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Believing The Impossible

Is necessary to rationalize today's bubble markets
Thursday, January 18, 2018, 9:13 PM

"Alice laughed: "There's no use trying," she said; "one can't believe impossible things."

"I daresay you haven't had much practice," said the Queen. "When I was younger, I always did it for half an hour a day. Why, sometimes I've believed as many as six impossible things before breakfast."

~ Lewis Carroll, Through The Looking Glass

To borrow from Lewis Carroll: To have confidence in today's central bank-created bubble markets, we have to believe in six impossible things.

Thing 1: Fundamentals Don’t Matter.

In our brave new world of money printing to infinity, we're supposed to buy into a “new paradigm” story. You know, that It’s different this time.

Spoiler alert: It never is.

Companies either make money or they don’t. They're either good investments or they aren't. They'll either return risk-adjusted cash to you over time, or they won't.

Here’s a simple exercise. Using a publicly available stock screener at Finviz.com, a favorite site of mine, I set two filter parameters to obtain a list of companies that have::

  1. A market cap of over $2B
  2. A P/E ratio in excess of 50x

These are the biggest companies that, in theory at least, require investors to wait 50 years (or more) to be paid back in profits for each dollar invested.

236 companies fit this description right now. 236!

Here’s a screenshot of page 11 of the results. Every company listed here has a P/E multiple of over 190(!). 

(Source – here’s the exact screen I used, so you can troll the results for yourself)

Again, these sky-high ratios mean that investors are willing to wait more than 190 years for these companies to earn back their principal at current stock earnings prices.

In a word, folks, this is nuts. Not even during the height of the 2000 and 2007 bubbles could we find such an enormous number of extreme results spread across every sector as we see today. The small selection in the table above includes companies from the stodgy food, machinery, energy, and insurance sectors, also joined by traditional high-fliers like biotech and internet.

This is exactly the sort of indiscriminate optimism that identifies a late-stage classic bubble market. Nothing can ruin the party vibe. Anything and everything is priced beyond perfection. Each sector has its own story to rationalize the exuberance. “Oh, energy is poised to rebound soon, and Amazon has monopoly pricing power that will never be challenged, and Netflix is investing in premium content, and food, well, uh, food…you know, this particular company is special…maybe a takeover target?”

In the table above, I’ve highlighted a few companies in yellow just as conversation starters.

Let's start with Yelp. I don’t even grasp how Yelp deserves a P/E of more than 15, let alone 192. Its business model of using crowd-sourced reviews to drive eyeballs/traffic to sell advertising against is facing competition from every possible direction. Google is squeezing them on every front, and new apps come along daily to parse the same review & locator territories.

Schlumberger is not a soon-to-recover story. Even if it were, that doesn’t help to justify the 21 other oil & gas companies returned for this particular filter I ran. Taken together, seeing so many super-high P/E companies from this sector is difficult to explain -- outside of the markets throwing all caution to the wind.

Netflix is almost a special case of willful investor denial, similar to Twitter, Uber, and Amazon. In each case “investors” have waited year after year after year for earnings to finally materialize, but none do. Worse, it’s been nothing but a steady parade of red ink.

Does this look like the sort of explosive earnings growth you’d want to see to justify a P/E of 220?

(Source)

And those are "earnings", which are easily doctored by accounting gimmickry into telling a picture rosier than true reality. Netflix’s cash flow burns are much better at showing how colossally this company loses money:

Quarterly burn rates in excess of $500 million are not the sign of a maturing, successful company. This is a company that is completely dependent on continued access to new inflows of funds from generous suckers -- ahem!, investors -- in the capital markets.

If those inflows stop and the company have to actually earn positive results from what it has already built, then Netflix would have to abandon its current cash-bleeding business model. In a more normal market environment, such pause would justify a P/E ratio of perhaps 1/10th the current ratio of 220.

And one last example to show that stocks are not the only asset class experiencing a price bubble. Without getting bogged down too much into the details of bonds, seeing Greek 2-year debt trading today with a lower yield (i.e. a higher price) than US 2-year Treasury debt tells us that similar massive price distortions exist in the bond markets as well.

The bottom line here is that fundamentals have been entirely tossed out the window. To believe in today's asset prices you have to believe in a future so bright and full of explosive growth that it’s literally going to eclipse every other growth period in all of modern history.

In other words, you have to believe that This time is different.

Thing 2: You Can Print Prosperity.

For nearly a decade now, central banks have been pretending they are printing up prosperity.

Our weak-minded and subservient media has been dutifully parroting these claims, even though they're easily refutable by anyone willing to do a little fourth-grade math. 

Money printing can only ever do one thing: take from one group while giving to another. It's wealth redistributive, not additive.

As I've frequently said, if it were possible to create true prosperity by printing money, the Romans would have succeeded long ago and we’d all be speaking Latin. 

But the common narrative we're being told/sold is that financial markets are going up because more wealth is being created. Metrics like record total market capitalization and home values are used endlessly on the airwaves as unassailable proof of the "everything is awesome" meme.

But even a cursory examination of the underlying data reveals that these increases in price are not the same as an increase in wealth. In fact, the efforts of the central planners result in an increasingly unfair distribution of wealth, where the rich get richer at the expense of everyone else.

For example, savers are losing, while equity holders are gaining. That’s a redistribution forced upon the system by central banks that have crammed interest rates to never-before-seen 5,000 year lows while also directly supporting stock prices by buying them. Yes, Virginia, purchasing financial assets with freshly-printed thin-air money spikes their prices higher .

Is that the same as creating wealth? No. Not at all.

Thing 3: Currency, stocks and bonds are “wealth.”

We have to accept with the very simple, but difficult, concept that wealth is not money. It's not currency either. And it’s not debt, it’s not stocks, and it’s not Bitcoin. Those are all claims on wealth.

Real wealth is real things. Land, food, cars, houses and other tangible and/or productive assets that we can use or consume.

We use markers to make claims on real wealth. Those claims are always, by definition, in the future.

For example, if I have a pocket full of money, I don’t have to worry about going hungry. I can always exchange my money for food later on when I am hungry. I use my claims on wealth as convenient placeholders for when I want to consume or use something later on, in the future.

By way of example, suppose you're starving but your pocketful of money can't buy any food because none exists in the stores. How much “wealth” would you say you have in that situation? A lot, some, or none?

This very circumstance faces many people in Venezuela right now. People who recently believed themselves to be wealthy because they had money suddenly discovered to their dismay that holding those claims is not at all the same thing as holding real wealth.

(Source)

At Peak Prosperity, we classify wealth into three categories: primary, secondary and tertiary.

Primary wealth is sourced from the land. It is rich soils, thick stands of timber and abundant reserves of ores and fossil fuels in the ground.

Secondary wealth is the means of production that has been extracted and/or converted from primary wealth and brought to market. It's lumber, steel, food in the grocery store, and factories.

Tertiary wealth, better known as 'paper wealth' (stocks, bonds, etc), is merely a claim on either primary and secondary wealth. Without either of those two forms of wealth, tertiary wealth has no value.

It was only recently that people somehow forgot this simple logical progression. Two hundred years ago, the answer to the question “Who are the wealthiest people around here?” was as simple as pointing to those who owned the most land (primary) or factories and stores (secondary).

But after 50+ years of intellectually-bankrupt experiments with “financialization”, people have entirely lost this thread and now confuse wealth with claims on wealth. Today the “wealthiest” are far too often composed of the skimmers and grafters that best learned how to exploit an ill-advised system of exponential credit expansion.

In order to believe in this system you have to believe that true wealth is created by the financial system, rather than by hard working people who take risks and deploy their talents to convert primary wealth into secondary wealth.

That just isn't the case.

Thing 4: The World Is Infinite.

To believe in the endless expansion of claims on wealth (i.e. that ever-rising stock and bond prices are rational) means that you also have to believe that the world is infinite.

To explain why, let's take a closer look at debt. Total credit market debt has been expanding exponentially in recent decades.

In order to believe the recent narrative of continued credit expansion alone (leaving aside the exponentially growing equity claims for the moment) you have to believe that somehow, magically, it’s possible to increase claims on wealth faster than actual real wealth…forever:

In the above chart, the green dotted line tracks the increase in global GDP while the blue dotted line tracks the increase in global debt. (Note: we're not including here under-funded liabilities such as pensions and entitlements which, if we did, make this story approximately 4x worse).

We can easily see that credit has been increasing much faster than GDP. This is an impossible, unsustainable condition -- mathematically certain to end in tears. Yet everyone is pretending as if we'll be able to continue this way perpetually, with no consequences.

Any grade-school child can work out the bad math involved here. It’s simply impossible for your debts to rise at a faster rate than your income forever.

So to be a believer in the current market's valuations and trajectory, you have to believe in a world with "no limits".

Thing 5: History Doesn’t Matter.

In every single case throughout history when claims on wealth have badly exceeded the real wealth itself, the claims have devauled. Usually quite painfully so.

World wars have resulted as a consequence. As have dark periods of great economic depression.

The core model of the central banks is predicated on endless growth on a finite planet. Do try your best to overlook the fact that hundreds of ecological warning lights are flashing bright red and clearly indicating the even more exponential growth is precisely what is not needed at this moment in history. Missing insects, bleaching coral reefs, eroding topsoil, plunging counts of everything from human sperm counts to oceanic phytoplankton, and plummeting migratory bird counts are all saying the same thing: the old economic model of endless growth is now destroying itself.

But this time we're supposed to believe that the lessons of history and scientific data don't apply to our unique situation in time. Our moment is special; magically so. This time is different.

It’s never different.

Thing 6: They Know What They're Doing.

A central theme of the dominant narrative is faith in authority. Our leaders have everything under full control.

Well, after watching the central banks get things wrong over and over again for decades, it’s quite impossible for me to believe that they suddenly have everything right.

They famously claim to not be able to spot bubbles in advance. They also firmly assert we are not experiencing an asset bubble now. Of course, they said the same thing right before the housing bubble burst in 2007.

