Rainman Economics

Tyler Durden's picture

Via James Howard Kunstler via Kunstler.com,

Like entropy, the diminishing returns of technology never sleep. The hubristic techno-narcissism of the day, as seen in mankind’s efforts to fake-out the universe, will eventually get our one-way ticket to Palookaville punched. Perhaps there’s such a thing as being too cool after all.

The trick so far has been to create massive inflation, export the effects of it to other trading partners, and end up with a lot more money here in the USA, or the illusion of more money. Well, loans, for houses, cars, and college tuitions. In a word: debt. Let’s call it “Rainman Economics,” because it begins to resemble the behavior of a severely autistic human being who performs a small range of obsessive actions over and over and over, often centered on numbers. Rainman Economics is the policy of the Federal Reserve and, indirectly, the government under Mr. Obama.

The suave and genial Mr. Obama just doesn’t know what’s going on - despite being surrounded by minions with briefing folders, sages and vizeers, quantitative augurers neck-deep in mathematical goat entrails, and (always) the lone, silent soldier toting the dire nuclear “football.” Mr. Obama doesn’t know that the universe has launched us on a journey to a place beyond techno-industrialism - and it’s not Ray Kurzweil’s infinity of orgasms. It’s a place where no ring-tones are heard and not so much as a stretch-mark of the Kardashians remains to be found.

This is the eeriest summer. The coordinated effort to devalue gold - so as to maintain the sagging reputation of the world’s re$erve currency - has had the effect mainly of funneling it out of weak hands in the west to strong hands in the east, to countries that at one time or another we regarded as adversaries. China and Russia have been backing up their respective trucks at the gold warehouse loading dock, and before too long they will have yuan and rubles with more credibility than the US dollar.

In these games of currency war, there are too many moving parts for comfort. Paradoxically, the American position is all about maintaining undeserved comfort, that is a standard of living that is no longer earned but borrowed from the darkest pool of magic capital: the future of declining expectations. Enjoy the flat screen TVs, water-parks, RVs, and Happy Meals while you can. There is sand in the gears of the moving parts that have made all that possible. It’s quite a trick to debase your currency for strategic advantage and at the same time maintain the world’s credibility in it. The strategic advantage is that debasement allows you to dissipate existing debt by stealth. But that trick is not working too well at the moment in the USA because too many other players are trying the same thing, and doing it badly, so people in foreign lands are dumping their currencies to take refuge in the dollar. The chief product of all this motion is not “prosperity” but instability. That is the last thing that economies need, even if the gamesters in the financial markets can arbitrage it to their advantage.

Instability translates into uncertainty, especially about the relative value of currencies. For the moment, holders of weakening currencies are seeking refuge in seemingly “stronger” dollars in bubbling equity markets. Many more dollars have been stashed on the balance sheets of the Federal Reserve in the form of bonds purchased in galumphing bales since 2009 - only the catch is that many of these bonds are worthless, especially the mortgage-backed securities. The collateral exists in the form of mold-infused sheetrock, swimming pools with algae blooms, and strip malls left with a single tenant: the wig shop. The Fed will never be able to unload this hoard of garbage, even if it “tapers” its buying of new garbage. The dollars that the Fed creates out of nothing are trapped in this fetid backwater of rotting capital, destined to go nowhere - surely not into activity that produces real wealth, or the means to continue being civilized.

Something’s in the air this hot, soggy summer and it smells like the loss of faith. In another month, as the nights grow cool we’ll approach the sober season of fall, when the air seems to possess powers of magnification and suddenly things can be seen clearly. The high frequency robo trading bots are good at detecting microscopic differences in digital quant pools, but they don’t have the finer sensory antennae of human brains for forces outside the rather narrow math narrative.

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UP Forester's picture

Def-def-definitely....

TheFourthStooge-ing's picture

.

It’s a place where no ring-tones are heard and not so much as a stretch-mark of the Kardashians remains to be found.

Fucken A, that sounds good to me, Bubba. Count me in.

