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On The New Monetary Era

Tyler Durden's picture




 

Authored by Yves Bonzon, CIO Pictet;

The US and European central banks are widely perceived as committed to a path of frantic monetisation in order to avert the risk of deflation. However, the unlimited QE (quantitative easing) of the US and its European cousin OMT (‘outright monetary transactions’ – of peripheral sovereign debt) differ significantly in terms of the likely monetary consequences on the two continents.

In the United States, the basis of the Federal Reserve’s actions has just switched around. The central bank is no longer reacting to developing tensions in the capital markets, but is giving priority to an improvement in the labour market. To achieve this aim, the Fed envisages unlimited expansion of its balance sheet through securitised mortgage purchases. In doing so, it hopes to give a decisive boost to financing conditions and to prices of tangible and intangible assets. The approach is not without risk. First, no one knows how long the central bank should influence asset prices and thus risk creating new imbalances in the allocation of capital in the US economy.

 

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At the same time, one may wonder how much unemployment is not structural, with low-skilled labour insufficiently productive to be used profitably in a developed economy in the full flux of post-industrial revolution. Faced with these uncertainties, gold seems the most likely winner from this unconventional new monetary experiment. Exceptionally, we have decided to increase our exposure to gold through mining companies.

In Europe, the ECB OMT programme certainly addresses the immediate risk of a disorderly break-up of the single currency should the southern countries fail to refinance their debt at market rates. Perversely, this lifeline for the governments concerned also allows them to postpone the necessary public-sector restructuring. Europe is therefore committed more than ever before on the road to latent deflation. Conditions look more and more like Japan, where the authorities have failed to reflate their economy decisively for over 15 years.

A new monetary era has began in the West. Its consequences will probably be very different in the United States and Europe. However, one way or the other, investors now operate under a regime of central bank asset price targeting. Everything we know about investors’ traditional reflexes and all historical points of reference are potentially invalid.

 

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Thu, 10/11/2012 - 15:05 | 2878480 vmromk
vmromk's picture

Look at those TWO SORRY ASS MOTHERFUCKERS.

Thu, 10/11/2012 - 15:08 | 2878496 Dr Paul Krugman
Dr Paul Krugman's picture

How eloquent you are.

Thu, 10/11/2012 - 15:10 | 2878510 NewThor
NewThor's picture

Does being eloquent while helping enslave the world in debt help you sleep at night, Dr.?

Thu, 10/11/2012 - 15:25 | 2878572 Sixdeuce062
Sixdeuce062's picture

"i know how to stop him" shines Ron Paul signal in the sky "You are in trouble now"

Thu, 10/11/2012 - 20:24 | 2879238 Muppet Pimp
Muppet Pimp's picture

Fuck you Paul Krugman, you and your ilk will not stop until you get a majority of the voting block of this country on the dole.  Do us all a favor and join the strike so we don't have to be reminded you still exist for awhile.  Why are you intent on turning a big portion of the country into moochers?  Welfare solves nothing, handouts solve nothing, opportunity is the way forward not handouts you douche.  If you stinking Ivory Tower economist had not created this mess you would not have to 'fix' it for us.  Oh thats right you were joking about creating a housing bubble right?  Where does the character of the people figure into your models?  You do realize once you get people on a steady diet of handouts that it destroys their will to be productive?  Who is gonna repay all this debt?  What do you have against the next generation?  You talk about how it is all good because we will all be dead, turns out we might but what about the next generation?  You are a tool for governments to overspend which is why you have a place at the times, you justify all that spending, its ok to be wasteful as hell and hire people to do nothing and send the bill to the productive.  Do you not see we are where we are from the policies you advocate?

Edit:  And why is it you only like big spending under democrat regimes?  You don't like it under Bush's recession earlier this decade, but if a D is in office, by all means spend away with no limits.  You are transparant Paul.

Thu, 10/11/2012 - 16:21 | 2878778 LongBalls
LongBalls's picture

The Fed is buying 75% (+/-) of all UST's. Under QE3 it will be buying $40B per mo. of MBS's off bank balance sheets so that the banks can in turn take that money and buy UST's. Our currency has already collapsed folks. No one is buying but the Fed either directly or indirectly less small amounts of the total auction by China etc... All that is left is the managed unwind of nations and managed decline by the Fed. of the dollar leading up to war.

Thu, 10/11/2012 - 18:09 | 2879024 asteroids
asteroids's picture

They look like they want to 69 each other.

Thu, 10/11/2012 - 15:10 | 2878490 Dr Paul Krugman
Dr Paul Krugman's picture

Who would you want deciding economic policy? 

Politicians who wait all year to address such problems as the fiscal cliff and then blabber about the data points like monkeys in a cage for months on end?  Or economists who have studied the science of monetary policy their whole lives?

Thu, 10/11/2012 - 15:10 | 2878514 TWSceptic
TWSceptic's picture

None of the above?