This is just how large bureaucratic organizations operate. The toadies say what they think their bosses want to hear, and the higher ups are pleased to have someone to blame when things go awry.

But now, suddenly, as the central banks are conducting a massive globally-coordinated expansion of the world money supply at a magnitude higher than anyone has ever imagined, we're supposed to believe that now they’ve suddenly got everything under control and correctly divined?

Yeah, sure.

Interest rates have never in all of human history been this low. There’s no guide to steer by. But don’t worry – the central banks will get it exactly right this time. This time is different.

Further, negative nominal interest rates such as we see in the many trillions today, are not so much a monetary experiment as they are social engineering. The price of money is a very important social signal. What does it even mean that money has a negative price? Having to pay to lend your money has unknowable impacts on decision-making by businesses, banks and individuals. Could anyone truly have had an accurate prediction of what the implications would be?

Well, the results of this experiment are in and have been for years. Rather than spurring spending as the Bank of Japan supposed, negative interest rates spurred saving. Rather than driving corporate investment as the ECB imagined, negative rates instead drove corporate borrowing which was then spent on stock buy-backs and other financial gimmickry.

Now I can’t fault the central banks for trying something new; but I can fault them for failing to adjust after it became obvious the effects were deleterious and other than intended. How much longer should we permit these same fallible central banks to continue unchallenged as the stakes get increasingly higher?

In conclusion, it’s impossible for me to believe that the central banks know what they're doing.

Shifting From The Impossible To The Probable

Look, either I have all this very badly wrong, or I don’t.

If I do, that means that this time is indeed different, that it’s possible to print up prosperity, that history doesn’t matter, that fundamentals don’t matter, that the world really is infinite, and that the central banks know exactly what they're doing.

If I’m wrong, I’ll have to carefully reexamine all of my data and assumptions to find out where the error(s) lay. And issue a very humble public apology. Oh, and then go long the market.

But if I'm right, and I really would prefer not to be, then a brutal market collapse is nigh. One that may well end in war, ecosystem breakdown, or financial Armageddon -- possibly all three.

In Part 2: How To Avoid The Pain Of The Coming Market Downturn, we lay out the specific steps to take now, while the system is still tranquil and functioning, to position yourself to sidestep the wrath of the coming collapse(s).

Remember that bubbles end remarkably quickly. When they burst, their job is to create the greatest misery possible for the greatest number of people possible. 

The only way to avoid that fate is to be positioned wisely in advance. Take steps now to ensure you're one of those prudent few.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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49 Comments

Petey1's picture
Petey1
Status: Bronze Member (Offline)
Joined: Sep 13 2012
Posts: 61
Guns, ammo and stored food

If you haven’t noticed certain guns and ammo are at prices lower than I have witnessed in a long time.  AR for $389.00,  good 5.56 brass ammo for 24 cents a round.  If you shop the sales prices are really low.  Long term storage food is really cheap now.  If you need it now is a good time to stock up. 

Pipyman's picture
Pipyman
Status: Bronze Member (Offline)
Joined: Apr 24 2011
Posts: 56
Just a thought!

I often get a great a wry source of amnusement when I think about the similarity between those that defend the current infinite growth paradigm and the “flat earth” wackjobs. Just goes to show what credibility consensus can buy you :-)

robie robinson's picture
robie robinson
Status: Diamond Member (Offline)
Joined: Aug 25 2009
Posts: 1161
A good team

of drafts will be worth a lot. 

Best to get your mare settled

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 807
Hmm... does that AR have electronic protection?

Just out of wondering, don't guns now have to have electronic locks that only fire with the owner's hand?

So if those new ARs do have electronic protection, are they hackable? Has the Federal government ever shown an interest in embedding weaknesses to their own advantage?

Hmm... in a related issue, I was this morning minded of the slaughter of the Polish Cavalry by a few machine gun nests in WWI... iirc. And it occurred to me that it would be like the chinese (or even the Dutchy of Grand Fenwick) hacked our nuke controls, so that when we gave an order to launch, ALL of our weapons launched at once, and blew themselves up 100m into the flight, thus making our great and feared nation ... nothing. And how we would be the new polock joke, as terror gave way to hatred, and hatred to despising, and despising to derision.

Point being, the big bully doesn't last forever, and sometimes the comedown happens at the hands of an amazingly small event.

In other words, I'm inclined to think even trusting in our nuclear arsenal is a mistake.

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1839
No electronic locks on weapons

Hi Michael,

Electronic weapon locks have been discussed but are not currently in use.  I don't believe I have ever seen one on an actual weapon.

sand_puppy

MKI's picture
MKI
Status: Bronze Member (Offline)
Joined: Jan 12 2009
Posts: 71
Feedback

This was a comprehensive article; an excellent summary of Peak Prosperity's philosophy, and all in one place. It's also clearly written. One weakness? The arguments don't give the counterarguments, nor the more moderate position of the alternate view. Examples:

1. Fundamental Don't Matter: Why point to the most expensive, speculative stocks? There are reasonable stocks to buy even at the peak of a crazy bull market with a DOW div yield down to 2.1%. For example, KO (PE 26, BK 5), IBM (PE 14, BK 19), XOM (PE 28, BK 40) all are making fair money, paying dividend yields ~3%, ROIC >10%, FCFY ~10%. This is real money (dividends) and real wealth creation (BK), not fictitious earnings of FANG stocks. And it's a reasonable way to participate in the FED money pumping to the 1% (which looks like it may go one for a very long time).

2. Print to Prosperity: I generally agree. But when the FED is in control, and real wealth is being created, it makes sense to participate in the real wealth creation. The FED has been playing it's debt games since WWII, and that's a lot of time to be abstaining from taking one's share of our wealth  creation.

3. Currency Stocks Bonds Not Real Wealth: One of the problems here is that ideas and technology have real value and make us all wealthier. Look at the cost of lighting falling. Look at the cost of communication falling. Look at the ability to read books digitally and share information (even on this website). This is real wealth creation, I'm living better today because off it, and it's not easy to place these ideas/technology in the "primary" or even "secondary" category. And using stocks allows one to participate in the real wealth of these ideas. Currency is just a ledger of real wealth (I prefer to look at oz of gold, but it's just all just measurement of real wealth).

4. The World Is Infinite: I agree the debt is crazy since 1980. But it's been 40 years now and are you really going to "sit out" of the real wealth creation going on for my entire life? Look at China; they have exploded over this time in terms of real wealth, going from starving to having a living decent.

5. History Doesn't Matter: History shows precisely the opposite regarding wealth creation during times of monetary foolishness (yes, like today). This isn't a "this time it's different" claim; as we look at over 300 years of data we see the most incredible wealth creation in human history, much during some pretty ugly monetary and political times. We've went to the moon, built trains and atomic bombs, created the radio, phone, internet, lighting, engines, you name it. There is real wealth being created today: genetic engineering, renewables, you name it.

6. They Know What They Are Doing: OK, here I agree with you 100%. But "they" have never known what they are doing. Ever. So what? All one does is be aware, keep their powder dry, stay alert, and continue to participate in wealth creation through technological advances. We've come a long way since the industrial revolution circa 1750, and it's unlikely to stop anytime soon no matter how stupid the FED is.

But overall this was a good article and well presented. There was much I agreed with, but tried to focus on disagreement because that's more interesting and educational. Thanks!

fionnbharr's picture
fionnbharr
Status: Bronze Member (Offline)
Joined: Sep 27 2012
Posts: 87
The Fine Detail

Hi MK1,

many people here gave you a very clear and concise series of answers to your points without any conclusive reply on a recent thread called Gail Tverberg: The Coming Energy Depression. I happen to be one of them.

At the time I asked if you'd watched through the Crash Course Series that is the glue to the site. To save your search, here's the first five below, with a link to the sixth to help you on your way : -

The Crash Course - Chapter 6 - What Is Money?

Finn

Uncletommy's picture
Uncletommy
Status: Platinum Member (Offline)
Joined: May 4 2014
Posts: 529
Hmmmmmm?

This isn't a "this time it's different" claim; as we look at over 300 years of data we see the most incredible wealth creation in human history, much during some pretty ugly monetary and political times. We've went to the moon, built trains and atomic bombs, created the radio, phone, internet, lighting, engines, you name it. 

I appreciate your faith in human progress, MKI, but I expect it smacks somewhat of human hubris. And, as usual, it comes on the backs of some creature"s capture of sunlight over the eons. Yes, I share  your belief that humans have the capacity to achieve some remarkable things. I also believe in TANSTAAFL. So I'd sit back and have another beer; "lunch will be served, shortly".

MKI's picture
MKI
Status: Bronze Member (Offline)
Joined: Jan 12 2009
Posts: 71
The Fine Detail

Finn, I don't waste time on fruitless disagreements. I've said my piece there, am unimpressed with the responses, and so politely withdrew. Regarding the vids: is it so inconceivable to you that I've watched them yet believe what I do? Well, if it makes you feel better, I have and do. Cheers, & enjoy this fine day!

Broadspectrum's picture
Broadspectrum
Status: Bronze Member (Offline)
Joined: Mar 14 2009
Posts: 90
Why Bother with MKI (The Joker)?

Hi All,

The joke is on us.  This MKI person has been a member of this site since Jan. 12, 2009, 9 years.  In order to join this site a person must identify themselves to some degree before posting comments.  So, CM knows who this person is. If I am not mistaken, MKI's first post EVER was on the Gail Tverberg's thread on Jan 7, 2018.  I counted 21 comments by MKI on that thread. That person is now up to 25 comments (at the time of this writting), including 1 on this thread.  So MKI has posted 3 other comments on some other threads since first commenting on Jan 7th (I don't know which one(s) on which the comments were made and I don't care).  The question you all must ask is, "Why now?".  What has triggered MKI to start commenting?