BTW, the last paragraph was omitted. Here, for your enjoyment:

For instance, I communed with my fellow citizens this Fourth of July weekend for a few hours at a little beach in a Vermont state park. It was a family kind of place. The mommies and daddies were putting on a competitive tattoo display (along with competitive eating). So many skulls, Devil heads, snakes, screaming eagles, flags, and thunderbolts. I suppose they acquire these totem images to ward off some apprehended greater harm, the metaphysically inchoate forces marshalling at the margins of what little normal life remains in this nation of rackets, swindles, and tears. All was nonetheless tranquility, there by the little lakeside, with the weenies grilling and the pop-tops popping. A three-year-old came by where I was working on my tan on a towel in the grass, supine. He asked me if I was dead. Not yet, I told him. Behind him a skull smoking a doobie loomed in blue and red ink on his daddy’s thigh. My people. My country.

akak's picture

Make me laugh.

Your flirtationalizing with self-indictment marks you as a US 'american' citizenism imposter.
Everyone knows that the US 'american' inability to self-indict is part and package of US 'american' eternal nature.

After all, 'americanism' is as farming the weak and extorting the poor does.

TheFourthStooge-ing's picture

Kid me not. That is uniformously a piece of news.

Reads like cat in the box stuff.

Singing field goose obsessionates on blattering degenerescence accessorily.

Troubles is that facts point at Chinese citizenism as the root cause.

prains's picture

okay okay shoot the chink (AnAnonymousAnus) and be done with it

where is that sad sack anyway? damn rickshaw guys are so fucking unlielable

Cathartes Aura's picture

sneaking in with a couple o' my pals (I hope). . .

Something’s in the air this hot, soggy summer and it smells like the loss of faith.

this is absolutely true.  all faith must be tested for truth, and the misplaced faith in nationstates, in flags, in representatives, must be put to the test.  and this summer is as good a time as any, folks. . .

easy livin' days, numbered.  the final countdown.

old naughty's picture

"...begins to resemble the behavior of a severely autistic human being who performs a small range of obsessive actions over and over and over, often centered on numbers"

this is downgrading the autistic human who can still love and care...and the obsessive actions could turn out to be what humanity needs.

I bet they'd come out test-winners over all the rest of them and us.

Wakanda's picture

I'm only a few hours from JK and dem's my tatooed peeps too.  They're sometimes smarter than they look.  Some have sharp minds beneath the beards, ink, and baseball caps with logos.  Smart minds, but generally ignorant about the powerful forces that rule their lives.  Will the tatooed faux rebels grow a spine, get a clue, and throw off their invisible chains?

It will take a serious fucking miracle, but I'm a crazy believer in just such things.

The Second American Revolution - get the tatoo "I Believe In Miracles" surrounded by stacks of PMs on your left cheek - the big left cheek

chubbyjjfong's picture

When I was growing up I was always a little intimidated by those that had tatoos.  Now it is those that have no tatoos that I fear the most.

granolageek's picture

>>Fucken A,

You just outed yourself. Say Bubba all you want, your are from the Northeast or Great Lakes states. If it was 'Provinces' you'd have said the same thing and spelled it 'eh.'

The red staters will now run both of us out of ZH on very splintery rails.

Cult of PersonALity's picture

I have that same tat !!!   Choombawa  Lord of Herb, Chancellor of Change, Hop of Hope, Creator of Dreams (I haz one).  I should have it touched up...  maybe add a bit more color.  Its kinda' hard to see after all these years.

Stuck on Zero's picture

Oh Gawd.  If I can't trust the "quantitative augurers neck-deep in mathematical goat entrails" then I'll have to go back to my tea leaves.

 

UP Forester's picture

Dub-dub-double tap

Yen Cross's picture

   "Come Mr. tally man tally me bananas"   Harry Belafonte, (aka Libtard of the universe)...

Yen Cross's picture

   Yes, Beetlejuice.

  Here's the Rainman soundtrack.

