Mumford, Spengler, Heidegger, Ellul, Vanderburg), but what I love about your book is that you put the predicament in such clear and accessible terms that all walks of life can understand it. The message is no less profound.

Thank you for your reply.

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
Okaaaayyyy, I call inner

Okaaaayyyy, I call inner peace a PREDICAMENT, something to be manged and honed as each day unfolds. Frankly inner peace has more questions than answers and is why it is a Predicament. Unsolvable, faith based, and is individual.

I call our every day life a Problem as everyone at PP has good ideas, and ways out of our mess, our Problems. We have solutions to our problems, and only time and money will resolve. That's a good thing.

I contend that a viable economy can be created just providing the necessities in life, that being Food, clothing, Shelter, and Energy. The must essentials that must be maintained. All else is discretionary. I believe it is what Capitalism is, the ability of the people to choose for themselves what is most important for quality of life. From there is how we became rich in the first place. Yes? We were already rich just satisfying our needs. We became rich when we made the better mouse trap. Yes? Examples abound if you stop and look around keeping in mind that all things invented were chosen by the people to advance a better way of accumulating more of things after necessities were satisfied first.

I know that OIL is finite, and will become too expensive just on a Supply and Demand basis. This requires of us to get off of OIL before OIL gets off of us.

No ENERGY to scale, then NO growth. The problem requires us to build out a new energy source that SCALES. If we fail to do this then the stuff we have, that we manage will have to be mothballed because survival and true happiness will require that we focus on our absolute needs, and is what IS happening the world over right now. Folks are waking up every day not thinking about a Rolls Royce or a Beetle Bug but are thinking water first, food next, shelter, and warmth from the cold. Then they sit around and bullshit or hit the streets and riot.

OIL does more work with the most BTUs at the cheaper cost than all other fuels. Of course Oil will be fought for tooth and nail. However, forward thinking Folks understand we must "PLAN" for the day when this is just an unrealistic quest. I believe everyone understands this but haven't grasped that the transition will take time. A long time.

I say the Problem requires us to suck it up, pay double the cost for OIL and Natural Gas (earmark those taxes exclusively for mass transportation needs using electric as the fuel source) now, and make all other fuels cheaper to SCALE, and competitively viable to SCALE UP. Use the added tax (or call it something else as a rallying cry), and use everything where it is profitable to do so. For instance: Wind Mills where the wind blows fastest more hours of the day. Use Solar Farms where the sun shines the most, and Natural Gas when the wind don't blow or the Sun don't shine. Coal can be used then to augment Natural Gas. Then Diesel, then switch grass. To the victor goes the spoils and the market will decide ultimately. The thing is some systems work better in some areas. Wind from Texas to the Northern borders. Off shore. In the mid continent then natural gas pehaps but if we tie everything together in a smart grid then we use more of what we produce and not waste it to the atmosphere. We can conserve and Bridge until a Commercial Battery System is Scalable.

Of course I am not speaking of increasing Oil prices over night but put a "PLAN" in place and let the economy adjust to more buses for example so Folks have options. That in and of itself will start a change in structure that all Folks will get used to, preparing as the date of doubling prices takes effect.

We get a scalable commercial battery storage system and we have a serious problem solved. I believe we will. Carbon sequestration or cleaning is another game changer that must be developed, and will are my beliefs.

We can scale where the costs will be paid back in a few very short years. Dr. Martenson has shown this so lets do this a on Nation scale now. Let the utilities run this program and maintain this at our homes.I would rather pass the buckto them then risk life and limb maintenencing this myself. If you choose then do it yourself. No big deal. Just do it. This would be at least as big as the Internet and just as important.

Benefits would be jobs, and a sense of purpose. Not to mention a huge step to solving our environmental problems. Folks don't want to harm the environment but we haven't a system that stores energy for future use. Therefore we are back to square one. What is going to replace OIL.