MKI told us he/she is recently retired from the oil industry and that he/she was an engineer.  So, don't you all get it?  She/he is a shill and playing devil's advocate with time on her/his hands.  MKI's mindset is exctly that, SET.  I know many persons that their minds have been made up for so many years on certain topics that nothing new can penetrate anymore.  Those persons have too much invested in the way they think (Communist professor/educator types come to mind). They don't want the "proverbial rug" to be pulled from underneath their feet.  It is called cognitive dissonance.  Nobody will be able to help this person understand what the rest of us do.  MKI even said more than once that he/she is not that smart.  I must agree based on the evidence MKI has presented to us through the comments she/he has made that it is clear to me that he/she isn't that smart or else the comments being made wouldn't be as deaf and dumb, which is my objective observation of reality.  Ha ha.

MKI has been effective in getting under your skins.  To all of you that have engaged with her/him, your efforts are commendable but a waste of time.  It was worth the original effort because of your sincere desire to help someone understand our predicament. But it soon became clear that MKI doesn't want our help and thinks he/she is helping us.  What a laugh (a devil's advocate joke). You will not get any charts, graphs or sourced data from this person outside of a linked to weak article on electricty consumption and claims to have done so of course.  I didn't see them.  Did anyone else?  What you will get is more and more contridictions and weak ASSUMPTIONS and very wrong conclusions (anyone here think of the blind persons trying to describe an elephant while touching entirely different parts of the elephant?).  MKI IS BLIND!  And like most persons taking a similiar position, for their own purpose, they poke a hot stick into their own eyes for the sake of not seeing because that is too scary to them.  They must talk themselves into being right because that is all persons like this have left.  

All MKI cares about is making money, TERTIARY wealth, and said it many times in the other thread.  MKI isn't smart enough to even understand those wealth concepts because the response above confuses those concepts. Or was that just sloppyness or again devil's advocacy?  MKI doesn't care about anyone else but her/himself and maybe, just maybe her/his family (if she/he has one), and probably then just a little bit.  All of his/her fake twetiary wealth (fiat money) will evaporate like everyone's else's when the time comes.  We all saw it happen more than once in the past 30 years, most recently 2007/2008.  

MKI certainly won't understand (or will pretend not to understand) how the "game" being played is actually a way to redistribute the real wealth and the momentarily tertiary wealth to the 1%.  The rich have become richer and richer in this same tertiary wealth fiat money scheme.  Maybe MKI is one of the 1% defending his/her anti-human values.  It is exteamely difficult for persons like MKI to ever admit they are wrong. He/She is one of the Extractors (if only by the nature of their profession) mentioned in this article.

https://medium.com/training-the-mind-to-see-new-horizons/the-progressive...

Check out this one too:

http://notesfromthetrailblog.com/the-great-upwising/

Peace for Real, May Peace be With You, but it begins with me,

Broadspectrum

 

 

 

 

 

 

AKGrannyWGrit's picture
AKGrannyWGrit
Status: Gold Member (Offline)
Joined: Feb 6 2011
Posts: 460
Broadspectrum

Wow, you have been a member since 2009?  Well done, I look forward to more of your posts!

AKG

JohnH123's picture
JohnH123
Status: Bronze Member (Offline)
Joined: Apr 14 2010
Posts: 45
I appreciate MKI posts

I appreciate that MKI is providing counter balance to Chris's arguments. If we are to find the truth here, we need to look at all angles and respect those who thoughtfully disagree.

Mark_BC's picture
Mark_BC
Status: Gold Member (Offline)
Joined: Apr 30 2010
Posts: 470
MKI wrote: This was a
MKI wrote:

This was a comprehensive article; an excellent summary of Peak Prosperity's philosophy, and all in one place. It's also clearly written. One weakness? The arguments don't give the counterarguments, nor the more moderate position of the alternate view. Examples:

1. Fundamental Don't Matter: Why point to the most expensive, speculative stocks? There are reasonable stocks to buy even at the peak of a crazy bull market with a DOW div yield down to 2.1%. For example, KO (PE 26, BK 5), IBM (PE 14, BK 19), XOM (PE 28, BK 40) all are making fair money, paying dividend yields ~3%, ROIC >10%, FCFY ~10%. This is real money (dividends) and real wealth creation (BK), not fictitious earnings of FANG stocks. And it's a reasonable way to participate in the FED money pumping to the 1% (which looks like it may go one for a very long time).

2. Print to Prosperity: I generally agree. But when the FED is in control, and real wealth is being created, it makes sense to participate in the real wealth creation. The FED has been playing it's debt games since WWII, and that's a lot of time to be abstaining from taking one's share of our wealth  creation.

3. Currency Stocks Bonds Not Real Wealth: One of the problems here is that ideas and technology have real value and make us all wealthier. Look at the cost of lighting falling. Look at the cost of communication falling. Look at the ability to read books digitally and share information (even on this website). This is real wealth creation, I'm living better today because off it, and it's not easy to place these ideas/technology in the "primary" or even "secondary" category. And using stocks allows one to participate in the real wealth of these ideas. Currency is just a ledger of real wealth (I prefer to look at oz of gold, but it's just all just measurement of real wealth).

4. The World Is Infinite: I agree the debt is crazy since 1980. But it's been 40 years now and are you really going to "sit out" of the real wealth creation going on for my entire life? Look at China; they have exploded over this time in terms of real wealth, going from starving to having a living decent.

5. History Doesn't Matter: History shows precisely the opposite regarding wealth creation during times of monetary foolishness (yes, like today). This isn't a "this time it's different" claim; as we look at over 300 years of data we see the most incredible wealth creation in human history, much during some pretty ugly monetary and political times. We've went to the moon, built trains and atomic bombs, created the radio, phone, internet, lighting, engines, you name it. There is real wealth being created today: genetic engineering, renewables, you name it.

6. They Know What They Are Doing: OK, here I agree with you 100%. But "they" have never known what they are doing. Ever. So what? All one does is be aware, keep their powder dry, stay alert, and continue to participate in wealth creation through technological advances. We've come a long way since the industrial revolution circa 1750, and it's unlikely to stop anytime soon no matter how stupid the FED is.

But overall this was a good article and well presented. There was much I agreed with, but tried to focus on disagreement because that's more interesting and educational. Thanks!

Comments:

1). You keep referring to "wealth creation". Wealth is not created; it is harvested from the natural world and then transformed. Something like 97% of our energy comes from burning dead things that used to be alive, which were all actually created by ecosystems (converting sunlight), not by us. You speak of wealth coming from high technology. This is a special kind of wealth, I place it between Chris' secondary and tertiary wealth. We need primary and secondary wealth to live: water, forests, agriculture, fossil fuels, mines, factories, etc. But you can't live off digital technology. It is merely a means of information manipulation and transfer which can definitely improve our lives and make our secondary wealth (traditional industries) more efficient, but it does not provide anything tangible. The easiest way to put it is this: you could live with out digital technology if you have primary wealth but you cannot live without primary wealth no matter how much CPU power you have (and with 7 billion people overpopulating the world, we also couldn't live without secondary wealth nowadays). The problem of course is that the traditional sources of primary wealth; fossil fuels and water, agriculture, etc, are waning. Of course I know that you disagree with that statement but the data shows otherwise. I think this is one of the fundamental misconceptions out there, that all this fancy distracting computer technology has somehow separated us from the natural resources that support us, which is totally incorrect.

2) "We" did not go to the moon (at least, no people did; unmanned expeditions most likely have). This is blatantly obvious from any basic competent technical analysis of the evidence.

TechGuy's picture
TechGuy
Status: Gold Member (Offline)
Joined: Oct 13 2008
Posts: 386
Credit Growth

As long as credit growth keeps increasing the bubble will continue:

Total Consumer Credit Owned and Securitized, Outstanding

https://fred.stlouisfed.org/series/TOTALNS

 

Motor Vehicle Loans Owned and Securitized, Outstanding

https://fred.stlouisfed.org/series/MVLOAS

 

Total Nonrevolving Credit Owned and Securitized, Outstanding

https://fred.stlouisfed.org/series/NONREVSL

 

Bank Credit of All Commercial Banks 

https://fred.stlouisfed.org/series/TOTBKCR

davefairtex's picture
davefairtex
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Posts: 5322
wealth creation

I disagree about wealth not being created by tech.

Information creates utility - and for the most part, utility = wealth.  If you are faced with 1000 buttons you can push, one of which will give you a 1000:1 return, if you can obtain the information about which button is the correct one - that's wealth creation, because it saves you a whole lot of button-push attempts.  If you were forced to push all those buttons every day, the information about which one to push (saving you all that time & effort) would seem extremely valuable to you.  You would definitely feel "wealthier".

In WW2, allied bombers dropped bombs in the rough vicinity of the target, just hoping by luck and sheer volume to hit something important.  That was death-by-lots-of-molecules.  Now, we have laser guided bombs which we can position extremely accurately - at least by comparison.  That's a force multiplier.  If you want to destroy just one building, tech & information lets you do this with one bomb and one plane, rather than thousands of tons of bombs and hundreds of planes.  Tech is a force multiplier, and - I claim - force multipliers create wealth.

While AI won't create energy, it will allow us to use the energy we have more efficiently.  Self-driving cars allow sharing of vehicles (instead of 1 vehicle per person), as well as energy maximization (hypermiling). Is that wealth creation?  Yes.  While AI doesn't result in more cars being produced (no increased "molecule wealth"), it will be used as a force multiplier, where 1 AI-driven car can provide the same utility to society as 2 or 3 person-driven cars (increased "utility wealth").  If we are focusing on maximizing utility rather than maximizing molecules, then tech does indeed create wealth.

Likewise, if tech allows us to research and construct better batteries - that's not energy, but it allows us to substitute one form of energy (electricity) for another (liquid fuels).  It takes windmill electricity and turns it into gasoline - more or less.  The better we can do this, the wealthier we will be.

Lastly, fabricating solar panels also doesn't create energy, but it does provide us with a tool to convert the energy from a less useful form (sunlight) to a more useful form (electricity).  That's wealth creation once more.

Information is all about being wrong less often.  You know which company to invest in, which button to push, which store has the product you want, which route you should take, which drill site is likely to result in a successful well, and so on.  Having the right information is an energy/force/molecule multiplier.