Thu, 10/11/2012 - 15:42 | 2878639 Bunga Bunga
Bunga Bunga's picture

He is not Austrian, he simply doesn't understand the problem.

Thu, 10/11/2012 - 15:56 | 2878699 adr
adr's picture

Exactly, let everyone figure out economic policy for themselves. Many people will fail, but at least they will figure out that path was wrong.

Instead we get a group of people who think they are smart, and know best, to make policy for everyone. Because they believe themselves to be superior, ie studied the "science" of economics for years, they will not admit or can not see that they have taken us down the wrong path. Instead of turning around, they keep heading through the mountain pass, believing the next corner will lead to open ground.

Perhaps when Krugman is the last economist left on Earth, he will admit he was wrong the whole time. If there is nobody left to hear the admission, then it doesn't count, but his conscious will be clear.

Thu, 10/11/2012 - 15:11 | 2878516 NewThor
NewThor's picture

Dr. Paul Krugman,

You're kind of like the modern day leni riefenstahl 

of the Central Banks.

 

Thu, 10/11/2012 - 17:10 | 2878911 falak pema
falak pema's picture

she had talent! misused, but true talent. 

Thu, 10/11/2012 - 15:11 | 2878519 redpill
redpill's picture

I'd settle for actual monkeys at this point.  At least they aren't pretending to do anything except fling feces.

Thu, 10/11/2012 - 15:16 | 2878539 NewThor
NewThor's picture

Monkeys also give hugs for free.

Thu, 10/11/2012 - 15:20 | 2878554 Ineverslice
Ineverslice's picture

 

Planet of the Fuckin' Apes

damn u to hell!

Thu, 10/11/2012 - 15:16 | 2878537 SafelyGraze
SafelyGraze's picture

starts off with a banging title "Domestic Sovereign Default as Optimal Redistributive Policy

the abstract says something provocative: "Default is optimal when .. public debt is high enough and its ownership is sufficiently concentrated."

but then there's all that math. minimal (and crappy) captions. weak conclusion: "We showed that domestic sovereign defaults can be rationalized as the optimal action of a utilitarian social planner that responds to distributional incentives in a model with heterogeneous agents and incomplete markets."

C-

 

Thu, 10/11/2012 - 16:10 | 2878581 blu
blu's picture

To paraphrase then: "Government default is inevitable because an unbiased central bank will lean towards rewarding the rich primarily, all other things being equal."

I'm a scientist and I can tell you this is not even science. It is common sense.

Thu, 10/11/2012 - 15:19 | 2878546 ejmoosa
ejmoosa's picture

I want the people earning the money to decide their OWN economic policies.

Thu, 10/11/2012 - 15:23 | 2878564 yogibear
yogibear's picture

What about a responsible Fed that knows when to say no to more political fiscal irresponsibility? The Fed has become a political puppet/enabler. The political members know they can continue spend and be irresponsible. Bernanke and the rest of the Fed doves can just print to cover it.

Rather than adhering to prudent lending rules, the Fed allowed relaxed lending standards and enabled the bubbles.  

 

 

Thu, 10/11/2012 - 15:27 | 2878580 legorf
legorf's picture

I vote for "the invisible hand" ... or simply said, everyone with their very own economic behavior.

We call capitalism creative destruction, but we try to prevent any destruction from happening, thus, we also prevent any recovery or "creation".

 

Thu, 10/11/2012 - 15:45 | 2878657 NewThor
NewThor's picture

Right now "The invisible hand" is holding a gun.

Thu, 10/11/2012 - 17:08 | 2878908 falak pema
falak pema's picture

the other holds a pile of fiat like a kamikaze taliban his weapon of mass destruction. 

Thu, 10/11/2012 - 16:09 | 2878747 DUNTHAT
DUNTHAT's picture

you've studied for almost 100 years and still haven't gotten it right.

markets, not macroeconomics(if there really is such a thing...)

Thu, 10/11/2012 - 16:57 | 2878819 earleflorida
earleflorida's picture

it is said we learn from our mistakes[?]... let us look at japan, shall we. the world's 3rd largest economy now being threaten'd by china... perhaps as early as 2017-20 china will be #1?  now, let us juxtapose the u.s. in this game of 3-card monty?

what we have today is a u.s. style economy mimicking the japanese 'mof',... where the bernak is playing[gambling?] and juggling dual[ing] 'Jekyll & Hyde' personalities. one as mr. zaibatsu [yin] of the 'tbft's, and his counter persona... mr. keiretsu's [yang] as a administrator of employable compassion[?], knowing the match is doomed in self destruction? please be abreast, and forewarned as you are[one hopes?]... that the chinese are already in counter-fiscal/monetary mode not to be outdone by foolish american keynesianism's.

but,... we just keep roll[e] playing 'the bouncing bubble'... whence the horizontal fiscal landscape is as steep as a catenary curve hoisted upon brittle'd green[frb/u.s.tres/ scions... where the entities become one, bursting over the self-made cliff of arrogance via ignorance!  

yet the purveyors will be long past gone and too the victors go the neo-iconoclastic maestro's of fiscal responsibility spoils! damn too hell iconoclasm, and all its sanctimonious half-truths!

long live complacency... viva mediocrity... and forever the banishment of laissez`faire--so it be written... so it be done.

jmo 

Thu, 10/11/2012 - 17:06 | 2878903 falak pema
falak pema's picture

hahahaha, good one.