"Iko Iko"
(1965)   
Written by Rosa Lee Hawkins, Joe Jones, Barbara Ann Hawkins (as Barbara Hawkins), Sharon Jones, Joan Marie Johnson (as John Johnson), Marilyn Jones, and Jessie Thomas
Performed by The Belle Stars
Courtesy of Stiff Records

"Scatterlings of Africa"
(1986)
Written by Johnny Clegg
Performed by Johnny Clegg and Savuka
Courtesy of EMI Records Ltd. "Please Love Me Forever"
(1961)
Written by Johnny Malone and Ollie Blanchard
Performed by Tommy Edwards
Courtesy of Polygram Special Projects, A Division of Polygram Records, Inc. "Lonely Avenue"
(1956)
Written by Doc Pomus
Performed by Ian Gillan and Roger Glover
Courtesy of Virgin Records Ltd. "Dry Bones"
(1927)
Music by James Weldon Johnson
Lyrics Traditional, based on Ezekiel 37:1-14 of the Bible
Performed by Delta Rhythm Boys (as The Delta Rhythm Boys)
Courtesy of RCA Records "Beyond the Blue Horizon"
(1930)
Music by Richard A. Whiting and W. Franke Harling
Lyrics by Leo Robin
Performed by Lou Christie
Courtesy of Three Brothers Records, A Division of Creed Taylor, Inc. "Star Dust"
(1927)
(Listed as "Stardust")
Music by Hoagy Carmichael
Lyrics by Mitchell Parish (1929)
Performed by Rob Wasserman with Aaron Neville
Courtesy of MCA Records "Lonely Women Make Good Lovers"
(1973)
Written by Freddy Weller and Spooner Oldham
Performed by Bob Luman
Courtesy of CBS Records "At Last"
(1941)
Music by Harry Warren
Lyrics by Mack Gordon
Performed by Etta James
Courtesy of MCA Records "Nathan Jones"
(1971)
Written by Leonard Caston and Kathy Wakefield
Performed by Bananarama
Courtesy of London Records "Wishful Thinking"
Written by Jocko Marcellino and Randy Handley
Performed by Jocko Marcellino "Lovin' Ain't So Hard"
Written by Jocko Marcellino
Performed by Jocko Marcellino "I Saw Her Standing There"
(1963)
Written by John Lennon and Paul McCartney "After Midnight"
(1966) (uncredited)
Written by J.J. Cale "Bouncin' the Blues"
(1948) (uncredited)
Music by Harry Warren
Danced by Fred Astaire and Ginger Rogers
From the film The Barkleys of Broadway "They Can't Take That Away from Me"
(1937) (uncredited)
Music by George Gershwin
Lyrics by Ira Gershwin
Sung by Fred Astaire
From the film The Barkleys of Broadway

"Shoes with Wings On"
(1948) (uncredited)
Music by Harry Warren
Danced by Fred Astaire
From the film The Barkleys of Broadway

prains's picture

longest yen text to date, he's been saving up, didn't think it was rainman that was going to be the trigger

joego1's picture

Chinese and Russians simply have to trade fiat for gold and wait. We will take care of the rest of it ourselves.

buzzsaw99's picture

T-800: In a panic, they try to pull the plug.

Sarah Connor: Skynet fights back.

T-800: Yes. It launches its algos against the targets in Russia...

Son of Loki's picture

Anathema!

 

"Caught by surprise, homebuyers are reeling. All of the sudden, they're getting considerably less for their money. The response, for many, is panic, say two real estate agents in Arizona and Massachusetts. Applications to refinance "tumbled," according to Capital Economics...."

 

 

http://money.msn.com/home-loans/article.aspx?post=b285f727-7b1e-46cd-a14...

El Oregonian's picture

I raze a toast to the imbeciles in charge! (toast as in we're toast)

BurningBetty's picture

Get those interest rates up,up,up so that we can finally liquidate ALL that worthless debt that has been flowing into the markets. AND THAN we can start growing again, with sustainable and real growth! At least until we find ourselves with Bernanke 2.0 and Socialists 3.5 somewhere down the road screwing us over...again..

involuntarilybirthed's picture

The US is approaching peak full faith and credit and there is no plateau on the top.

TheFourthStooge-ing's picture

.

The US is approaching peak full faith and credit and there is no plateau on the top.

I'm afraid that train might have already sailed.

Haole's picture

A necessarily self-reinforcing debt creation parabola being supported by nothing but financially-dependant programming coupled with self-entitlement complexes en masse, ever-crucial control and hypnotic manipulation of public perception...  The slow boil.

 

 

 

 

Wakanda's picture

AKA  I'm afraid that ship has left the station.  ; - P

Mike in GA's picture

I wuz right there with ya, 4th stooge, till ya mixed ye olde metaphor and my brain had to deal with a train sailing. That just blew me clean outta the RRXing.