And that's wealth.  Sure, you still have to have the molecules, but you don't need nearly as many if you have the right information to start with.

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Mark_BC
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Posts: 470
davefairtex wrote: I
davefairtex wrote:

I disagree about wealth not being created by tech.

Information creates utility - and for the most part, utility = wealth.  If you are faced with 1000 buttons you can push, one of which will give you a 1000:1 return, if you can obtain the information about which button is the correct one - that's wealth creation, because it saves you a whole lot of button-push attempts.  If you were forced to push all those buttons every day, the information about which one to push (saving you all that time & effort) would seem extremely valuable to you.  You would definitely feel "wealthier".

In WW2, allied bombers dropped bombs in the rough vicinity of the target, just hoping by luck and sheer volume to hit something important.  That was death-by-lots-of-molecules.  Now, we have laser guided bombs which we can position extremely accurately - at least by comparison.  That's a force multiplier.  If you want to destroy just one building, tech & information lets you do this with one bomb and one plane, rather than thousands of tons of bombs and hundreds of planes.  Tech is a force multiplier, and - I claim - force multipliers create wealth.

While AI won't create energy, it will allow us to use the energy we have more efficiently.  Self-driving cars allow sharing of vehicles (instead of 1 vehicle per person), as well as energy maximization (hypermiling). Is that wealth creation?  Yes.  While AI doesn't result in more cars being produced (no increased "molecule wealth"), it will be used as a force multiplier, where 1 AI-driven car can provide the same utility to society as 2 or 3 person-driven cars (increased "utility wealth").  If we are focusing on maximizing utility rather than maximizing molecules, then tech does indeed create wealth.

Likewise, if tech allows us to research and construct better batteries - that's not energy, but it allows us to substitute one form of energy (electricity) for another (liquid fuels).  It takes windmill electricity and turns it into gasoline - more or less.  The better we can do this, the wealthier we will be.

Lastly, fabricating solar panels also doesn't create energy, but it does provide us with a tool to convert the energy from a less useful form (sunlight) to a more useful form (electricity).  That's wealth creation once more.

I don't disagree with your rationale; likely our disagreement is in the definition of "wealth". As I said, "digital technology... is merely a means of information manipulation and transfer which can definitely improve our lives and make our secondary wealth (traditional industries) more efficient," which I think exactly agrees with your arguments above.

Is that wealth? I suppose so but I don't think there is a direct link between efficiencies brought on by AI necessarily improving the lives of the masses (which is why I slotted it between secondary and tertiary wealth -- "AI wealth". It isn't tangible but it isn't as vacuous as the financial system).

If the human population was 1 billion and stayed there, and if we had a fair wealth distribution / allocation system, then all this recent AI development would definitely mean we could waste less resources to do a task and at the same time spend more time in the pool drinking cocktails while robots do half the work we used to. I would call that wealth generation.

But instead we have an ever-expanding population (which may or may not stop on its own accord), which demands ever more natural resources with dropping EROEI's, which means that the improving efficiencies could merely be offsetting declines in total primary wealth available. Which of those two opposing forces wins out -- dropping EROEI's of our remaining energy sources and increasing population demanding more natural resources, versus increasing efficiencies in how we find and use resources... I don't know. I would say that on a global basis, the efficiency side has been winning since the developing world has seen a substantial increase in living standards, even though the western world has mostly stood still or regressed.

As to my "fair wealth distribution system" statement, I do not see that happening at all. The efficiencies and "wealth" brought on by AI have by in large NOT been enjoyed by the middle class. Instead, what we have seen is AI displacing workers which is throwing western economies into shambles and will only worsen. The unemployed as a whole have no way of benefiting from this "AI wealth effect" beyond basic welfare checks / cheques from the government to keep them alive. Even China faces this same problem, which they are fully aware of, and why they are scared of a financial meltdown which would destroy the consumptive power of the rest of the world and throw half of their factory workforce out of work. Even people that retain their job have not seen any improvement in their real inflation-adjusted wage since the invention of AI. Who does benefit immensely from AI in the workforce, though, is those at the top who see dropping production costs. I can say that that isn't me...

What the average person does enjoy because of AI is relatively inexpensive smartphones and access to the internet. I think this is a fantastic development, one of the greatest achievements of humanity. As to whether this makes the average person better off, I guess it depends on the person... it seems many people these days are losing touch with the real world due to addiction to their phones. The information provided to us by the internet is a plus, but overall I think it would probably be balanced by all the other negatives.

All in all, because of the above, I argue that the rise of AI has NOT improved our wealth, which would be consistent with comparisons of the purchasing power of the average westerner between 1950 and 2018 for stuff that really counts -- food, energy and shelter. Our lives aren't that much more awesome than they were 50 years ago.

As to solar panels creating wealth, I would definitely agree, if they ever reached any sizable proportion of the energy mix, and were not being outpaced by growth of traditional fossil fuel consumption.

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AKGrannyWGrit
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Tech = Wealth- Nope

Information creates utility - and for the most part, utility = wealth.  If you are faced with 1000 buttons you can push, one of which will give you a 1000:1 return, if you can obtain the information about which button is the correct one - that's wealth creation, because it saves you a whole lot of button-push attempts.  If you were forced to push all those buttons every day, the information about which one to push (saving you all that time & effort) would seem extremely valuable to you.  You would definitely feel "wealthier".

You mean like data collection of the masses so marketing can be specific and targeted thus knowing what buttons to push becomes extremely valuable to corporate and government interests thus making THEM wealthier. 

In WW2, allied bombers dropped bombs in the rough vicinity of the target, just hoping by luck and sheer volume to hit something important.  That was death-by-lots-of-molecules.  Now, we have laser guided bombs which we can position extremely accurately - at least by comparison.  That's a force multiplier.  If you want to destroy just one building, tech & information lets you do this with one bomb and one plane, rather than thousands of tons of bombs and hundreds of planes.  Tech is a force multiplier, and - I claim - force multipliers create wealth.

What, WHAT, are you crazy? Laser guided bombs that are extremely accurate.  You mean like gigantic, mega, kill-em lots bombs that can take out 25 million people.  The problem with force multipliers is that they get out of hand and in the wrong hands.  Force multipliers create wealth, of course, it's called coercion.

"Coercion = the practice of persuading someone to do something by using FORCE or threats"  Yep, it's been VERY effective in creating wealth!!  Sadly.

While AI won't create energy, it will allow us to use the energy we have more efficiently.  Self-driving cars allow sharing of vehicles (instead of 1 vehicle per person), as well as energy maximization (hypermiling). Is that wealth creation?  Yes.  While AI doesn't result in more cars being produced (no increased "molecule wealth"), it will be used as a force multiplier, where 1 AI-driven car can provide the same utility to society as 2 or 3 person-driven cars (increased "utility wealth").  If we are focusing on maximizing utility rather than maximizing molecules, then tech does indeed create

Again, weath creation for WHOM.  As soon as we don't have free choice of 1 car, 1 driver but are forced into 2 or 3 person driven cars that's not wealth creation, that's slavery.

Dave your argument is indeed logical, yes let's maximize utility, but an extremely likelihood it will be at the expense of freedom and choice.  That's not wealth that's a nightmare. A nightmare our children will live in.

As always, it's a matter of perspective.

AKGranny

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mememonkey
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Posts: 248
Useless Dialectic
JohnH123 wrote:

I appreciate that MKI is providing counter balance to Chris's arguments. If we are to find the truth here, we need to look at all angles and respect those who thoughtfully disagree.

I think most of us appreciate well thought out counter arguments and challenges to what is presented here.

Someone Like Dave F will challenge Chris and others all the time.  The difference is that he uses logic, intellectual depth and data and he responds on point to refute or challenge something.

The resulting dialectic is educational and illuminating and regardless of whether I am persuaded by one side or the other, It typically will expand the context of an issue or add nuance for me.

I consider well thought out debate and counter arguments to one of the primary benefits that I get from this site and community.

MKI on the other hand:

  • Uses  primarily inductive reasoning coupled with anecdotal observations to refute well thought out positions and analysis that are grounded in data and deductive logic
  • Claims to use data but never seems to present any data or quantify anything to buttress his points
  • Makes gross misstatements of facts
  • Draws simplistic self referential conclusions from broad generalizations.  
  • Does not respond to well thought out and cogent counter arguments that refute his mistakes and assumptions.
  • Smugly dismisses said counter points with "I was not impressed" offering no substantive refutation of any counter points.
  • This form of "debate or counter argument" is basically useless for "finding truth"  and bordering on troll like behavior I have to agree with Broadspectrum, that it is a waste of time to engage with MKI

Mememonkey

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davefairtex
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what is wealth

Ok, lots of good points.  :)

I agree that the benefits of AI-wealth will - almost certainly - be unevenly spread across the landscape.  Owners of capital will almost certainly benefit more from AI than labor.

But "means of production" is definitely still wealth, so my point is valid - even if it is unsatisfying.  You can't say "hey, that's not wealth because the rich get richer."

For me, since I'm not a taxi driver, and I think a car is a PITA, I will feel my wealth increase when I can get the benefits of transport on an ad-hoc basis without having to plunk down the 30k on a new car.  Energy overall will be saved on both ends.  For sure, winners & losers will change, but overall more "transportation utility" society-wide will be created through the self driving car, using fewer molecules and (presumably) less energy to do it.

As for human reproduction not slowing down - look at the demographics of Germany, Japan, Italy, Greece, among others.  A stat I quoted in my weekly report: female fertility in Italy was 1.34.  This shocked me.  Half of the Italian population will vanish in the next 60 years from that effect.  For sure that's not Africa, but its a datapoint.  The conspiracy-lover in me wonders how that came to pass.

As for laser guided bombs - the first thing you do after obtaining "redistributable wealth" is figuring out how to keep it from the hands of those who want to practice some redistribution.  Military effectiveness is most definitely wealth, and it is a required adjunct to owning any molecule-wealth.  Of course military effectiveness can be used for bad things as well - but that's still wealth.  Capability = wealth, and tech makes the same number of bomb-molecules a lot more effective than they were before.  Doesn't matter how many gold bars you have, if you can't protect them, you might as well not own them.