The plague or the cholera.

Either its the kleptocrats or its the Dr Strangeloves of our warped university environment. When you think that more and more Harvard business school grads want to join WS; I wonder why they want to go work in a pig sty. Unless they be hogs for greed and dogs for the power breed.

Time out. As this post says, the nature of the ball game will have to change; bigtime. 

 

Thu, 10/11/2012 - 20:32 | 2879261 honestann
honestann's picture

BLATANT FRAUD
------- AKA -------
FALSE ALTERNATIVE

NOBODY should "decide economic policy".

The FACT is, economics is only valid as an "observational science", like "astronomy" for instance.  There's nothing wrong with watching how humans freely and voluntarily produce and trade goods, then writing down principles and equations... just as is done to predict orbits of planets, satellites and asteroids.

To "study monetary policy" is inherently just a reformulation of the phrase "study how to lie, cheat, steal, defraud and enslave billions of humans".  Those phrases mean PRECISELY the same thing.

Thu, 10/11/2012 - 15:09 | 2878508 Totentänzerlied
Totentänzerlied's picture

Check out that 58-59 channel, looks like the Fed finally reduced volatility somewhere!

Thu, 10/11/2012 - 15:10 | 2878509 PUD
PUD's picture

Central "banks" doing what "banks" do...seeking to get as many in debt as possible for as long as possible at as high a cost as possible. It has nothing to do with the good of humanity and everything to do with preserving the money as debt system.

The fail will be epic

Thu, 10/11/2012 - 15:18 | 2878545 steveo77
steveo77's picture

In these troubled time we should all consider a Living Will

Here is a funny one, worth 90 seconds

http://oahutrading.blogspot.com/2012/10/living-will-form.html
Thu, 10/11/2012 - 15:19 | 2878548 machineh
machineh's picture

It's a tight race this year between Ben Bernanke, Mario Draghi, and Argentina's Mercedes Marcó del Pont for the coveted Gideon Gono Prize in Central Banking.

Gono, after all, is the first central banker to make every citizen a billionaire (in the local currency).

When the going gets tough, the printers get going.

GOT TONER?

Thu, 10/11/2012 - 15:24 | 2878569 StephanStrack
StephanStrack's picture

Yeah, Both member of the Faustian school of Economics, bitches. Infinite money for all.

Thu, 10/11/2012 - 15:25 | 2878571 SilverIsKing
SilverIsKing's picture

If I were a gullible lad, I would think "improving the labour market" was cover for "helping our banker buddies."

The public will certainly have a much easier time swallowing the lie.

Thu, 10/11/2012 - 15:26 | 2878577 razorthin
razorthin's picture

Accidents can happen.

Thu, 10/11/2012 - 15:35 | 2878603 NewThor
NewThor's picture

"Accidents happen, there is one planned today."

- The Strokes

She was still sleeping; the problem will stay
One more day
Said she's not sorry the wind blows her way
Accidents happen, there's one planned today
Oh you see...

I wish it was not true
But that's the way it is
It's not your fault
That's the way it is
I'm sick of you
And that's the way it is
And will always be.

Wednesday is over, it's over again.
Said my goodbyes to the life we won't spend
Together...

I wish it was not true
But that's the way it is
It's not your fault
That's the way it is
I'm sick of you
And that's the way it is

But that's not your problem
That's not a problem
That's not my problem
That's not your problem.

 

http://www.youtube.com/watch?v=NLFkLrRs-0w

Thu, 10/11/2012 - 15:28 | 2878584 centerline
centerline's picture

The FED is trying to keep the system from imploding sooner rather than later.  Same as in the EU.

Thu, 10/11/2012 - 17:17 | 2878930 NewThor
NewThor's picture

Seeing as the Federal Reserve has run the system for 99 years,

it looks like it's all happening right on their scheduled time.

Or is that just a Co -inky- dink?

 

Thu, 10/11/2012 - 15:29 | 2878588 q99x2
q99x2's picture

My brother lived (he is still alive) to see Mubarik ousted and I will live to see Draghi and Bernanke imprisoned.

Thu, 10/11/2012 - 16:17 | 2878742 blu
blu's picture

May you live a long time.

However you will never live to witness the day when either man -- least of all both -- sees the inside of a court room.

And still. May you live a long time.

Thu, 10/11/2012 - 17:12 | 2878914 machineh
machineh's picture

Sad to say, it is somewhat more likely that we will see Bernanke and Draghi knighted, like 'Sir Alan' Greenspan.