I honestly feel that we do everything, and have faith that a battery will be resolved. Build this new system with this in mind. I feel no negatives can come from this as we will at least have some energy to survive. An example for me is that some groups of people, communities around the world have only hours a day of energy, and I am positive they appreciate a few hours than if they had no hours of energy. Fact is these few hours have changed their lives exponentially.

I happen to believe that we are the Problem, that for whatever reason grown Men and Women cannot come together and start doing something so obvious that this is the Problem. All Problems have a solution. Our Predicament is that we are running out of cheap Oil, and it is time we ratchet up the next fuel sources. Some say wind, solar, natural gas, coal, wood, hydro, etc... I say the Problem is we are too dependent on one, OIL, so lets use them all, and we can at least manage what we have better, and have that new system thereby solving a huge Problem.

Interchangeable solutions to future Problems seems a good idea. It is better to drop in a new transmission in a car than to total the car. Capeesh?

This God thing I am not going to discuss because, well, it's impolite. I feel, you feel, and we are both WRONG especially since  we are talking about the same being. That's the PREDICAMENT, and is why it is considered impolite. NO END IN SIGHT when this beast gets a rollin'.

Chris and Adam have expressed until their blue in the face. "GET MORE RESILIENT". The pure logic of this is inescapable. Yet some here still haven't really started!? HYMmmmmmmmmm.

Our Debt problems are a serious issue, and this Debt cannot be paid off. The math says so. This means that someone in the long chain of obligations will default and this means a reset. No question about this. It will be then that we start making the good choices, and is why I am so hopeful for the future. Survival of the fittest has always just been, and this time is no different. Get resilient Folks.

Respectfully Given

BOB 

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 375
spirituality.

I completely understand the struggle to define spirituality and your points are well taken. I'm not sure I would consider spirituality as strictly that which lies within the individual. I believe there is a collective spirit/ unconsciousness. I also believe that it can manifest itself in many ways, religion (any religion) being one.  If it makes people more comfortable to take the word "spiritually" out of my post and make it "morally grounded," that works for me. I  can see an objective definition of spirituality as being problematic, partly because spirituality lies outside of the objective, but I do think we can often find people that we collectively agree to be more spiritually grounded. Often it is our collective intuition that brings us to see some people in that light, and not based on a religious or objective definition or tenet.

I really think the problem lies again in our myth/narrative. If we have a "economic" probem, we mistakenly look only to our economic experts. Unfortunately the models these experts use to build their arguments or solutions are the very problems that amplify the predicament. It takes those from outside their field of expertise to speak to the issue to give an alternate point of view and often give a way to manage the predicament by shifting the narrative.

The issues of this predicament are global, and Chris is right, we can not continue to think of ourselves as people within defined national borders or ideologies. We need to ask bigger questions.

Thank you

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
I was asked off site and

I was asked off site and respectfully this: "but Bob I couldn't afford $10 bucks a gallon for gasoline". I answered, "but you find two other people, drive together to work, and I'll save you more than you are paying now before the price hike, Problem solved". Not one thing changed in your life except you now pay less for OIL. Capeesh? People will, we will adjust. Especially if we can save money, and solve our PROBLEM.

Regards

BOB

herewego's picture
herewego
Status: Bronze Member (Offline)
Joined: Aug 11 2010
Posts: 79
spirituality, biospheres, love etc.

What a quality thread!  Chris, THANK YOU for your daily focus on assisting our culture to notice, assess and shift our governing narratives.  I love that your doorway into this task is clean information and deeply appreciate the respectful, informed, thoughtful posters here.

What "grounded" or "conscious" means to me includes individual and community ability to be self-aware and self-responsible.  Truth-telling.  No committment to story, to assigning blame, (though that urge is powerful when one is triggered) just claiming what's going on inside us.  We notice when we feel angry/threatened/sad, or want to withdraw/attack, or are operating with a limited sense of power etc.  We know to pause and take care of our reactivity.  We get help when needed, and we give help readily to someone in the grip of an upset.  We listen a lot and offer the sanctuary of our alert attention to each other.  The power of healing is operative within our daily lives.  We handle our upsets first, gain ever more clarity of mind and then make decisions.  A lot of damaging mistakes don't happen.  A lot of better decisions do get made.  We become a more sound people.

