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Dylan Grice: "There Is A Widespread Perception That Something Is Very Wrong"
Dylan Grice lets loose with his latest piece "The Language Of Inflation":
We’ve recently come to the conclusion that there seems to be a widespread misunderstanding of what "capital" is. We happened to stumble across a fabulous book called Talent is Overrated (no sarcastic emails on why we were so attracted to such a title, please) written by the well-regarded Forbes journalist Geoff Colvin. To be clear upfront, is an excellent book which we learned a lot from. But consider the following extract (our emphasis):
For roughly five hundred years—from the explosion of commerce and wealth that accompanied the Renaissance until the late twentieth century— the scarce resource in business was financial capital. If you had it, you had the means to create more wealth, and if you didn’t, you didn’t. That world is now gone. Today, in a change that is historically quite sudden, financial capital is abundant. The scarce resource is no longer money...
“Financial capital” indeed. We found it striking that Mr. Colvin, a distinguished journalist of a distinguished business magazine should use the concepts of capital and credit completely interchangeably. Yet this is a fundamental error of thought. Capital is not money. One is scarce, the other is in infinite. And we might not have thought anything of this sloppy language had we not been talking to an economist a few days earlier who feared for the future of euro. The situation remained grave, he said, and there was surely no alternative than for the ECB eventually to “print more capital”…
What he meant, we think, was printing more money. But it’s not what he said. He had confused money with capital as Mr. Colvin did in his book.
Like the Zuni tribes struggling to deal with the difference between yellow and orange without sufficient linguistic precision, we face the same problem in our financial system. As stock markets blink green on more QE supposedly making us all more wealthy, the developed world is saving less than it has at any time since WWII. And as central banks are conjuring up ever more liquidity, more thoughtful observers scratch their heads over the lack of collateral in the system. Of course, the problem is solvency, not liquidity. Capital comes from savings, and the policy of cheap credit with its inflation of time preference has encouraged spending, not saving. Scarce capital is growing ever scarcer.
One day, the price of capital will reflect its underlying scarcity, because one day it must. But in the meantime we think very carefully about the capital requirements of the businesses we own, growing increasingly wary of those which depend on artificially cheap “financial capital” for their survival. We note in passing that physical gold bullion is the oldest and purest capital there is…
What is the moral of this story for the steward of capital? Success in the long run requires that thought and action be fully independent from the false ideas of the herd. Yet today’s language of inflation embeds so many of these false ideas that the full rottenness of what passes for financial thinking today is obscured. One increasingly reads of capital stewards complaining that things seem more difficult today. We think it’s because they are. We are also increasingly mindful of conversations with friends, family and colleagues that reveal a widespread perception that something is very wrong, though people can’t quite put their finger on what it is. As we have just argued, we think the answer is that the inflation of credit has driven an inflation of asset prices, which has driven an inflation of future expectations, which has driven an inflation of time preference… and that while the consequences of these various inflations are profound, the new language of ininflation which it has spawned is shallow. Therefore, not only is there insufficient capital to ensure future prosperity and insufficient realism to deal with the future this implies, there is insufficient linguistic precision for most people to articulate the problem let alone understand it. And when language itself becomes so grotesquely distorted, how does one go about substituting the customers’ unattainable hopes and expectations of never-ending growth with the need for principled and honest action?
Read the full note by Dylan Grice, no longer at SocGen but at Edelweiss Holdings, below:
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My experience is that it is far more pervasive than that. You mention the overt FSA, and I agree. The perception is that there are many, and that could truly be the case. Advocates of Obamacare, Obama phones, EBT, WIC, etc self-identify. They are easy to spot, and they loudly proclaim. The majority of the people that cling to large government are not vocal, or at least not yet. These people have government pensions, Social Security benefits, Medicare, Medicade, federal, state and local government jobs, or depend on people who have these jobs. In other words, a fairly large percentage of the working population, and almost all of the retired population. Logically, they may understand that the system they bought into is unsustainable, but fiscally, and emotionally they won't do anything to turn the benefit spigot off. Ticks won't let go until they are full, and you can expect the same with these people.
So, where does that leave us as a culture/society? There is more capital going out, than is sustainable. But if the host dies, the parasites will too, though the parasites refuse to acknowledge their part in the destruction. Maybe it will come to that. I truly think we are well past the tipping point, and there won't be an easy way to recover.
The conspiracy theorist in me expects an elegant solution in the form of a highly virulent, exceptionally lethal pandemic, with scarce access to inoculations. The government has plausible deniability, and a decreased population to deal with, with "excess resources per capita" thus extending the wealth effect/plundering of real resources. We are overdue for a plague, and with increasing resistance to antibiotics, a plague may occur on it's own anyways.