* grabs for vomit bag and heaves *

Thu, 10/11/2012 - 21:53 | 2879479 stocktivity
stocktivity's picture

Yeah...ok...they couldn't even press charges against Corzine and you think you'll see Benny and Mario in prison? Now take your meds and go to sleep.

Thu, 10/11/2012 - 15:32 | 2878600 icanhasbailout
icanhasbailout's picture

Government borrowing leads to central bank monetization, to cover the funding shortfall.

 

Central bank monetization leads to ZIRP, to keep the interest on rapidly mouting debt from bankrupting the government further.

 

ZIRP leads to collapsing returns in the bond markets, sending investors into riskier asset classes in order to generate a return on their investments.

 

Investors take greater and greater risks as interest rates approach zero, leading to literally ludicrous (technically: "discontinuous") solutions to the problem of generating returns such as HFT, buying governments, buying Spanish government bonds, etc.

 

Ben and Co., in the face of the utter chaos his actions have wrought, wrings his hands and says, "How could I have known?"

Thu, 10/11/2012 - 15:34 | 2878614 yogibear
yogibear's picture

Both central banks are filling every void with debt. It's becoming saturated. Next game drastically devalue the currency. Maybe some huge derivative chains will implode and finish it ahead of time.

 

Thu, 10/11/2012 - 15:48 | 2878673 Bunga Bunga
Bunga Bunga's picture

Money lost its gold corset, now it is losing its debt corset. Without money retaining any value economy will end up as centrally planned insanity.

Thu, 10/11/2012 - 16:16 | 2878764 blu
blu's picture

Once money has no value, there can be no monetary system. The entire artifice evaporates at dawn like the fog from which it was made in the first place. With it evaporates debt, and the notion of solvency, and 1,000 years of liquidity. Gone with the light of sunrise.

Once money has no value, we'll awake from this strange dream and wonder what all the fuss was about.

Thu, 10/11/2012 - 17:15 | 2878919 toomanyfakecons...
toomanyfakeconservatives's picture

The Federal Reserve Note is debt-slavery without the chains, pure and simple. I would say once money HAS VALUE, we'll awake from this strange dream. The FRN needs to be replaced with a legitimate equity-backed Treasury Note (backed by PMs/commodities), flushing Unconstitutional fiat money down the hole forever..

 

The dream you speak of is the precarious state of the world today because the U.S. has thus far failed to regin in, arrest, and convict 40 years worth of financial-political criminals. Debt-slavery cannot end until MASS ARRESTS and trials for the guilty occur... http://tinyurl.com/cd5cyjo/

Thu, 10/11/2012 - 20:26 | 2879245 honestann
honestann's picture

"BACKED-BY"
  ---- equals ----
TOTALLY CORRUPT

There are ZERO legitimate reasons to have money or currency "backed-by" anything.  Once you accept the notion of "backed-by", the predators have already won.

What is wrong with buying stuff with grams of real, physical gold (coins, wafers, etc)?

Answer: NOTHING.

In fact, the moment you accept anything other than real, physical, valuable goods in exchange for the goods you produce, ethics vanish, honesty vanishes, and invariably the predators win.  EVERY SINGLE TIME.

And it cannot be otherwise.

STOP letting predators insert nothings (fictions) into your behavior.  That's all the predators need to do to completely enslave you and everyone else... simply convince you to accept ONE of their fictions (much less thousands of fictions).

Why cannot regular folks STOP supporting the predators schemes?  Why do regular folks feel compelled to openly allow craven predators to pay in worthless pieces of paper when they could simply receive real, phyiscal gold and silver coins?  Why?  That's all honest people need to do is eliminate all the fictions from their dealings, and the predator-class would be defeated.

Why is this so difficult?

Answer:  Because humans are dumber than rocks.

Okay, but they don't have to be... so why not make an effort, folks?

Fri, 10/12/2012 - 02:05 | 2880086 Radical Marijuana
Radical Marijuana's picture

Well, honestann, what do you have to say about the reality of robbery?  I am not asking for a "we should" statement! My view is that there is no difference between predators and parasites, except the sizes they come packaged in. I OBSERVE, as another "observational science" that ecologies everywhere, over and over again, evolved trophic layers, with systems of prey, limited by predator/parasites. I note that in relatively stablized systems, that evolves to be almost half prey, and almost half predator/parasites, with a slight advantage to the prey.

My use of language does NOT draw a fundamental distinction between the PRODUCING PREY, versus the consuming predator/parasites. Rather, I see the prey as being, on yet another level, predator/parasites.  I.e., herbs, herbivores, and carnivores. In the context of the established human ecology and political economy, the metaphorical system has developed to be a vast herd of brain dead sheep-people, controlled by a small herd of wolf-people. (It is made somewhat hyper-bizarre by the fact that they are still members of one species, and can interbreed, and so, it is way more cultural than genetic.) The same basic ecological problems were being resolved by the same energy laws and general systems as found throughout countless other evolving ecologies.