Where this becomes spritual, whatever that means, is that truth-telling also reaches the brilliant heart of us where wisdom, love, joy, gratitiude, power, clarity and willing responsibility live.  Somewhere there is also that elusive beingness (human being), and our inherent, if mostly unaware and unexplored, state of union with the universe.  For me, this experience is "spiritual" and I need to go here often.

Another place it becomes sprititual is truth-telling whilst looking outwards.  Along with the despair of witnessing a beloved ecosphere and species in dire distress is the eye falling on a thousand things that the heart loves without measure.  If I listen to that for awhile, it becomes clear that celebration and loving are as loud as grieving and terror.  There is much to sing about, inside and out.  There is a powerful song locked up inside this culture, I am sure.  A song of what we love.  It is there even if we cannot fight our way out of this paper bag and have NO future.

I long for a cultural narrative that repatriates the fact that we humans love our world and our lives back into the core of our operations....

Thanks all for the stimulating, narrative-shifting conversation.

Susan

gpoulsen's picture
gpoulsen
Status: Member (Offline)
Joined: Aug 27 2009
Posts: 14
Wake Up

A saying goes, "Habits are like beds, easy to get into but hard to get out of."  Most of us in the world have some bad habits; cheap oil, to much debt, the need for more and more, over use of precious resources, etc.  So many are still sound asleep in their beds and will probably never get out of them.  Some will only get out of their beds when they are forced to.  Some just need an alarm, which I think we are getting right now.  Others are out of bed but still have a fog in their head, they don't know what has happened and how to proceed.  Few are awake and are well on their way to resilience.

What this site has given me, and I am most grateful, is that awareness of what has happened and how to proceed.  Getting more people to PP will help, but I truly think that it will take a BIG wakeup call to get most people out of that soft, warm and very comfortable bed.  Let's all be as prepared as possible to help those who are not prepared to get out of their beds.

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
...Ooops, this should read

...Ooops, this should read "and solve our Problem while managing our Predicament (Peak Oil).

Thank you

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
Folks, I have read all of

Folks, I have read all of these really neet, inner, and self help threads that have me seeing all of the emotions, and intellectually gifted individual spread across sentences and paragraphs. "If we could only all get on the same page" type narratives then everything will be Utopian like. We can seek this ultimate truth if only the narrative was all inclusive, and made everyone feel the same, important and viable. I seek these same things and understand fully what is being discussed here.

I just don't believe it will ever be reality. Life is way to fragmented for any narrative to be so all inclusive. Besides, the narrative changes once Mother Nature has her necessary ways.

Essentially, every action will have an opposite and equal reaction. Do gooders-Do badders type balance.

If asking every single person here if they would put all their cash, all their stuff into one pile, and divvy it up among the enlightened group (we are) and spread the responsibility around equally that we would guarantee a life of happiness for a thousand years then I doubt seriously that the majority would do this. A Husband and Wife can but one still has the power to effect strong changes that upset these idealic goals, so Utopia is always tenuous, and set in quick sand. Life itself is a flood of hormones and it takes a seriously gifted, sincere, and unselfish person/individual/community/world community to Love when it would be just so easy to concern ourselves with ourselves. So strong is the desire to survive that stealing is the opposite of storing and the strongest will always have the upper hand. Be that with the mind or with technology.

That too is our DNA, who we are.

Economic theory, environmental degradation, and spiritual enlightenment will always be a main stay to life itself. It too is part of our DNA. When we abuse what the natural world has given us she will extract her pound of flesh in equal measure, and I dare say we are facing this today. Try and control this you may but from what direction will you/we start? We cannot control what will happen only what happens when the balance is restored.

Here's a news flash Folks, we may not be here to rebuild at all, and all our plans did was to do No Further Harm, and THAT should be the narrative we truly seek. Still, this will make us condemn many to the earths ecosystem and I haven't the guts to point the figure and pull the trigger. My spiritual beliefs are opposed to this solution unless someone has decided I should add my pound of flesh to the worm population. DNA again, and I will resist.  