And even if you don't like the implications, the thing could still be wealth.  Information about "what people like" - that's wealth.  Its how Facebook makes money.  Is that primary wealth?  There are no molecules involved, but boy, as long as money exists, advertisers will want to connect with potential customers through this channel, enabling Facebook to receive an income stream.

Information is definitely wealth - and if you are the only one with the information...it can make you rich, or get you killed, or first one than the other...

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fionnbharr
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The Six Stages of Awareness
MKI wrote:

Finn, I don't waste time on fruitless disagreements. I've said my piece there, am unimpressed with the responses, and so politely withdrew. Regarding the vids: is it so inconceivable to you that I've watched them yet believe what I do? Well, if it makes you feel better, I have and do. Cheers, & enjoy this fine day!

MK1,

I sincerely believe that you haven't paid enough attention to the details within the Crash Course series. No matter that you've aired them in the comfort of your home, is it inconcievable that you've missed there depth and nuance?

Frankly, I have agreement with Broadspectrum and Mememonkey about your actions on this site. To me, that you'd choose one of the very best resources on the net to bandy dispute upon elements that have been written in stone through a multiple number of noted debates and counter debates here for ten years is staggering.

This website is a tool for information and support. It isn't an echo chamber filled with apes in trees hurling fecal matter at each other with their thumbless mitts. Some of the most accredited people write, share, learn and teach here from all four corners of the spectrum.

This website is also a search facility that you can find clear detail if you know how to use it and where to look. The fact you've already had a 9 year head start on those who may be reading the opening article of this thread as Peak Prosperity newbies beggars belief - I'd expect such comment' from people who had less exposure.

In October 2008, Chris Martenson wrote an article called The Six Stages of Awareness, reproduced below, since again, I don't believe you'd find it for looking.

Question: which stage are you at?

The Six Stages of Awareness

Wednesday, October 8, 2008, 3:04 PM 

The text below is from a past Crash Course seminar.  It is a very loose adaptation of Elisabeth Kübler-Ross' "Five Stages of Grief."

Often a broad new awareness results in a series of emotional responses that mimic the grief associated with loss.  I call these the Six Stages of Awareness.

Each of us here is somewhere along this progression.  Most of us will inevitably pass through all six stages, each at a different speed, not always in order, and some will skip stages.

While we read or hear each others' comments at this site and elsewhere, my hope is that we can find acceptance and understanding of the fact that each person is naturally at a different stage of acceptance and awareness. 

Each person needs to process the stage they are currently in (within normal bounds of civility and appropriateness, of course) and deserves the support of others as they progress at their own pace.

(The following was spoken at a seminar:)

Today is about examining data in a whole new way.   I am going to provide you with a new framework for viewing this data, a scaffolding on which to drape this data, that is probably built a little differently than the framework you already have.  The information is absolutely vital and critical to your future, but it will be worthless if we examine it in the same way that it has been presented to us by what I’ll term ‘our popular culture.’

So your first opportunity today will be the opportunity to change your thinking.

I must warn you, this will not be easy for some.  I know this from experience.  You may well find yourself progressing through something akin to the five stages of grief throughout the day and throughout the next few months.  Awareness can be troubling enough to mirror the process of grief, and knowing this can be important in grounding oneself.

So let's now progress through some examples of what you might experience at each of the six stages.

The Six Stages of Awareness

STAGE 1:  You might begin with a series of statements to yourself, such as, “No way can this be true.  There must be alternative explanations.  This simply can’t be; I would have heard about it.”  To help speed you through this stage of denial, I offer you access to the source data so that you can check it for yourself.  Further, I only draw upon sources that I believe most reasonable people would consider to be highly credible.  If you can view all of the data that I will present and find some alternative set of explanations as to why and how all of these things will not matter, I need you to share this with me, pronto.

STAGE 2:  Next, you might find yourself full of anger, saying to yourself (and possibly your loved ones and anybody else who will listen), “Aaaaarghh!!!  Those bastards at the Fed, in the government, in media, have been hiding things from me, lying, and serving their own interests at my expense. How dare they!!!"  While anger is a perfectly normal and even healthy stage to pass though, it is also counterproductive, in the sense that anger often serves to inhibit action…and as you’ll see later, we don’t really have a lot of time to spend in the non-solution stage. So for everybody’s sake, you need to move through this phase as rapidly as possible.  This is also why you will not find me assigning blame and pointing fingers.   Blame leads to anger and often a sense of victimization – both of which serve to inhibit taking action.  Further, the "blame game" only serves to polarize people into opposing teams - and we’re all on the same team in the end.

STAGE 3:  The next stage is bargaining.  Here you might find yourself thinking such thoughts as, “If I simply change a few things in my life, perhaps that will be sufficient and I won’t have to really change.  I’ll use efficient light bulbs, buy a Prius, and save more each year.”  You will find yourself bargaining with the data for more time, a different outcome, perhaps for a miracle to emerge.  Perhaps some new technology will arise that will give us abundant and limitless energy, or we'll elect a new president capable of speaking the truth and marshaling the considerable talents and energy of this country.  This, too, is a stage, and I’ve assembled a framework for understanding in such a way as to help you understand the critical difference between wishful thinking and realistic solutions.  Please understand that I am not going to purposely step on your hopes – I am as hopeful as anybody you will ever meet – it’s just that I want our collective hopes to be placed in the right places, where they can do us some good.  My hopes center on the tremendous reservoirs of talent, energy, and problem-solving that reside in this country, this community, and this room.  I am confident that we will pull through all of the problems that we are about to discuss and that we can do it with joy, verve, and excitement.  Misplaced hopes and defective strategies, on the other hand, will only let us down in the future, as they fail to deliver.

STAGE 4:  The next stage is fear, and it can take many shapes. “I’m going to die broke.  People will come out of the cities and eat all my food and harm my family.  The future is going to be unbearably bleak.   I might die.  I might starve.   I’m not built for a world that mirrors the dystopian nightmare of Mad Max.”  It is important to name these fears and confront them directly.  Trying to ignore or stuff them away is simply a recipe to assure that they linger deep down, infecting your dreams and fostering paralysis.  Fears are debilitating.  They will prevent you from acting and they will ultimately erode your physical well-being.  Most of these fears are grounded in the knowledge that our social, energy, and food networks are, for the most part, unnecessarily complicated and often wafer-thin.  How will they operate in a more challenging environment?   We don’t really know, and it’s that uncertainty which creates a deep sense of unease.  Our food supply is both robust and fragile.  If the continuous parade of trucks ever stopped rolling, for any reason, nearly all communities would find their store shelves stripped bare within 2-3 days.  In fact, when we peel back the covers and examine each aspect of our various support systems, we find that they are nearly all built upon the implicit assumption that the future will be pretty much exactly like today.  But what if it’s not?   For myself, the only answer was to actively take steps to address each of my most basic fears.  Imagine that you live in a maze made out of some flammable material and you have a fear of being caught in a fire in the maze.   How could you reduce your fear?  One way would be to familiarize yourself with the way out.  Another might be to leave the maze and live somewhere else.  Attempting to ignore the fear is not a strategy, because you would still know, on some level, that even though you are ignoring the fear, the risk remains…and so will the fear.   The easiest way to reduce fear is to take concrete actions to reduce risk. 

STAGE 5:  The most critical stage to navigate is depression.  With a realistic assessment of our predicament, it is extremely common for people to begin to harbor such thoughts as, “Crap, we’re screwed. What’s the point?  I am powerless to do anything about this.  There’s nothing that any of us can do, anyway.”  At this stage, dark fantasies of the future begin to creep into our thoughts, and fear paralyzes our ability to think, let alone act. It is my goal to help you limit this stage to the absolute shortest possible time – perhaps we can find a way to bypass it altogether.

STAGE 6:  The final stage is acceptance.  You will know you are here when you begin to think, “However we got here is unimportant – it is what it is.  Let’s figure out how to navigate the future with the tools and advantages we’ve got, not what we wish we had.”  With acceptance comes peace, a sense of calm, and the ability to think clearly and take actions.  However, acceptance and urgency can co-exist, and I do not mean to imply otherwise. 

Working through these stages is not a one-way trip.  I, myself, cycle through stages #4 (fear) and #6 (acceptance) pretty routinely, but spend less and less time in #4 with every pass.  What I hope you take away from this is that wherever you happen to be in these six stages will almost certainly shift over time.  If you are uncomfortable with where you are in this process, know that it is temporary.  My audacious, gigantic goal is to enable you to move through each of the six stages faster and more smoothly than I did.

Lastly, please remember that everybody is somewhere along this curve, and my experience is that the people who are further along tend to catch grief from the people who are not.   I ask that you be as respectful as possible of those who are in a slightly different place with all this.  Know that where they are is right where they need to be at this moment.  We can all benefit tremendously from supporting each other through this process.

Finn

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AKGrannyWGrit
Status: Gold Member (Offline)
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Posts: 460
Dave We Disagree

The definition of wealth

Wealth is the abundance of valuable resources or valuable material possessions. This includes the core meaning as held in the originating old English word weal, which is from an Indo-European word stem.[1] An individual, community, region or country that possesses an abundance of such possessions or resources to the benefit of the common good is known as wealthy.

"But "means of production" is definitely still wealth, so my point is valid - even if it is unsatisfying.  You can't say "hey, that's not wealth because the rich get richer."

Ah but I can indeed say that because slave labor does not make the rich wealthy, just rich.  

.  "Military effectiveness is most definitely wealth, a......."

Nope, assets yes, currency, riches but not wealth.

Here is the disconnect in our discussion.

"The difference between being rich and being wealthy is knowledge.  Wealthy people know how to make money while rich people only have money.  Rich people are motivated by money but wealthy people are motivated by their dreams, purpose and passion. "

As stated in the definition "an abundance .... to the benefit of the common good.  Wealth is positive, and good and honorable.  Riches No.  Dictators are rich but not wealthy.