"We are overdue for a plague"...gruesome thought. It would be nice to have a monitor on all the elite's movements and when they all decide to 'go to the countryside for the weekend' we could DUCK!
not "duck" but self-quarantine.
The Black Death was a godsend to the survivors. I've seen calculations that estimate that Europe was culled of 1/3 of its population. I've seen others that stated that 1/3 of the population of the world died. Whole cities were wiped out as the plague burned its way through the streets, but for those who survived, they were often the sole survivors of an entire family and inherited the wealth and property accumulated by their entire bloodline. Even serfs found that they could demand wages for work that was formerly part of the duty that was owed their lord, as there was really no one left to enforce their compliance. Still extant are the records of the widow and chatelaine of a nobleman in which she bitterly complained that she could not get her serfs to do the work that was owed her without paying them. It could be argued that the plague was the progenitor of the Renaissance.
60% of people favor more entitlements!!. 108 million people receive entitlements compared to 78 million people working full time in the private sector. Add 22 million Government workers and millions of students and its clear more and more big government candidates will win elections. Why stop QE when its compassionate, there is no inflation and interest rates are at historical lows?? The numbers who favor more entitlements (and Require more QE programs) will grow and the number working in the private sector will drop. More and more in the health care industry will be Government and union employees.
If the dollar died tomorrow I wonder what the USA would do, the people, I mean.
We are 20 years behind the Chinese in manufacturing these things we used to make. A dead dollar would mean FIRE was dead too.
We do not have skills as craftsmen or weavers...agriculture?
Those of us in the various service industries can keep doing what we are doing, whether we get paid or not is a good question.
Extraction industries will probably rise but energy costs could crimp that activity as a foundation of a new economy.
I suppose the government could keep many on the dole and quiet but what about our kids? Do they have to leave for the Orient to make their fortunes?
<<We do not have skills as craftsmen or weavers...agriculture?>>
Our best hope is the same as it ever was, to honour and listen to the old craftsmen and skilled women, learn their crafts and skills from them, and pass them on. Show some respect for real labour - crafts and trades - instead of genuflecting (including in our language) to white collar paper shufflers and number-jugglers. We have a huge surplus of unskilled labour in the west, including an army of paper shufflers who can't even cook let alone grow a carrot or fix a car, but skills and knowledge could die out with increased dependence on 'services'. Skilled labour is increasingly hard to find.
Can't rely on the government to preserve our labour skills, especially now that we have outsourced the work for 2 generations of skilled labour. As usual, it's down to each one of us in our own families to preserve this knowledge.
The way I remember it , c-a-p-i-t-a-l , capital = asset(s) which create wealth by creating a product or service which is in demand. Money , of itself , neither creates supply nor does it create demand - OF ITSELF. The private ownership of such capital is what is referred to as Capitalism. John Rockefeller and his heirs owe quite a bit to Henry Ford for creating an affordable car that ran on gasoline. It is doubtful that Rockefeller had the skill to manufacture an automobile himself , so he was better lucky than smart that Ford came along when he did. Did Rockefeller actually sit down and create anything more than a catacomb like structure of charitable foundations to prevent his money from being taxed like the average John Q Public ? People are beginning to awaken from their stupor and ask questions like these. There is no shortage of people who think that everything , EVERYTHING is a scam. The concept of a FREE America will depend IMHO on how they answer those questions for themselves.
J.D. Rockefeller actually built an oil refinery with his own and his partners money. Cheap kerosene changed the way America lit and heated their homes. A very popular product.
His competitors didn't like his Railroad transport deals that gave him a substantial discount for guaranteed volume that they couldn't match, but it cut the retail price to consumers in half. A good deal for the working Joe.
You can fault him for using his financial power to control industries, but he made his initial fortune selling a lot of what people wanted to buy, and doing it cheaper than anyone else.
You could easily say that Americans gave him the money to eventually buy their Govt.
You did okay up until this last part:
"You could easily say that Americans gave him the money to eventually buy their Govt."
whats palpable is the need to create another event to distract the american people from how bad things are.... Isreal attacks Iran, or North Korea acting up would be good ones.... but you never see a black swan comming...
my bet is on the Isreali Iran thing.
I don't know...
I'm going to be contrarian, and vote for Gulf Arab state revolution/coup.
It's simple. Bankrupt you Bernanke doesn't understand the difference between money & liquid assets. Bankrupt you Bernanke has conducted a deflationary & destructionary economic policy. Bankrupt you Bernanke did the opposite of what William McChesney Martin, Jr did to correct the same problem in the 1966 S&L crisis.