Anyway, I START with SUBTRACTION, which then defines the ROBBERY, as my basic concepts. I see that the producing prey are limited, because the natural environment is limited, and there are both natural selection, as well as, for us, artificial selection processes that evolve systematic limitations. (I see intelligence as the internalization of natural selection.) I see the way that our top human carnivores do that as being their expedient solutions which benefit them. I do not see any other better solutions, except for the sheeple to become better wolves.

I see that all other ecologies have an effective arms race between their different components. I see that our current human problem is that the prey people, the sheeple, do act "dummer than rocks," which makes it way too easy for the predator/parasite people to get away with what they are doing. However, I still insist that there MUST be some ecological system, and therefore, the realities BE some organized systems of robbery, (based on perceiving some organized system of subtracted parts from the Whole) and that MUST continue to exist, as long as human beings survive, and continue to tell stories to each other ...

Fri, 10/12/2012 - 21:28 | 2883703 honestann
honestann's picture

What do I say about "the reality of robbery"?  Well, sure, "robbery" is "physically taking what someone else produced", so that is a 100% real phenomenon.  Well, the "taking" part is certainly 100% real, and the identification of a real, physical "producer" of the real, physical "goods" is also 100% real.  So labeling of "physical taking from a producer" as "robbery" may sound abstract, but is just shorthand for a 100% real action.  However, I would note that assigning a negative connotation to "robbery" requires an "ethics" of sort --- and ethics that identifies and acknowledges the connection between "causality" and "human action" (both of which are real aspects of reality).  More specifically, it identifies that "actions of a human" were the "cause" of "goods" that would not have come to exist otherwise (without those actions).

I suppose we can agree that predators, parasites, producers and prey all have some common features.  They are composed of atoms, they require air, water and other conditions to survive, and so forth.  I'm not sure that matters very much in the context of our conversation, however.

You make a HUGE mistake in the second half of your first paragraph.  You need to identify and consider the following fact to condition your opinions.  Before humans learned to "produce", the naturally occurring processes of nature (in the earth environment) were sufficient support tens of thousands, perhaps hundreds of thousands, but not more than a few million human beings.  Then some man burried some fruit for later consumptions, then some river got too deep to cross for many months or years, so when he finally managed to get back to his stash --- he noticed a whole slew of fruit trees bearing yummy fruit in the spots where he burried his fruit.  And he made the connection that we call "production" today.  He realized that he could take a tiny quantity of fruit today, plus modest actions today... and end up with thousands of times more goods a year or two later simply by burrying them under ground.  Then he discovered the efficiency of burrying his fruit at modestly separated intervals, and the efficiency of making sure they get a little water now and then, and he was astonished that his modest actions would cause the existence of up to one million times as much food as he invested (planted).  And his friends noticed this too, and they also noticed how much safer was this "productive existence" compared to endlessly wandering into unknown, unfamiliar territory infested with unknown predatory beasts.

What you need to understand from the above is this.  The human population of earth exploded by a factor of something like 10,000 because the life of a producer is about 10,000 times more efficient than the life of a hunter-gatherer who only destroys and consumes what already exists (due to natural processes).  In contrast, the producer creates 10,000 times as much... and we say "creates" because the goods he produces would not have existed unless he caused them to exist.

Therefore, this idea you have to bundle every behavior into one more-or-less equivalent behavior and treat them all the same ignores a hugely important fact --- the population of earth must collapse from 7-billion to 1-million or less.  Are you ready to claim the death of 99.99% of human beings on planet earth is "irrelevant" and "not worth considering"?  Not even to mention "quality of life".

Too bad you didn't learn enough about geology or astronomy when you were a kid.  If you had, you'd better appreciate that mankind is a factor of 10^23 or so from "exhausting the environment".  To begin with, mankind currently only accesses resources (and living space) from the most incredibly thin layer of planet earth.  And they haven't even begun to tap the essentially limitless resources of the universe yet.  So anyone who seriously discusses "resources" is someone who has totally accepted the authoritarian lie of non-production, that man doesn't live from [potentially unlimited] production, but lives by stealing from his neighbors directly (as a thief) or indirectly (via predators-DBA-government).  Anyone who understands the limitless resources that we can effectively and efficiently tap to create "the good life" for unlimited numbers of human beings, has an astronomically limited image of what is possible and natural --- not to mention ethical.

The whole POINT and focus of "individualism" and "producers" is to ADD, not subtract.  Or at the very least, to ADD BEFORE WE SUBTRACT.  In fact, the whole "subtract" part isn't that big a deal to producers.  After all, production is 10,000 times more efficient than predatory-destruction-consumption, so there is no need to subtract anywhere near as much as we add --- IF WE ARE PRODUCERS.