The mistakes being made today deals with vanity, another strong DNA marker. We are trying to mess with Mother Nature, to control her, and this just will not be. Same with the economy, and just about everything. Again, for every action there will be an equal and opposite reaction. So expect a reset not because I say to but because of the things done that will need to be undone.

Man's pursuit of life eternal is at issue here, we think we can solve all the issues and eliminate work by technology, and all things to replace Man's labors. Oh how great that would be. A Jetson type robot that does everything in the home, a solar powered this and that to do manual labor in the yard, a robotics system that not only works 24/7/365 but fixes itself. All these technologies replace Man's labors. The tipping point is when energy runs out and Man has to re-learn all that he has set aside. Generations of workers pass along and leave nothing behind as the next generation aspires to do less and less. It is a system destined to break and reset. It will, it is near, and it will be devestating. It will happen because we are at fault through no fault of our own. Often is the case that we see the benefits, and only see the destruction long after the fact. So Nature takes control and evens things up, replenishes, and we start anew.

We can manage the after effects once these problems are corrected by a natural and healthy reset. From there we get our true enlightenment as we work towards another natural reset.

The only thing Man is responsible for above everything is Water, Food, Clothing, Shelter and Heat. Everything else is non essential. A luxury. In my mind when the SHTF these will be the only things we gather as nothing else is important. As the reset is finished and those who took care of these essentials first and foremost will be rewarded with the luxury of gathering other stuff.

This is the natural way, nothing cute about it, not so hard to understand, basic life/death simplicity, and I dare say the ultimate high and most spiritually satisfying.

I don't seek Utopia, I live it by wanting less and having more.

I practice the game as it is played today understanding that there are risks. What I seek are more of the things I absolutely need as the funds to purchase these things are from labors stored turned into dollars. I am preparing in effect for a reset that will surely come so that I can have an effect on those who stored nothing, and will rely on me for assistance. No problem so long as they are willing to work so that I maintain what I have worked for and stored so that I may assist others going forward. This is community and self preservation, is spiritual, self rewarding and enduring. Living life, and this is the Greatest DNA marker of all.

John D. Rockefeller said, "what you consider a monopoly I call entrepreneurship", The cycle of life frankly.

We got to get to work Folks, talk is nice but is counter to what needs to get done. In my world it's called "Blowing a lot of Hot air". Self Resilience, Water, Food, Clothing, Shelter are the essentials. Please get them. Get more of them if you can, and you will live to fight another day. if you don't you will meet resistance trying to get them, and someone will not be so happy that you have arrived wanting something. Especially for nothing.

While the leaders talk, searching for the perfect narrative, and kick the can down the road you will clearly see those who haven't stored enough of the essentials, and are demanding a helping hand by whatever means necessary. These Folks will find themselves helpless to this cause as those who have are not willing to part because the system is so strained that even those who want to help cannot.

"Here we are and there you go".

My wife and I have adopted a family of 9. Grandma and Grandpa have taken in their daughter and her 6 children. They DO NOT know who we are, and it will stay this way. It is Thanksgiving Folks and Christmas is near. No matter your spiritual awareness it is right to give for givings sake. My feelings are that this too is part of our DNA, and I wish I/we could do more but I/we cannot. I will pray however that some Devine being can turn a few loaves of bread, a basket of fish, and a little water, and magically feed the World. I hear this was done before, and we have tried to follow the example set but Devine interventions is a must now, and I fear that just won't happen. 

Respectively Given

BOB

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2302
On Narratives

The problem of changing the narrative needs to investigated further. Why do we have a narrative at all?

Dr. Iain McGillchrist explains the Left brain’s creation of models of reality, and why they are necessary. He also points out that the power distribution between the Left and Right hemispheres has become unhealthy since the Enlightenment. The models now dominate over the lived gestalt existence.

Hence, if my model includes Cold Fusion and someone else’s does not, they will assume that their model is more accurate and that therefore I must be indulging in “Magical thinking.”

