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PeakProsperity.com

Doing the Next Thing

Steady steps is what it takes to build resilience
Tuesday, August 6, 2013, 6:14 PM

The whole reason we spend our time looking at where the world is going is so that we can position ourselves to have as prosperous, joyous, and fulfilled a life as we can, while leaving behind a better world for those who will follow us.

Today I can say with complete sincerity that I am a better, more fulfilled, happier, and healthier person than I was ten years ago. » Read more

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The Fed Matters Much Less Than You Think

It can't control the real economy
Thursday, August 1, 2013, 1:18 AM

This lemming-like belief in the power of the Federal Reserve generates its own psychological force field, of course; the actual power of the Fed is superseded by the belief in its power. We can thus anticipate widespread disbelief at the discovery that the Fed is either irrelevant or an impediment to the non-asset-bubble parts of the economy. » Read more

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Class, Race, Hierarchy, and Social Relations in 'The Long Emergency'

Reality does not have an ideology
Monday, July 29, 2013, 7:07 PM

After the second novel in my World Made By Hand series (The Witch of Hebron) came out in 2010, I was beset by indignant reviews and angry letters from female readers over my depiction of gender and class relations further along in the 21st century. The fictional future economy I described was, in its broad outlines, similar to the future sketched by Chris Martenson and his stable of writers — a re-set to a far more local, much less complex, and downscaled economy, with a lot of formerly modern comforts and conveniences missing from the picture. » Read more

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Bankers Own the World

And are ultimately destroying it
Tuesday, July 23, 2013, 1:41 PM

Today, some of the most celebrated individuals and institutions are ensconced within the financial industry; in banks, hedge funds, and private equity firms. Which is odd because none of these firms or individuals actually make anything, which society might point to as additive to our living standards. Instead, these financial magicians harvest value from the rest of society that has to work hard to produce real things of real value. » Read more

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Our "As You Wish" Markets Have Reached the Cliffs of Insanity

Next stop: the Pit of Despair?
Friday, July 19, 2013, 12:41 PM

In the classic fantasy rom-com The Princess Bride, the beautiful maid Buttercup orders the farm boy Westley to perform numerous tasks to test his servitude. No matter the magnitude of the request, Westley simply answers "As you wish" and makes it so. Buttercup eventually comes to view Wesley with similar devotion, and true love is born.

Similarly, investors have fallen back in love with the capital markets, whose continual response their increasingly irrational hopes has been "As you wish." » Read more

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Get Ready for Rising Commodity Prices

Driven by hot money seeking a low-risk haven
Tuesday, July 16, 2013, 9:27 PM

The human mind seeks a narrative explanation of events, a story that makes sense of the swirl of life’s interactions.

The simpler the story, the easier it is to understand. Thus the simple stories are the most attractive to us.

But conspiracies and power groups do not always provide comprehensive explanations for what we observe. » Read more

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Living Two Lives

And what to do about it
Friday, July 12, 2013, 3:12 PM

You know that something is very wrong.

Even if you ascribe to the recovery meme and ingest the current narrative that the economy is about to take off and that stocks and houses will once again make us all rich, you know deep down that the story of perpetual exponential growth has an ending.

Maybe not immediately, but someday, certainly, the doctrine of endless growth will have to end. And you know that in all likelihood it won't end on human terms, in a manner of our careful choosing, but on some other terms set by exhausted ecosystems and depleted resources interacting with our highly complex economic and financial systems. » Read more

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The Dead Weight of Sluggish Global Growth

Weighing heavier each year
Tuesday, July 9, 2013, 1:04 PM

Global Slowdown

The U.S. economy weakened appreciably in the first quarter of 2013. But what if this weakness persists into the second quarter just completed, and worsens still in the second half of this year? Q1 GDP, as reported on June 26th, was revised lower to just 1.8%. And various indications suggest that Q2 could come in slightly lower still, at 1.6%. Might the U.S. economy be guiding to a long-term GDP of 1.5%? That’s the rate identified by such observers as Jeremy Grantham the rate at which we combine aging demographics, lower fertility rates, high resource costs, and the burdensome legacy of debt. Well, after a four-year reflationary rally in just about everything, and now with an interest-rate shock, the second half of 2013 appears to have more downside rather than upside risk. Have global stock markets started to discount this possibility? » Read more

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Why the Bullwhip Effect All But Guarantees Another Poorly-Handled Liquidity Crisis

Complex systems break under stress
Monday, July 1, 2013, 11:54 AM

One of my more memorable moments in business school came during an Operations class. The topic for the day was the Bullwhip Effect, a very real and vexing phenomenon that occurs in forecast-driven distribution systems.

Essentially, when there are multiple parties in a distribution system, the imperfections in each player's forecasts (no forecast is consistently perfect) compound to wreak increasing havoc over time, even if demand stays relatively stable.

Grasping how this works is somewhat non-intuitive... » Read more

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Europe's Precarious Banks Will Determine the Future

Ticking time bombs
Tuesday, June 25, 2013, 5:09 PM

Crying Wolf?

It is easy to get the impression that the naysayers are wrong about Europe. After all of the predictions of Armageddon, ten-year government bond yields for Spain and Italy fell to the 4% level, France (which is retreating into old-fashioned socialism) was able to borrow at about 2%, and one of the best-performing bond investments has been until recently – wait for it – Greek government bonds! Admittedly, bond yields have risen from those lows, but so have they everywhere. It is clear, when one stands back from all the usual euro-rhetoric, that, as a threat to the global financial system, it is a case of "panic over." » Read more