The sheep don't need to become better wolves... except in self-defense.  The sheep have nothing to gain by stealing from predators.  After all, their investment of time, effort and resources in production is 10,000 times more efficient than anything they could gain by destroying and consuming predators.  So I do agree that sheep need to become better destroyers-of-destroyers when the destroyers come after them and their goodies.  In fact, this has been the most enormous failure of the sheep --- to sanction, support, defend and encourage the predators (by paying taxes, voting, etc).  They have helped destroy themselves by helping the destroyers become vastly more powerful... to the point where 1 out of 10,000 predators control and enslave all the sheep!  Insane!

Now I will say something that I really, really, really don't like.  But I'm a realist, so I'm just as willing to identify and consider things I don't like as those I do like.  At previous points in history there were "frontiers" where the most intelligent, brave, hardy, competent producers could "escape to" and be mostly free of human predators (the most dangerous predators by a factor of at least 1000).  And they could flourish in these frontiers... until they were no longer frontiers.

At this point in history, it is absolutely necessary that individualists find a way to escape into outer space.  As one who understands the size, scope and nature of outer space, I can assure you and everyone else that the modus-operandi of predators cannot work in outer space.  It is just too easy to find endless places to hide, and the energy that would be required to find and force producers in the solar system (much less ort-cloud, much less other solar-systems) is just so astronomically greater than ever could be recovered from producers once they were caught up with... that the predator approach no longer works.  The fact is, once achieved, outer space forever gives individualists and producers high ground that can never be taken away by predators.  The predators may still be able to dominate planets, but never can they dominate outer space.  Not ever.

I am very much anti-pollution and pro-environment.  However, except for the massive inefficiencies imposed by the predator-class, a population of trillions could be supported on planet earth --- at vastly lower population densities than we experience today.  How is this possible?  Well, remember the earth is almost entirely molten magma, and man has barely scratched the teenie, tiniest bit of the very thin crust on top.  If the molten material of earth is gradually removed and converted into an open foam structure, a population of trillions can easily be supported (and supplied energy from the molten core) by engineering only a very tiny portion of the magma beneath the core.  And this is just one of many, many opportunities... none of which will ever be tapped as long as predators rule earth.

Sat, 10/20/2012 - 12:17 | 2906385 Radical Marijuana
Radical Marijuana's picture

I did not notice your reply, honestann, for about a week, and maybe, therefore, my belated reply is lost in past times, as so much in the rapidly evolving world of Zero Hedge news gets lost in the past, so fast ... but anyway ...

How do we survive past this Neolithic style of civilization?

What kind of Translithic civilization might evolve & survive?

I do not think there are any fundamental dichotomies, so I do not think that anything that happened during the Neolithic revolution to develop agriculture made any fundamental break with the past, nor the future.   The human mind was always making models of the world, and living according to those models. There was no magic moment when agriculture started. There was no beginning to the domestication of animals, including some humans by other humans, and no first moment of agriculture. There surely has been a feedback acceleration to organizing life, and creating artificial environments!  It is plainly obvious that agriculture enabled the human population to vastly increase, and that the industrial revolution pumped orders of magnitude more into that agricultural revolution. I agree that it is obvious that without the ability of the human mind to make effective models of the world, and thereby reorganize artificial environments, then the human population would crash beyond imagination. However, I believe that we need to develop more unitary mechanisms to evolve better ecologies, so that those artificial environments are not so shattered and incomplete as they are now. I agree that there are still many, many orders of magnitude more energy and information that exist, and could be reorganized through more non-linear functions, for there to be more life and consciousness. However, I return to my original view that those applications of energy laws and general systems theories must re-manifest the basic dilemmas that natural ecologies worked out through the repeated developments of various ecological systems. I agree that it would be nice for humanity to be able to survive and expand its frontiers through new environments. However, I would still insist that that would require new ecologies to evolve in those new environments. Indeed, I believe that the more artificial the environment, then the more artificial selection there must be. That is, IF human beings ever have sustainable habitats in outer space, then they MUST, in even more intense ways, have artificial selection systems inside of those more intense artificial environments.

What I am proposing is that the relative artificiality of the Neolithic revolution, such as manifested through agriculture, and then by another order of magnitude or more leaps through the industrial revolution, and especially through atomic energy, have all forced us to adapt, and that we should evolve better artificial selection systems. The problem that I identify as central to that is that we already HAVE been doing that, through militarism, which built the money system, BUT, success in militarism depended on deceits, and therefore, success in the monetary system depended upon frauds.

I always endeavour a creative synthesis of ancient mysticism into postmodernizing science. I always attempt to develop unitary mechanisms, through energy laws and general systems theories. I never accept any fundamental dichotomies. Therefore, I try to blend things like production and reproduction, ETC.!!!

Anyway, I voted your comment UP, because I found that I agreed with almost everything you wrote, except that I do not think I made any "HUGE mistake" in thinking that there were no fundamental dichotomies between Paleolithic and Neolithic times. There were no magic moments when suddenly hunter-gatherers were fundamentally different than farmers. Nor do I agree that there were any magic moments that totally separated factory workers from farmers. I certainly agree that human beings able to better understand their world, and take advantage of that, were able to produce and reproduce far, far more! However, I insist that everything comes as a package deal, with the good and the bad STUCK together, and the greatest strength also the greatest weakness, and that however we are able to see the world better also requires that it has its own blind spot.