This is the value of the Scientific method. It demands that any model, no matter how persuasive and no matter how passionately held, is subject to empirical evidence.  

Our models (Narratives) are a great aid to survival, but their weakness must also be acknowledged. We must be free to modify and if needed drop any narrative that is inaccurate with no more angst than disposing of a tissue.

Since the Enlightenment this has become increasingly difficult to do. We need to recognise this malady, and work on its remedy.

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
Arthur said: "Our models

Arthur said:

"Our models (Narratives) are a great aid to survival, but their weakness must also be acknowledged. We must be free to modify and if needed drop any narrative that is inaccurate with no more angst than disposing of a tissue."

Agreed Arthur

Here's the problem, FRAGMENTATION. No one, not one single soul alive today, in all corners of the globe has as their circumstance the same set of variables to form a conclusive model for all the moving parts. Fact is the model is only as good as the input, and NO ONE can possibly conceive of the absolute perfect input. Therefore all the models are contrived. Not so much for the individual unit but for the masses it certainly is.

So, again, who's narrative will be THE Narrative. For me that can only really be ascertained after the fact, and why a reset is going to happen, is happening.

OIL will be the best barometer for change and is important to follow this bouncing ball. Precious metals have the test of time in their corner so is the logical hedge against all outcomes. So, it can be modeled more appropriately than anything else, and can be used then as a function to life itself, and makes perfect sense to have then. Of course this is for the future, as for today it is resiliency for resiliency sake. Water, Food, Clothing, Shelter and redundant energies are essentials that should be stored for as far out as can be usefully stored. Once satisfied then the world remains calm and observation becomes rational as the visuals will tell the story, and the narrative becomes clearer closer to the next turning as winter becomes spring again.

Respectfully Given

BOB

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 375
On Narrative (cont)

Arthur, Great video! McGilchrist's "The Master and His Emissary" as I'm sure you know is his seminal book on the subject. Yes, his theory is that we are currently living in a time that is out of balance and dominated by the left side of the brain. What troubles him is that a rebalancing of this left brain domination (like the Romantic era did in reaction to the Enlightenment era) doesn't seem to be working in our time. Because the left brain has been responsible for huge scientific miracles, it merely ignores or downplays, as Chris points out, its shadow side and/or failures...the devastating effects on the planet, the desymbolizing effect of technology on our cultures, even the failure to systematize the foundations of mathematics (Godel's proof put this to bed) and quantum mechanics. The third stage of the relationship between the two hemispheres is crucial, but seems to be currently circumvented in our western culture, and that is the left brain passing back what it has analyzed and categorized to the right brain so that it can be resymbolized back into the whole.

Science/empiricism (left brain) is absolutely necessary in analyzing our narrative, but if his theory is correct, it is the right brain that needs to be making sense of and resymbolizing this information. The left brain does not see the forest, but merely the trees. The right brain sees the forest, but needs the left to inform it of what's going on below the canopy to have an accurate picture of reality.  Who knows if his theory is correct, but it sheds light on the two predominant ways of relating to the world.

Another issue that I see, and you may disagree, is that science is now beholden to and exists under technology, not the other way around (technology being a tool of science). Because of complexity and the enormous monetary costs of furthering science, pure science doesn't exist any more, only applied. Therefore science cannot move forward without technology (economy/money being a form of technology)  and therefore resides below it. I would be interested in your thoughts.

I have to say I don't usually spend much time posting on-line, but this thread has been interesting.

Thank you

John Lemieux's picture
John Lemieux
Status: Silver Member (Offline)
Joined: Mar 2 2012
Posts: 223
The Master and His Emmissary and Jill Bolte Taylor

I'm sure that many out there have seen this as it is one of the most popular Ted Talks. Jill Bolte Taylor is a neuroscientist who suffered a stroke to the left side of her brain. She did recover, but the stroke changed the way she uses her brain and as she explains in this illuminating Ted Talk. 