Perhaps military conquest, slavery, means or production regardless of ill-be-gotten gains, murder, coercion and all manner of despicable methods of acquiring assets can be mistakenly called wealth, but it's not, it's assets, riches and plunder.  Wealth is honorable! There is nothing honorable in using others or killing to acquire plunder.

And so we disagree on the definition. Consider, an honest man with integrity, joy and purpose, though he be poor can be wealthy beyond description because he has abundance of valuable resources.

AKGrannyWGrit

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AKGrannyWGrit
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Posts: 460
For You Dave

 

From the movie Fiddler on The Roof.  Spoiler alert, the family was wealthy but poor.  The Dictator who banished them from their land was rich but not wealthy.  Regardless, the two are used interchangeably. Enjoy

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davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5322
definitions

Sure, I can see by one of your definitions, for you to consider something to be "wealth" it must also drop into the "good" category.

But your last sentence confuses me, because it appears to stray a bit from this.  Vis:

And so we disagree on the definition. Consider, an honest man with integrity, joy and purpose, though he be poor can be wealthy beyond description because he has abundance of valuable resources.

I'm all for the meaning of what you say.  Happiness is definitely wealth, because it is elusive, it is something everyone wants - and people are quite clearly willing to do all sorts of things to achieve it.  "Most everything you want, you want it because you believe that by getting it, it will make you happy."

I also think that the definition of "valuable" is situational.  If you are hungry, food takes on a much higher value for you than it does when you are not hungry.  Generally speaking.

So, a good general statement might be, a "valuable resource" is something that meets a need that you have now, or might have in the future.  It might be scarce, or powerful, or beautiful, or nourishing, it might keep you warm, or power your car, or it could be tasty, it might keep you afloat in the open water after the plane crash, or it might dispatch your enemies into oblivion.  It could be knowing just the right person at the local precinct, or it might just be something that reminds you of your mom, long after she has passed away.

And that brings us back to laser guided bombs.  A laser guided bomb could easily qualify as a valuable resource, if you had someone you really needed to blow up.  In the right set of circumstances, there's just no replacing a laser guided bomb with something else. If you were living in 1944, and you really needed to kill Hitler, that laser-guided bomb would have been just the thing.

Wealth = abundance of valuable resources.  Valuable = something that meets a need you have.  Need = changes with the situation.

Great Wealth = the ability to meet your needs easily, almost regardless of situation.  Note: this definition easily encompasses happiness, inner peace, and so on.  A person's "ability to be happy" mostly independently of circumstance is also a measure of wealth, at least by my definition of meeting needs.

 

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AKGrannyWGrit
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Posts: 460
Thanks Dave

Dave, You have done a good job of breaking down each word and defining them.  

"Wealth = an abundance of valuable resources". Concrete, specific and simple. Slavery could be considered a natural resource. Slaughter bots, drones and laser guided bombs, heroine, meth, and all manner of black market goods like rhino horns. Valuable resources indeed.  

I "believe" that true wealth is acquired from, as I referenced previously, from dreams, purpose and passion.  It's black and white for me, real wealth only comes from that which is good, and positive.  Riches, assets, and plunder are not wealth.  Yes, I get  it they are all interchangeable to most people. It's like James Howard Kuntsler says " anything goes and nothing matters."  No distinction need be made.  

I disagree, I liked the world better when there was a distinction.  Honor and integrity were words that used to be important as well.

AKG

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Snydeman
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Posts: 496
Zoinks

 Mememonkey, you nailed it on the head regarding MK1. If he would actually use data, source it so that others could also see it, and quit it with the fluffy anecdotal statements, his views would be given credence. Having been warned of this several times by me and others, he persists still, so I can only assume he doesn’t have the ability to do so. MK1 could learn a lot from the civil and intellectual discourse going on between Dave, Granny, and Mark.

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davefairtex
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Posts: 5322
free will

As you know I believe that wealth is non-aligned.  It simply meets needs.  Intent has good & evil deeply embedded within it, but wealth itself is nonaligned.  As I defined it, wealth is the ability to meet your needs.  Great wealth allows you to meet your need easily.  And if what you 'need' is something basically evil...wealth will dutifully provide it for you.  Harvey Weinstein is one recent example.

You said:

I "believe" that true wealth is acquired from, as I referenced previously, from dreams, purpose and passion.

I agree with you. But like wealth, I believe that dreams, purpose, passion are also neutral words.  [I know, I cut off your subsequent explanation.]

Humans have free will.  They are allowed to have evil dreams, fell purposes, and angry passions.  Can those very real dreams, purposes, and passions lead to "true wealth"?

I'm only being pedantic here to help clarify things for myself.  What is wealth?  What should I put my effort into doing?  And why would I do it?

Does my AI that watches the market - is it wealth?  Or plunder?  Why do any of us do what we do?  What about the creators of bitcoin?  They clearly had a dream, passion, and purpose.  Is bitcoin wealth, then?

Does all purpose and passion that leads to a result emit true wealth?  Or is passion necessary, but not sufficient?

For me it all boils down to happiness & survival.  I want enough physical (and skill, and informational) wealth to meet my survival needs.  (And the odd glass of wine can't hurt either).  Happiness I sort out in other ways.  Marketing wants my happiness to come from externalities (preferably bought from them).  I try not to get sucked into that game, and mostly I succeed.

But as part of the happiness thing, there is also my desire to create.  I like writing my code because I enjoy the process of creation. Creating makes me happy.  In my definition, what I produce is wealth.  In your world - is it wealth, or plunder?

’When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

’The question is,’ said Alice, ‘whether you can make words mean so many different things.’

’The question is,’ said Humpty Dumpty, ‘which is to be master — that’s all.”

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Plunder
Quote:

 Riches, assets, and plunder are not wealth.

This reminds me of a statement that has haunted me for years. In "The Rise and Fall of the Third Reich" by William Shirer, the author said that the value of all the plunder that the Nazis stole from around Europe was less than Germany's ordinary profits had been from doing ordinary business with other countries before the war.

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Why bother?

I like your perspective Broadspectrum. I would also add that as Chris has often noted, when belief systems become challenged, emotions can run high.

The comments from MKI obviously do raise some hackles but on the positive side, it also presents an opportunity to examine or reexamine the basic concepts of our predicament and the facts which form the basis of that predicament.

IMHO, there is a sizable portion of the population that will never accept the facts as presented nor choose to delve into their own examination of the data. Whatever the personal motive in desiring to challenge a body of work presented for critical evaluation, I can only wish that it would be for a beneficial cause to improve or refine the actionable things individuals can/would do to make the transition to a care giving approach to our planet.

Extraction of wealth (resources) for our own benefit is probably a very basic drive to life itself. Humanity in all of its wisdom (technology) has yet to demonstrate that it has the ability to rise above that drive to create a stable and balanced ecosystem for life in all its forms.

As regards wealth creation, if humanity could accomplish this one feat, I say we would be a very valuable resource to the planet.

Coop

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ckessel wrote:   The
ckessel wrote:

 

The comments from MKI obviously do raise some hackles but on the positive side, it also presents an opportunity to examine or reexamine the basic concepts of our predicament and the facts which form the basis of that predicament.

I heartily agree, and nothing fills me with glee like being confronted with a false stereotype I never knew I had, a faulty assumption I never realized I held, or a paradigm that deserved to be shifted. That is the essence of growth and change, both of which I embrace as a facet of a meaningful life. Alas, my paradigms don't get shifted with the kinds of remarks MK1 puts forth, because there's no substance behind them I can chew on, process, and integrate into my thinking. It's just like icing on a cake; tasty, perhaps, but ultimately un-filling.

I've had lots of my views challenged by what I read on PP, and every single one of them was a result of the kind of analytical or well-reasoned approach almost every PPer embraces as par for the course here.

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Let's Muddy The Water

Humans have free will.  They are allowed to have evil dreams, fell purposes, and angry passions.  Can those very real dreams, purposes, and passions lead to "true wealth"?

My answer is "it depends", did a persons actions cause harm? in the original definition it says "to the benefit of the common good is known as wealth".Again, any gain gotten from harm, evil or from less than honorable manner is not wealth.  It's riches, assets or plunder, in my opinion, of course.

But as part of the happiness thing, there is also my desire to create.  I like writing my code because I enjoy the process of creation. Creating makes me happy.  In my definition, what I produce is wealth.  In your world - is it wealth, or plunder?

Interesting observation Dave.  Does creating really make you happy?  What is happiness?  What about satisfaction and contentment? Your coding is a tool.  And at the end of the day, or the end of our life, we each must look in the mirror, or inward, or in the face of our god, and evaluate if the earth is better because our feet walked on it.  

My definition of happiness is that it's the emotion that's superficial, fleeting, temporary.  A more desirable state of being would be contentment and satisfaction.  Perhaps our observations of the most desirable state of being changes with age and our journey in life.

Good discussion Dave.  Perspective is like noses, we each have one, and they are not the same.  I would enjoy sharing the glass if wine-you sepeak of.

Cheers

AKG

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Hmmmmmm?

UT: I appreciate your faith in human progress, MKI, but I expect it smacks somewhat of human hubris.

Look, I have no "faith" in human progress at all. It's just an objective fact that humans had massive economic growth over the last 300 years (which includes my entire life). No faith needed here. To think this will suddenly change in the last half of my life due to lack of energy (or whatever) is a prediction, and one I'm not bold enough to make. To think growth will "probably" continue over my lifetime is also a prediction, yes, but it's the least "hubris based" prediction a humble person can hold. And it's been a very profitable view to hold over my entire life so far, of which 40% of these considerable profits now sit in physical gold & real estate, which is fairly tangible. I've had no Road to Damascus moment. But boy, it sure seems like many here have a religious fervor & faith in their energy acumen that I lack. I'm just a plodding PE too skeptical for bold claims.