Yen Cross's picture

     So, the basis of the article is that technology isn't the "Golden Grail" / next best thing to evaporate away decades of fiscal abuse?

NoDebt's picture

Aw, come on, technonogy's great, man.  I how have lightbulbs that use 25% the electricity of my old incandescents.  Of course, electricity costs 4X as much, but whatchagonnado?

 

buzzsaw99's picture

Of course, electricity costs 4X as much...

So do the bulbs. lulz

newengland's picture

ZH is controlled opposition; fishing to see who bites, and how to reel them in.

A fight club for the confused bankrupt status woe to find new ideas, and new money, new debt slaves.

chubbyjjfong's picture

We used to be proud of our technology.  We used to research it, manufacture it, develop it, improve on it and sell it to the world knowing we had produced a quality product.  Now all we can do is watch it degrade in a far off land where peoples free labour is exchanged for our shareholder profit.  We now have to pay twice as much for the same product that is only half the quality.  No one in this country can make anything anymore, not because we can't, but because beauracracy makes it impossible. 

The sooner we are off this fractional reserve, fiat ponzi, elitist charade, and back to trading local well made meaningful products and nutritious foods, the better.

Seize Mars's picture

I am sick of central planning, and all its works and all its ways.

I cannot stress this enough: give a slow thoughtful read of Bastiat's "The Law." If you were fuzzy on things, this will set you on the path. A lot of shit will come into focus. The fuckin' thing is like 60 pages for heaven's sake. It will take a day or two. Just do it.

NidStyles's picture

I find this offensive to Autistic people.

Dr. Sandi's picture

None of the autistic people I've contacted have expressed any problem with it.

NidStyles's picture

No one cares what you think.

Dr. Sandi's picture

Yeah, you took the words out of my mouth but paraphrased badly.

tmosley's picture

The author claims that foreigners rushing to buy dollars is somehow preventing the dilution of our debt.  This is asinine.  The Fed is buying the debt.  That is monetization.  There is no downside to other countries buying the dollar--it helps us to export the inflation we have created through debt monetization.  This is the ONLY reason that people are able to claim that there is little or no inflation.

But that, too, is just kicking the can down the road.  A road that is ever steeper, and a can that is ever heavier.  They aren't going to like it when the can finally falls right on their stupid heads, and all the inflation we have generated comes crashing back onto US territory all at once.  It'll be like the 1970's in the course of a week, and that will be curtains for the dollar.

Seize Mars's picture

tmosely

I don't think he said that. I think he said that the USA has been exporting its inflation. This is true. WHen you print, it devalues all the dollars, everywhere. Don't forget the USD the reserve currency everywhere. That means they's stealing a little from everyone, everywhere. Nice trick, eh?

As for the 1970's in one week, you are correct. Only worse.

NidStyles's picture

What TMosley was saying is what the article is trying to tell us. However as TMosley points out the article is flawed in that the inflation is being bought by the Fed, not foreigners. Foreigners essentially stopped buying T-Bill's at the end of 2011. It's been almost exclusively the Fed and three major Hedge funds. Now it's essentially just the Fed buying it. 

ncdirtdigger's picture

I'm an excellent driver. 

Downtoolong's picture

Something’s in the air this hot, soggy summer and it smells like the loss of faith.

It’s like when your car is running bad and you can’t pinpoint the problem. All you know is that if you don’t fix whatever is broken it’s going to get worse and end badly.

And the MSM solution to the problem is…..just turn the radio up louder.

Seize Mars's picture

BTW I think the writing in this article is very good. Very evocative.

Son of Loki's picture

"Many more dollars have been stashed on the balance sheets of the Federal Reserve in the form of bonds purchased in galumphing bales since 2009 - only the catch is that many of these bonds are worthless, especially the mortgage-backed securities. The collateral exists in the form of mold-infused sheetrock, swimming pools with algae blooms, and strip malls left with a single tenant: the wig shop"

 

I like that too...causes vivid imaginations in my hippocampus, thalamoose and other places....

Mike in GA's picture

If you are not familiar with Kuntsler you should go to his website and read some of his weekly writing.  The guy turns a phrase as artfully and evocatively as any writer, anywhere has ever turned one.  That being said, if you like Nascar you will be offended by his low opinion of you and if you might be that easily offended, you will probably find some other things that send your eyebrows skyward.