My concept of SUBTRACTION is absolutely basic to my way of thinking about everything thereafter. I suppose that is way, way too abstract for a little post like this, especially since I regard that concept in radically different ways than most people presume. One of the things I think is most important, for the sake of the synthesis of mysticism with science, is to appreciate that when the entropy equations were first being developed, in thermodynamics, an arbitrary minus sign was inserted, so that the power would come out of that equation with a positive value. When thermodynamics was extrapolated into information theory, the entropy equations continued to have an arbitrary minus sign inserted into them, so that information would be expressed as a positive number.

I believe that was a profound philosophical mistake! That became one of the biggest obstacles to the synthesis of old-fashioned religions, and their mystical traditions, with the world view of the sciences developed during industrialization. What I am suggesting is that ALL power and information always actually has a negative value, not a positive value. Everything we "know" is relatively subtracted, and therefore, is a relative lie. That is quite consistent with the transcendental poetry that mystics were prone to produce. From the idea that "everything" as a "thing" is relatively subtracted, and is some relative illusion, due to the relativity of the definitions which cut the world into pieces, that human beings name, and arrange into stories, then follows that across those boundaries there MUST be robberies, as a result of those definitions.

That is how and why I assert that "reality" is ALWAYS different systems of organized lies, operating organized robbery. That is what the history of the combined money/murder system has been elaborating. That is HOW human beings live by telling stories, and behaving according to those stories. Human beings fundamentally live as robbers in their environment. They never become producers outside of that! Human beings can never make energy or matter out of nothing, nor send those to nothing. Energy is conserved, and directs its own transformations. That is also where we find the infinite tunnels of self-reference, whereby the map is IN the territory being mapped, and so on, and thus, that is ESPECIALLY wherein the infinite tunnels of deceits evolved in militarism, which made Kings, and then the Fraud Kings, in the money systems.

I throw out another line ... What of the infinite love between the prey and the predator? They ultimately ARE ONE, in ONE flowing environment, with the same energy going through their standing action patterns.  IF human beings are to develop a better human ecology, and political economy, then they are going to have make better models of the murder and money systems. That problem only becomes more and more acute, and overwhelming, when we create more artificial environments to live inside (particularly any such in outer space!) That problem is becoming acute now precisely because the runaway triumph of the social pyramid system of Neolithic civilization could initially take for granted the vast natural abundance, and natural ecologies that it started off already within. However, the amplifications of the industrial revolution, and more than anything, the amplification of atomic energy, are threatening to utterly destroy the natural ecologies, because Neolithic civilization has a human ecology based on militarism, and our political economy has developed those triumphs of deceits to become the triumphs of frauds.

That self-referential problem is the particularly human one, as the human experiment was all about building brains, and networks of brains, that could become more and more self-aware, and thus feedback more and more to change not only their world, but themselves too!

I think the biggest reasons WHY you thought I made "a HUGE mistake" is that you presume there is a fundamental dichotomy between subtraction and addition. I do not agree with that. My mathematics generates addition from the process of subtraction. My mathematics generates every other operation from the original subtraction process. (The only number which can not be proven to exist is minus one.) As I said, there are profound levels after levels there, regarding ways to attempt creative synthesis of ancient mysticism with postmodernizing science.  That is what I have been preoccupied with doing for several decades!  I focus that system of understanding upon the monetary system, backed by the murder system, since money comes from measurement, and that loops around back through the inherent limits to measurement.

I do not subscribe to any fundamental dichotomies between producers that "add," and predators that "subtract." I tend to regard production as a double subtraction, like minus one times minus one equals one. IF, IF, IF human beings are going to survive developing far, far, far superior mathematical physics, and molecular biology, and so on and so forth, then we must go on through to change our political science, so that our human ecology becomes consistent with those other sciences. However, there is nothing more difficult and paradoxical than that! Since all ecologies begin by presuming there is life, and reproduction, or else there is no system there at all, after there is life, in any relatively limited environment, then there MUST be death controls as central to the whole ecology. In the case of human ecology, those death controls mainly manifested through militarism, as human beings became the most significant limits upon each other, far more than any other living things were limited by other living things, or by other factors in their environments. The CENTRAL feature of our human ecology was militarism, which was blasted into explosive development by the Neolithic revolution, just as you pointed out the sustainable number of human beings also thereby became exponentially increased. Furthermore, the same things happened, even more so with the development of the industrial revolution, and the rudimentary industrial ecology that is in its fledgling stages. However, the basic thread through the militarism to the money system was deceits to fraud.