The sensation I have is one of being a passenger on a cruise ship peacocking by the rocky shore while its distracted captain tries to stem the flow of his $500 nose bleed.
Heard this shit all the time from that fucktard Geitner. " we injected capital into the banks." Bullshit! They printed money thereby stealing from anyone who had saved. Gov has no capital.
Something's happening here
What it is ain't exactly clear
There a man with a gun goin' round .....
Exactly.
stop hey. flavor flav's still goin' round-
Aiyo, these are some serious times that we're livin in G
And a new world order is about to begin, y'knowhutI'msayin?
Now the question is - are you ready, for the real revolution
Which is the evolution of the mind?
If you seek then you shall find that we all come from the divine
You dig what I'm sayin?
Now if you take heed to the words of wisdom
That are written on the walls of life
Then universally, we will stand and divided we will fall
Because love conquers all, you understand what I'm sayin?
This is a call to all you sleepin souls
Wake up and take control of your own cipher
And be on the lookout for the spirit snipers
Tryin to steal your light, y'knowhutI'msayin?
Look within-side yourself, for peace
Give thanks, live life and release
You dig me? You got me?
The only true capital input is energy. You cannot produce anything of value (ie wealth) without energy as an imput, and cheap energy input is vital to growth. Without cheap or free energy you cannot grow. Societies with a low input of energy (or only expensive inputs) only grow when they plunder either nature or other humans, so they use their limited energy inputs to move actual wealth around to suit themselves. The creation of abundant wealth requires new inputs. Cheap free energy from fossil fuels created explosive global growth in the west, and the resulting 300 years of "modern" achievement is the result.
Sorry, but all else is illusion.
Like Agent Smith said. "humans are a virus on this planet". Basically it's true. Nature will eventually achieve equilibrium, and it won't be pretty.
More like 200 years but you're right, as energy gets more expensive, there will be less overall output unless a new power source comes into play or some radical shifting of carbon fuels from least efficient uses to more productive areas.
Most of what we use petroleum for to make things could easily be replaced with cheap, fast growing renewable hemp including fuel, clothing, paper products and building materials.
But it won't because somebody has a lobbyist somewhere to keep it from breaking somebody's rice bowl.
Yes, shovelhead, it was crucial to the historical development of the industrial revolution that legal monopolies, at crucial times, made alcohol and hemp illegal. However, the solutions to those problems requires understanding the murder systems that backed those monopolizing forces up. While I believe there are an abundance of creative alternatives, they can not function as integrated systems without their keystone being alternative death controls.
The FIRST thing that such people (who think that something is wrong) must do, is to accept Einstein's principle that "Problems cannot be solved at the same level at which they were created".
People need to stop following failed or inadequate old models and paradigms that aren't solving the underlying problems, and actively look for and explore different models. Until they do, these Statists are very much like the Flat-Earth theorists (earth-centered universe).
The best place to start looking for the economic equivalent of a Galilean and Newtonian model of the Solar system, is to get educated on the History Of Money. There are a number of good sources, including Mike Malone and Chris Martensen.
And for those (poor souls) who think that this level of systemic and global fraud is due to "Socialists", must therefore also believe that "socialists" have the org and networking system that has been created by competing entities (Aristocrats, money changers, bankers and secret societies) and whose systems have been around for centuries. They are either ignorant, delusional or just plain agents of Disinformation.
Quite correct, Kirk2NCC1701, as far as you go. However, I think it goes WAY past that. The main achievement of Albert Einstein was to develop the special theory of relativity, in ways which PROVED that the way that we thought about time and space was profoundly WRONG.
The supreme paradoxes track back to progress through paradigm shifts in basic sciences having NOTHING like that in political science. It is quite possible to apply basic energy laws to understand human civilizations, EXCEPT that then understands how and WHY society is controlled by the people who are the best at being dishonest and backing that up with violence. The current economic systems are the entrenchment of the well-established force backed frauds.
Even more so, a thorough paradigm shift results in perceiving money is measurement backed by murder, which goes far beyond various "good sources, including Mike Malone and Chris Martensen." As my comment below emphasizes, to better understand how energy laws manifest systematically through human activities, one has to also understand that we developed the concept of entropy backwards. The triumph of controlling civilization through huge lies, backed by lots of violence, penetrates to the heart of the philosophy of science, as much as it operates throughout political economy.
Unfortunately, to recombine a couple of Einstein's other social observations, human stupidity appears to be infinite, while the runaway mathematics of compound interest is not giving us enough time to adapt to debt slavery transforming into debt insanity. Not only is something very wrong, it is getting worse an exponentially accelerating rate, which tends to make pathetic comments upon that fate appear way too little, too late ...
Smart people assess what stupid people accept.