To wit: You showed a graph of energy use...I can only assume you are making the claim that this energy use is the "cause" of our economic growth (not merely that we waste so much energy because we are so rich)? If so, I would note this hasn't been proven or disproved. It's just a theory. I've examined it, and found it possible yet unconvincing. I'm afraid I lack such faith. Myself, I could easily see people cutting their energy use back 75% yet still living a very high standard of living AND increasing worldwide GDP at the same time (hell many could move to town and cut half of their 70% oil barrel used for transportation and we would all be better off). Or finding a new replacement like we did with oil. I have no idea and make no prediction. What do I know? All I know is that I have no faith whatsoever about humans. I'm merely projecting forward based on the recent past. Could this all change tomorrow, especially with war or some Black Swan? Sure. But this speculation won't effect my investment strategy.

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I'm just going to say it.

You, sir, are an idiot.

 

There, I said it.

 

You do not seem to understand the costs that sprawl beyond monetary value, nor do you take into account any statistical analysis presented to you in any way, shape, or form. You have not acknowledged nor competently argued any facts presented to you by people whose opinions I may not share, yet whose data I trust. You are a shiv, and a bad one at that.

 

Chris and Adam, I understand if this gets me banned from PP for a bit. I deserve it, and I'll take it readily for the community at large.

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Exponentisl function

MKI,

Have you considered the exponential function as it applies to just about just about every function in today’s Economy, Energy, & the Environment?  One would be hard pressed to find examples of simple linear functions in regards to the 3E’s.  This world is currently in a state of stable instability.  The past 40 years of “success” (growth) or whatever you like to call it is largely irrelevant to the next 40+ years.  You can claim many here at PP have a religious-like faith in their beliefs about the 3E’s.  I would argue quite the opposite; a majority of the crowd at PP believe in simple math.  Few (highly educated) people in society have any type of understanding how quickly things can happen with doubling times and the exponential function on the steeper part of the curve (ie the eye dropper filling a football stadium with water at an exponential rate or the lily pad in a lake examples).

https://www.peakprosperity.com/blog/86131/compounding-problem-crash-course-chapter-4

 

 

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MKI wrote: To wit: You
MKI wrote:

To wit: You showed a graph of energy use...I can only assume you are making the claim that this energy use is the "cause" of our economic growth (not merely that we waste so much energy because we are so rich)? If so, I would note this hasn't been proven or disproved. It's just a theory. I've examined it, and found it possible yet unconvincing. I'm afraid I lack such faith.

Oh, Jesus Christ. You've examined it and found it lacking? Explain exactly how it is lacking, maybe? It isn't a theory, it is statistical fact. I've examined quantum theory on my left toenail and found it lacking, too, but that doesn't mean quantum physics aren't true.

MKI wrote:

  Or finding a new replacement like we did with oil.

Please, enlighten us. Which replacement are you referring to? Warp cores? Dilithum crystals? I'm curious what technological revolution that is scale-able to global energy needs you see as on the cusp of changing our world. Please be sure to source it, if you know how. It's the "link" button on the middle of the task bar above the area where you type letters in the box thingy. If that's too complicated, I can skype with you (skype is a video chat program, where you can see each other and talk in real-time) and show you how to operate your computer...

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noses

Perspective like noses?  I heard it was opinions, and a different body part entirely. :)

I've been fortunate in my career in that I pretty much enjoy what it is I do.  And if if the fun stops for some reason, I change things around so I get back to enjoying my work once again.

Agreed, good discussion.  It has me ruminating about wealth, and meeting needs, and happiness.

I'd definitely be up for a glass of wine... :)

 

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It’s no good, I’m just going to say it......

 

i just P****d in my pants.....

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davefairtex
davefairtex wrote:

Perspective like noses?  I heard it was opinions, and a different body part entirely. :)

I've been fortunate in my career in that I pretty much enjoy what it is I do.  And if if the fun stops for some reason, I change things around so I get back to enjoying my work once again.

Agreed, good discussion.  It has me ruminating about wealth, and meeting needs, and happiness.

I'd definitely be up for a glass of wine... :)

Lol! 

Hi Dave, whilsts we are on bubbles, if you have a minute, be grateful for your view on Tether, centralised, fiat pumping machine at the heart of Crypto boom, corrupting its price discovery.??

Seems unbelievable and too opaque to trust not to break under duress.

https://steemit.com/cryptocurrency/@cryptoscopia/making-sense-of-the-tet...

Cheers

NL

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davefairtex
davefairtex wrote:

Perspective like noses?  I heard it was opinions, and a different body part entirely. :)

I've been fortunate in my career in that I pretty much enjoy what it is I do.  And if if the fun stops for some reason, I change things around so I get back to enjoying my work once again.

Agreed, good discussion.  It has me ruminating about wealth, and meeting needs, and happiness.

I'd definitely be up for a glass of wine... :)

Lol! 

Hi Dave, whilsts we are on bubbles, if you have a minute, be grateful for your view on Tether, centralised, fiat pumping machine at the heart of Crypto boom, corrupting its price discovery.??

Seems unbelievable and too opaque to trust not to break under duress.

https://steemit.com/cryptocurrency/@cryptoscopia/making-sense-of-the-tet...

Cheers

NL

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Fear of echo chambers.

I for one, welcome mk1 comments. Having someone challenge ones belief systems is good for you. It helps you to refine your own arguments. The main thing is to remain civil at all times and for it not to become personal.

I would also recommend peakresilience regulars to visit other sites that promote other world views and make challenging comments on them.

I worry that society is becoming too fragmented in which people just live inside their own echo chamber in cyberspace.

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Vance Packard - The Hidden Persuaders - 1957

Climber99,

I have an idea why I've chosen the first couple of pages of Vance Packards book as a copy and paste, leaving a link below to the complete pdf book sourced safely from Archive.org.

We are indeed governed by an algorythm echo chamber. 

The Hidden Persuaders - Vance Packard 1957

Chapter One - The Depth Approach

This book is an attempt to explore a strange and rather exotic new area of American life. It is about the large-scale efforts being made, often with impressive success, to channel our unthinking habits, our purchasing decisions, and our thought processes by the use of insights gleaned from psychiatry and the social sciences. Typically these efforts take place beneath our level of awareness; so that the appeals which move us are often, in a sense, "hidden." The result is that many of us are being influenced and manipulated, far more than we realize, in the patterns of our everyday lives.

Some of the manipulating being attempted is simply amusing. Some of it is disquieting, particularly when viewed as a portent of what may be ahead on a more intensive and effective scale for us all. Co-operative scientists have come along providentially to furnish some awesome tools.

The use of mass psychoanalysis to guide campaigns of persuasion has become the basis of a multimillion-dollar industry. Professional persuaders have seized upon it in their groping for more effective ways to sell us their wares -- whether products, ideas, attitudes, candidates, goals, or states of mind.

This depth approach to influencing our behavior is being used in many fields and is employing a variety of ingenious techniques. It is being used most extensively to affect our daily acts of consumption. The sale to us of billions of dollars' worth of United States products is being significantly affected, if not revolutionized, by this approach, which is still only barely out of its infancy. Two thirds of America's hundred largest advertisers have geared campaigns to this depth approach by using strategies inspired by what marketers call "motivation analysis."

Meanwhile, many of the nation's leading public-relations experts have been indoctrinating themselves in the lore of psychiatry and the social sciences in order to increase their skill at "engineering" our consent to their propositions. Fund raisers are turning to the depth approach to wring more money from us. A considerable and growing number of our industrial concerns (including some of the largest) are seeking to sift and mold the behavior of their personnel -- particularly their own executives -- by using psychiatric and psychological techniques. Finally, this depth approach is showing up nationally in the professional politicians' intensive use of symbol manipulation and reiteration on the voter, who more and more is treated like Pavlov's conditioned dog.

The efforts of the persuaders to probe our everyday habits for hidden meanings are often interesting purely for the flashes of revelation they offer us of ourselves. We are frequently revealed, in their findings, as comical actors in a genial if twitchy Thurberian world. The findings of the depth probers provide startling explanations for many of our daily habits and perversities. It seems that our subconscious can be pretty wild and unruly.

What the probers are looking for, of course, are the whys of our behavior, so that they can more effectively manipulate our habits and choices in their favor. This has led them to probe why we are afraid of banks; why we love those big fat cars; why we really buy homes; why men smoke cigars; why the kind of car we draw reveals the brand of gasoline we will buy; why housewives typically fall into a hypnoidal trance when they get into a supermarket; why men are drawn into auto showrooms by convertibles but end up buying sedans; why junior loves cereal that pops, snaps, and crackles.

We move from the genial world of James Thurber into the chilling world of George Orwell and his Big Brother, however, as we explore some of the extreme attempts at probing and manipulating now going on.

Certain of the probers, for example, are systematically feeling out our hidden weaknesses and frailties in the hope that they can more efficiently influence our behavior. At one of the largest advertising agencies in America psychologists on the staff are probing sample humans in an attempt to find how to identify, and beam messages to, people of high anxiety, body consciousness, hostility, passiveness, and so on. A Chicago advertising agency has been studying the housewife's menstrual cycle and its psychological concomitants in order to find the appeals that will be more effective in selling her certain food products.

Seemingly, in the probing and manipulating nothing is immune or sacred. The same Chicago ad agency has used psychiatric probing techniques on little girls. Public-relations experts are advising churchmen how they can become more effective manipulators of their congregations. In some cases these persuaders even choose our friends for us, as at a large "community of tomorrow" in Florida. Friends are furnished along with the linen by the management in offering the homes for sale. Everything comes in one big, glossy package. Somber examples of the new persuaders in action are appearing not only in merchandising but in politics and industrial relations. The national chairman of a political party indicated his merchandising approach to the election of 1956 by talking of his candidates as products to sell. In many industrial concerns now the administrative personnel are psycho-tested, and their futures all charted, by trained outside experts. And then there is the trade school in California that boasts to employers that it socially engineers its graduates so that they are, to use the phrase of an admiring trade journal, "custom-built men" guaranteed to have the right attitudes from the employer's standpoint.