Thus, transforming the established money/murder system is the primary, and extremely paradoxical problem! In direct proportion to our advancing sciences, we should advance our political science. However, THAT means better understanding how and why human societies are necessarily controlled by deceits and frauds, and why all human realities are always going to be organized systems of lies, operating organized robberies. THAT is why evolving any better versions of those systems is extremely problematic, and THAT is why our runaway destruction of the natural world is occurring, since we have NOT done THAT any better, so far. THAT is why we may barely survive to live in any artificial environments in outer space, since Earth is already a spaceship, which is now in a state of self-destructive mutiny!

IF we manage to survive on planet Earth, after physics, etc., makes us become trillions of times more powerful, THEN we must evolve predator functions inside of the artificial environment on that surviving Earth system. And IF we are able to survive in outer space, then we MUST have a death controlling murder system in those artificial environments too. There will surely continue to be role for the top carnivore functions, the predator/parasites, in space habitats, just as there always were in every terrestrial ecology. That should be done through a greater use of information, and thereby, with higher consciousness. However, the fundamental function and purpose must still exist in some form.

While I agree that there are many orders of magnitude more energy and information still available to utilize, that human beings have not yet harnessed, the NUMBER ONE problem with doing that now, and in the future, is that our death controls ARE done through deceits, and our debt controls are done through frauds. Those are the things that we most need to understand through unitary mechanisms, within our increasingly artificial environments!  Artificial selection comes from the internalization of natural selection, as our intelligence. However, just as spies were the most important soldiers, in the Art of War, the artificial selection systems that human being must evolve, as they DO evolve more artificial environments to live within, MUST primarily be murder systems, and those have the most extreme acute political problem of all, which is that their success depended on being the best at deceits!

Evolving a better human ecology is the most important thing that we need to do, and also, by far, the most extremely difficult thing, that we are muddling through in the worst possible ways, through our currently established global electronic fiat money frauds, backed up by atomic bombs, being the basic ways that we actually organize human activities on planet Earth, at the present time!

Thu, 10/11/2012 - 16:05 | 2878739 Downtoolong
Downtoolong's picture

The Wall Street Time Horizon

 Two weeks is a lifetime,

90 days is a millennium,

One year is equivalent to infinity,

No one feels one iota of accountability or concern for what they said yesterday,

and that disclaimer, Past performance is no guarantee of future results,

is the understatement of the millennium.

Thu, 10/11/2012 - 16:35 | 2878822 Floodmaster
Floodmaster's picture

The mortgage purchase application index will drop to 1990 levels, that's deflation.

 

http://1.bp.blogspot.com/-cczOsbDr2W0/TyAFNpDAqHI/AAAAAAAAL8w/FU4EZDFovv...

Thu, 10/11/2012 - 20:14 | 2879225 Freegolder
Freegolder's picture

Meanwhile over at FOFOA, the regulars are engaging in a mutual love-fest, with FOFOA interviewing some of his cronies.

I have never seen such a bunch of sycophants wallow in mutual admiration, it is pathetic.

FOFOA has had nothing new to say for a year now, and yet still they pay him for the blog. (In fact he has never had anything new to say).

DP, you appear to be exactly as you seem when you write. You assume you are clever and funny, you behave like the coolest dude on the blog. Reality is so far from what you perceive yourself to be.

Ironically, freegold at the national level is highly likely, but these goons think the Western savers will suddenly convert to saving in gold at $55k an ounce (after getting wiped out in a hyperinflation). Anyone spot the flaw in their thinking? It took the Chinese/Indians millenia to turn to gold, so don't hold your breathe.

FOFOA is typically a fat, bald, cocky American, but just read his early posts, and you will see what a fraud he is, making it up as he goes along.

Fri, 10/12/2012 - 00:39 | 2879975 Tompooz
Tompooz's picture

"I have never seen such a bunch of sycophants wallow in mutual admiration, "

You have missed the Bloomberg Surveillance interviews, obviously

 


Fri, 10/12/2012 - 01:43 | 2880076 polo007
polo007's picture

http://www.themoralliberal.com/2012/10/10/holding-the-fed-accountable-craig-columbus/

The Keynesian-dominated Fed sincerely believes that more QE will lower mortgage rates, further drive up asset prices, make cash appear increasingly unattractive, cause higher-end consumers to feel richer and thus spend more or purchase real estate—ultimately leading to additional demand and more hiring. Ifhome prices rise even marginally, banks will have fewer impaired assets and can ramp up lending.

Others contend QE damages confidence by implying that the American economy is on life support and tells home buyers and business owners that there is no need to act today when rates will remain low for as far as the eye can see. Furthermore, a majority of homeowners have already refinanced their housesfollowing previous Fed actions. Reasonable people can differ about the best approach for fighting deflationary forces.

An honest defense of QE should describe the techniques being employed to manage Washington’s massive debts. They include a tactic known as financial repression, which forces interest rates to levels below the rate of price inflation. By eroding the value of government debt held by bondholders and savers, politicians can dodge having to convince the public to accept unpopular austerity measures. It does mean, though, that the American people must accept “too big to fail” financial institutions in lieu of hard choices. To maintain unfettered access to the debt markets, the government backstops primary dealers at all costs.

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