I believe that the implications of what Jill Talylor and Ian McGilchrist are telling us in these presentations is profound. Because this likely explains our polarized political divisions, as well as our disconnection and  wanton destruction of our natural environment.

McGilchrist explains how business, money, markets and especially power and control are the functions of the left hemisphere. It deals with comparitive analysis, it needs structure, and it is concern is with non-living things. It is focused on the material world, is ridged and thinks in a linear fashion. And is focused on the separate individual self and does not consider matters outside of it's limited worldview.

The right hemisphere is about connection, creativity, fluidity in thought. And this is where we feel compassion and desire  harmony in relationships. In fact it is all about relationships and it's also the place of our spiritual selves. It's function works as a kind of connection to other living things, to the universe, to art, music and beauty.

McGilchrist is concerned that we have become a left brain dominant world especially in cultures like the US. This is becuase the Western culture values and emphasizes the qualities the left hemisphere. And we have now collectively lost the balanced worldview that is required to fuction in a healthy and sustainible way with our fellow humans and with the planet. 

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
John, this video I seen and

John, this video I seen and had a strong impact with me. I usually just pass over these sorts of things but Arthur is the type of individual in our community here at PP that gets me outside the box, and so I Googled left brain, right brain and this popped out. John, it doesn't surprise me at all that you put this up. Your work ethic is one I respect and you haven't disappointed at all with me your balances with regards to your search and research, very nice.

What I enjoy most about PP is the balance, the sum of the parts as they come from very bright and sincere Folks just challenging each to gain more. I am stubborn in my core beliefs as Oil and PM are the constants of all things made and then transferred easily as my excess labors accumulate in digits. After that it's just adding to, and preserving what I don't need today for tomorrow and beyond. My plan for the future and how to save for the the pleasures I seek come what may. 1st up for instance is a nice long stay at Yellowstone.

Regards

BOB

John Lemieux's picture
John Lemieux
Status: Silver Member (Offline)
Joined: Mar 2 2012
Posts: 223
It's About Balance

Hi Bob,

I'm glad that you found Jill's talk interesting. Millions of people have seen this and it's one of the top ten talks I believe. I really liked the talk that Arthur posted and I have also read The Master and his Emmissary. I think that these two presentations complement each other and it's interesting to hear Ain McGillchrist's thoughts about the real world implications of this. And it's important to understand that we need both sides of our brains to function at our best, that it's about balance. 

What Arthur is trying to bring to attention I think is that the left side doesn't realize that it needs the right side to have the more complete picture of the world. That's because it is all about focus, details, comparing and judging and it is essentially narcissistic. The right hemisphere is open and inclusive and it "knows" that it requires the use of the executive functions of the right hemiphere to achieve practical and necessary things to survive.

Gotta go. J.

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
Happiness is...

There are times when for me where I am privileged to walk through a door previously closed to me, and bits and pieces of knowledge coagulated and form just one beautiful awakening, and this entire subject, and the participation of every single person who took the time to pen their thoughts made this possible. I really need to thank you all for this most pleasurable feeling that I have right now.

Thank you

BOB

SeniorD's picture
SeniorD
Status: Bronze Member (Offline)
Joined: May 29 2012
Posts: 32
Awareness

In Asia they have a saying, "The bigger the front, the bigger the back", here in the West we say, "There is no free lunch".

Each of us needs to realize that every choice we make has an impact on not only the Society around us but the Planet and then factor that into our decisions, if we are to be part of the solution instead part of the problem.

The Left says tax the Ultra Wealthy, they can afford it and the Right says, tell all those that are unemployed to get jobs and stop being a drain on Society.

We are like one-armed paperhangers that cannot do everything at once, so it is no wonder that most people take care of themselves (and those closest to them) first; which is OK as long as most of those around you are in a similar situation.  A great example is a Country Club with members of different economic levels interacting with each other.  But that changes if you now place that Country Club in the middle of a depressed area and suddenly, it becomes an island of prosperity in the middle of a sea of fiscal despair, which makes just going to the Club a risky endeavor.  What to do?  Having a police force to maintain the peace is helpful, especially if the Police can afford to become Club members but at some point that also tends to break down as the level of despair increases.