Finn

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chipshot
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Human Progress and Wealth

Where would we be without fossil fuels and credit?  Our use of both is completely unsustainable, and we do a poor job of accounting for the consequences and total costs  (especially non-monetary costs related to fossil fuel use).  We can do that for a while and appear to be far wealthier than we really are, but it can't go on indefinitely.  

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Let's refine that.
climber99 wrote:

I for one, welcome mk1 comments. Having someone challenge ones belief systems is good for you. It helps you to refine your own arguments. The main thing is to remain civil at all times and for it not to become personal. I would also recommend peakresilience regulars to visit other sites that promote other world views and make challenging comments on them. I worry that society is becoming too fragmented in which people just live inside their own echo chamber in cyberspace.

While I agree with you in principle, it's too broad of a statement you've made for me to agree entirely.

For example, there are people who comprise the 'flat earth society' and they invest considerable effort in attempting to convince others of their belief that the earth is actually flat, not spherical.

I think there is indeed some benefit to wrestling with their arguments if only to hone your own.  But after you've done that once, perhaps in the 5th grade, there's nothing to be gained intellectually from the debate, except to learn better techniques for managing one's urge to roll eyes and to learn how to remain pleasant no matter what.

That is, not all arguments are worth our efforts.  Some have already been so thoroughly dispensed that there's too little to gain from using one's immensely valuable time revisiting.

Further, even if someone has an interesting counter-argument that might open my mind, if that person is utterly inflexible in their views -that is their mind is closed - then I also have to decide if that one-way street is worth my time.  It might be if the counter argument really opens up my thinking.

But if someone is offering only opinions, no data, and is unwilling to be receptive, or to address the points raised, then usually I find it's not worth anybody's time.

So I don't generally spend any time going to other sites and leaving comments because, generally speaking, the quality of the engagement is too low for me to justify it.

On the other side, I will say that when I heard Jonah Goldberg of the National Review speak (right after me a the New Orleans Investment Conference) I came away with two distinct thoughts; (1) I did not agree with many of his positions (2) I admired him enormously.

He was open, armed with facts, and strung his thoughts together in a very powerful and thoughtful way.  And he did sway my opinion in several areas, and if he and I were to sit down and really have at go at it, I bet he would expand my thinking and opinions even more.

If someone has taken the time to assemble their thoughts, test them out, and refine them, then I'm in!

But if someone is mainly lazy in their approaches, hasn't done the research, and is more or less just winging it from a base of a few sloppy personal observations then it's just not worth my time. 

Make sense?

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[deleted]

whoops wrong thread...

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Scenarios and Being Wrong

I've personally known about peak oil since around 2002. I remember being slightly worried about it then. My worries about the economy started to strengthen in 2005, but it took until August 2007 until I sold all my assets (stocks etc.) due to fears of an impending collapse. That was a pretty good bet. I remember being very concerned around 2008-2010 of a further dip down, but was again pretty fully invested during those years. Then in 2013 I thought "this is it", and have done nothing but accumulated cash since then. What has astonished me over the years is that I've looked at this for 15 years now (well, at least 12 years) and something truly cataclysmic hasn't occurred. Yes, we had a bad recession in 2008, but that never felt like the event I was expecting.
I've since run - and I continue to run - a lot of scenarios in my head and on paper and the best case I can come up with is a liquid fuel crisis "any day now" that is going to shrink the global economy by a minimum of 20%. This crisis will for certain be accompanied by reduction in travel and cut down the actual value of entitlements (pensions, social security etc.) by at least 50%. In this "best case scenario" we would eventually carry through initially with the help of less wasted electricity and in the longer run through the use of thorium reactors etc., but it would be a very painful adjustment process that would definitely take decades; in other words similar to the US great depression, except worse.
My worst case scenario is not really worth discussing, since even the though of it truly depresses me and it makes me feel clinically insane - similar to someone who's met one of the Great Old Ones from H.P. Lovecraft's novels. But the basics of it would be that the economy would disintegrate into hunter-gatherer levels in an uncertain/lengthy timeframe due to lack of energy and environmental decay through species loss/climate change that would make farming too unpredictable of an undertaking. Herding animals might still work under this scenario.
What I think will actually happen is a return to a society ca. late-1800s/early-1900s, but with more scientific knowledge and less practical understanding. For example, we would know germ theory and the importance of sanitation, we would also be well-aware of how genetics work and hence breading desired characteristics etc. would be a bit easier. Unfortunately most things we understand we could no-longer do due to the lack of energy.
Regardless of what unfolds the most obvious thing to me is that it'll all start - or be closely connected to - the liquid fuel crisis. On some level, in my case, this 15 year (or so) wait is almost like waiting being hit in the stomach with a baseball bat: it's a very, very bad - possibly fatal - experience, but you just want it over with so you can, hopefully, carry on with your life.
Peakprosperity.com is by far the only site I read, and most other places I visit are full of techno optimism, where the balanced views are at best of the John Mauldin/Doug Casey style with the author in question seeing problems on the near horizon, but believes that humanity will ultimately overcome, conquer the galaxy and boldly go where... you know the deal. One thing I can admit, even if I hate to, is that thus far I've (and dare I say, "we") have been horribly, horribly, wrong. Nothing really bad has thus far happened. In my case the wait has actually been so long now that I've started to doubt my analytical abilities, my education (formal and informal), intelligence, and even personal sanity. The only thing I'm still hanging on is that all this economic stimuli has only brought demand forward, meaning that all the spending (read: mostly malinvestments) we're doing now is money spent we simply can't spend in the 2020s or even 2030s because we've squandered the available energy and natural resources by electing to build strip malls that nobody visits and highrises nobody lives in rather than build a railway and canal infrastructure that could somewhat mitigate the coming liquid fuel crisis. Hence the baseball bat in the abdomen has transformed into a morningstar in the abdomen: a metallic spiky club that I can guarantee is a lot more painful and a lot more fatal than what we could have gotten away with if we've chosen the original baseball bat 15 years ago.
 

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The waiting

Stabu-

 

The waiting is the hardest part, at least until the next phase of this story manifests in earnest (and I think it is manifesting, almost unperceptively, at the edges). When that happens, we may look back and wish we were still waiting.

 

Enjoy the bounty while you have it, and set aside as much as possible for the future we know must come. Your mental facilities and intellect haven't failed you. You just underestimated how long the game could be drawn out, which many of us also have done. But the math is the math. As Daniel Quinn might quip, "the civilizational contraption we have built appears to be flying just fine right up to the point where it meets the ground at -9.81 m/s^2 * time." It doesn't matter how hard we pedal, and boy are the central banks pedaling (or should I say peddling?) fast!

 

I don't believe in the coming crash because Chris or Adam told me so, nor because anyone else on this site told me so for that matter. I believe it is coming because I took the data and assertions made here, verified them with my own research (spent a good year trying to punch holes in the Crash Course), thought things through with my own mind, and concluded the data supported the conclusion that the system will fail, and relatively soon. In 20 or so years, the world will look very different indeed. I don't doubt that because it isn't a "belief system," but because the data shows it must be true. Infinite growth on a finite planet is impossible, and the data shows we are hitting walls right now.

 

-Snydeman

 

PS-Chris, you nailed it!

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Cornelius999
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We've only come this far in

We've only come this far in technological development because we were lucky once.

During the Cuban Missile Crisis the common humanity and wisdom of Kennedy and Kruscheuve saved us from incineration. We may not be lucky again. Call it wealth, awareness, or humanity. 

And the UFOs may not be even bothered to disarm our nuclear weapons. We're slow learners of things that matter most!

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Stocks/Bonds

  I read the original post and since then have taken a closer look.  Netflix is one humdinger.  Even their owners say the P/E ratio is high and their banking on that to cover their recent bond sales. Only trouble is, how much of a panic does it take for their stock price to crumble to next to nothing leaving bond holders exposed. 

 There is something I read concerning the Fed.  The Fed intends to get out of the MBS business beginning this year. At present they account for about 30%+ of the purchases. FannieMae complained about not having enough money back in December. They had to go 'begging' as it was said for a few billion. 

 Where will the buyers come from to make up for the Fed being out of the game? Interest rates are currently too low to attract the necessary level of investment unless of course something happens. That something might be two fold. 

 One, interest rates will be increased which is no surprise except it won't be as much as we think.  Second, the stock market will get some air let out of it. It won't be a full on ten thousand point overnight bubble burst. It will be calculated and gradual to facilitate the movement of investors from stocks to bonds.

 Bonds are more important in the grand scheme of things. Stocks are generally speculative post IPO. They usually produce no actual benefit to the company unless it's to support borrowing as was the case with Netflix. Bonds on the other hand do more. They're actual loans. In this case the Fed purchases are to support home buyers which is more important to them than stock speculators.

 The interest rates can't be increased too much because that will make the FED's current assets less valuable plus cause problems in the secondary bond market.  It also makes government borrowing more difficult. For those reasons the primary motivator will be risk aversion from stocks that push the investor to bonds.  The Fed gets out of the bond market replaced by slightly beaten up stock traders. It won't be super dramatic and will appear almost natural.  Point is, the days of a stock market bubble are almost over.

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Cornelius999
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Having just finished " The

Having just finished " The Devil's Chessboard " I'd like to say it's essential and hair - raising reading about how TPTB ( CIA ) operated as background to Kennedy's assassination and how the deep state still operates. Compelling. Once you get over the slow start.

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Posts: 102
The waiting is also the opportunity

 Snydeman wrote  'The waiting is the hardest part, at least until the next phase of this story manifests in earnest (and I think it ismanifesting, almost unperceptively, at the edges). When that happens, we may look back and wish we were still waiting.'

I agree this is tremendously frustrating. Part of my preparation strategy is to purchase online items I see future value in. If you watch the auctions and don't get caught up in having to win there are lots of real bargains out there. Think good quality and low tech

Some of the things I've bought include-

garden tools and hand tools

a grain grinding mill

a corn sheller

several scythes 

manual juicers

mountain bike and trailor

a solar cooker

lots of preserving / canning jars ( new lids bought separately)

storage shelves

air tight plastic buckets and containers....

 

 

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