@tempo
60% of murikans want more free shit because 60% are already on the doll. no one will vote to take their own free shit away.
last lead from ore plant to close in Dec 2013. If you are melting your own muzzle loader bullets I would suggest stocking up on some PB soon. We will be buying PB from China to arm the TSA and HSA. Wonder how that will work when the dollar is truly toasted? Just thinking out loud which here can be dangerous. Stay alert my friends.
The problem is we have a "fake" market and thus a "fake" economy. What's happened is, the tail has finally wagged the dog; we're far from GAAP standards, no mark to market, it's mark to fantasy. 1,000's live in homes with "zombie" mortgages they've not paid in years, simply because the banks would rather not foreclose just yet. More Americans on the dole than are working because those genuises in government gave the middle class jobs to other countries.
I could go on and on, but yep, there's definitely something "wrong" and the problem radiates from dead-center D.C. The all really got rolling with the coup de 'tat that assumed power 1/20/01 with the biggest false flag of them all shortly thereafter (9/11). If they could pull THAT one off, it's all downhill from there for these theiving, lying bastards.
Not only that, but this as well: http://www.thetruthseeker.co.uk/?p=39324
800 FEMA camps that can hold 20,000 people.
It may be a natural disaster they are preparing for but wake of Hurricane Sandy led me to believe the FEMA camps are for something else - 20,000 terrorists that I just do not see and I have been looking since 911.
Quite simply one of the best and most profound PDFs I have read on this website .... ever....well done Dylan Grice...I am emailing this PDF to all those close to me
I absolutely agree. I learnt a few things reading the PDF and what I liked most about it, it gave me the wording and language needed to explain my thoughts to my family. Thank you Dylan.
"We are also increasingly mindful of conversations with friends, family and colleagues that reveal a widespread perception that something is very wrong, though people can’t quite put their finger on what it is."
While that is surely a correct observation, one of the deeper things which is wrong is that those people do not really want to put their finger on what is wrong. Neolithic Civilization was always a social slavery system based on lies backed by violence. Nothing has changed other than technology enabling that pyramid system to grow trillions of times BIGGER. The basic law of L, L squared, and L cubed, from length, to area, to volume, is manifesting itself, with the apparent consequences of catastrophic collapse. Ironically, the solutions are to be found in the sequence of F, F squared, and F cubed, i.e., on the fringe of the fringe of fringe, far, far, far away from those mainstream morons who are becoming dimly aware of the degree that their whole social reality is based on force backed frauds that are reaching their paradoxical point of failure from too much success.
The basic energy laws are still working through human civilizations. However, the ways that we understand those laws have become backwards, since the whole of history has been the runaway triumph of systems of deceits, backed by destruction, becoming refined into systems of financial frauds. MONEY IS MEASUREMENT BACKED BY MURDER. That has become global electronic fiat money frauds, backed by atomic bombs. It is tremendously ironic to perceive that "financial capital is abundant!" OF COURSE, FRAUD IS NOT A SCARE RESOURCE. The paradox of our civilization faces is that the excessive degree to which it was able to back up huge lies with lots of violence, for so long, made ECONOMICS BECOME THE BIGGEST BULLIES' BULLSHIT. The vast majority of people, for generation after generation, have adapted to living inside systems of organized lies, operating organized robberies, which they were brainwashed and conditioned to perceive and discuss through the language promoted by the biggest bullies who were most benefiting from doing that. ... As that grows at an exponential rate, it rather quickly reaches some limits of utter absurdity.
I AGREE THAT "there is insufficient linguistic precision for most people to articulate the problem let alone understand it." However, that goes much deeper than this article approaches ... Human civilization should be understood as an energy system. However, the triumphs of the biggest bullies' bullshit have made us think about entropy backwards, which then follows through every other level, where everything is backwards, and everything is a Bizarro Mirror World being controlled by deceits and frauds, backed by death and destruction, on every possible level, despite those careening out of control at exponentially accelerating rates. While more and more people are beginning to be forced out of the ruts of their previous social habits, and beginning to notice and think about something being wrong, they are still too well conditioned to want to understand WHY, but rather, still feel that they do not want to understand that. The Language of Inflation is basically the language of the Inflation of Fraud.
Thank you. The stress of the situation in the US is sending people to the ER. I am seeing strokes in patients as young as 30, peptic ulcer perforation in a 22 year old, alcohol related accidents in patients who do not have addiction, suicide attempts which sometimes fail, family arguments.
The situation is an emergency. Americans are in danger and they know it. Elimination of the middle class after theft of their possessions and tax liability which deems them unable to afford to pay for a way of life is more than any one person should have to deal with in a DEMOCRACY.