The Middle Class has for at least the last 50 years served as a buffer between the Wealthy and those in need, (think of that Country Club being located in a large City) but now more than ever before, the size of the Middle Class is shrinking rapidly and as it does so, the separation of the Haves and Have-Nots gets concentrated, (think of a Country Club being located in a tiny poor town).

One solution, at least for the Wealthy, is to insulate themselves from those that are Not Wealthy by relocating; a example might be to be one of the select few to live on the Hawaiian Island that is now almost privately owned (think of the entire Island as a Country Club).

For the poor, their solution is to band together and either use their democratic right to vote and or pass laws to better their situation or use their numerical superiority to “demand” better treatment.  History shows us, that In China, when the price of rice rises beyond what the poor can pay, there is a revolution (because the poor have nothing to fear), and I liken the current secession talk to this concept.

What to do?

My solution is for both sides to immediately comment to “working together” ASAP and fix what is wrong with our Country by accepting no foot dragging from Congress or the President.  If the Public demands far better from all our Leaders, then our Leaders will have to respond because the Wealthy will exert fiscal pressure from above and the Poor will exert massive pressure from the bottom.  The key is to aim toward an acceptable middle ground and as a goal of what that might look like, I’d suggest the image of the USA during the early 50’s, with the personal freedoms of the late 90’s …

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 375
McGilchrist and Taylor.

Thank you John for the video and your summary of McGilchrist's book. Your summary was much clearer than mine. I second Bob's comment too, I feel lucky to have found this website. It's a pleasure to read such respectful, intelligent, and thought provoking comments. Thanks to all!

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2302
Seconded.

I too thank John for shining a bright light on the subject of our shortcomings . This relationship between our hemispheres is worthy of further study.

Insight is what I come to this site for.

For like minded folk I offer Greetings from Talos by Nate Hagens (The Oil Drum)

Nervous Nelly's picture
Nervous Nelly
Status: Silver Member (Offline)
Joined: Nov 23 2011
Posts: 209
Left and Right brain

I had seen that video and it's good when a doctor (rationally trained mind) experiences this phenomena It valids what buddhist monks experience after years of training. Deliberately training there minds to shut down the separating self ....the ego , the rational mind.  Cultivating compassion, interdependance, happiness. I  for one, learned to meditate the buddhist way and did a daily practice of 45 minutes a day. This helped me to calm my mind.....slow it down and smell the roses. I will for ever be grateful because I am much happier. 

Sonya

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
No Arthur...Talos?! Maybe

No Arthur...Talos?! Maybe later, perhaps after the reset my Brother.

Regards

BOB

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
John Lemieux

John Lemieux wrote:

Interesting and inspirational video. 

"We are the life force power of the universe", she said.

But when the instrument is damaged and the intepretation of perception comes from that instrument, then the perception will be distorted. She's close but she's mistaken at to her role.  Metaphorically, she's the humanly intelligent and powerful antenna and receiver of the signal.  She's not the divinely intelligent and all powerful signal and the source of that signal.  Nevertheless, her message still resonates with a certain truth.

ThatsRight's picture
ThatsRight
Status: Member (Offline)
Joined: Nov 23 2012
Posts: 1
A real world example

"If wages rose such that an hour’s labor bought five gallons of gasoline, the wage earner’s purchasing power has actually increased despite the apparent 90% drop in the value of the currency"

Wrong. In 1993 I worked at a hotel for $6.50 an hour. Gas was .80 cents a gallon I remember clearly. I had a small one bedroom apartment, cable, and a car payment. All on this meager salary. 

Now I just came off a position where I ran an apartment complex for $34,000 per year which is roughly $17.70 an hour. I was working literally 3 times as hard. Try living in an apartment with a car payment, insurance, etc. on this salary and see how you make out. I won't even deal with insurance.

The wages and thus purchasing power in this country have not even come close to maintaining value. The above is a real world example not a chart.  

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments