This page has been archived and commenting is disabled.

A Zero Hedge Exclusive: "Too Different For Comfort" - The Complete Louis-Vincent Gave E-Book

Tyler Durden's picture


Stepping back from money management for a moment, Louis-Vincent Gave takes a big picture view of ongoing global developments and the implication for investments, from his perch in Hong Kong as CIO of GaveKal.  The result is a treasure drove of wisdom on robotics, money velocity, Chinese reforms and the new asset-centric monetary system. To wit: "in the past few years, we seem to have embarked on a new paradigm in which our control engineer central bankers have decided that the value of assets must no longer be driven by a price that would be reached today, but instead by whatever best price a given asset may have reached in the past. This is a revolutionary change". 

"In all likelihood, this manipulation will fail as every attempt at price manipulation since Diocletian’s Edict on Maximum Prices in the 3rd century. The only outstanding question is one of timing".  Amidst this momentous change, a few asset classes offer some (relatively) safer harbour – "the RMB attempt to become a trading currency is potentially of the most important financial development... The creation of the dim-sum market may turn out to be a more important event than QE; even if few care and fewer still talk about it."

The attached e-book is gifted from Louis-Vincent and the GaveKal team to ZeroHedge readers, with best wishes for a profitable 2014!

Too Different For Comfort, by Louis-Vincent Gave (pdf)


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 01/05/2014 - 12:45 | 4301757 CH1
CH1's picture

This is the fall of the Roman Empire, v. 2.0

The details are all different, the large factors are all the same.

Sun, 01/05/2014 - 13:08 | 4301812 Normalcy Bias
Normalcy Bias's picture

Yep, even down to the unimportant, but common failing empire peculiarity of 'Celebrity Chefs'...

Sun, 01/05/2014 - 13:10 | 4301816 lakecity55
lakecity55's picture

"I say, Flavius, you must visit and sample the products of my new Chef."

"I will, Mortimus. Mine was carried off by global warming barbarians."

Sun, 01/05/2014 - 13:30 | 4301845 BaBaBouy
BaBaBouy's picture

DON'T WORRY....Todays Money Chargers Have Everything Under FULL CONTROL.

Sun, 01/05/2014 - 13:38 | 4301857 Urban Roman
Urban Roman's picture

... except Bitcoin!

Sun, 01/05/2014 - 13:47 | 4301877 BoNeSxxx
BoNeSxxx's picture

They have Bitcoin too...

Nothing appears suddenly out of nowhere - it is either snuffed or co-opted before we hear (or don't hear) about it.

Sun, 01/05/2014 - 14:00 | 4301894 Headbanger
Headbanger's picture

Thank you Tylers!

Sun, 01/05/2014 - 14:30 | 4301943 Caviar Emptor
Caviar Emptor's picture

Yes. I deny it, but we bankers have convinced the plebes that this is a "democratic currency". :)

Sun, 01/05/2014 - 14:34 | 4301962 OutLookingIn
OutLookingIn's picture

Everything depends upon price.

Price is inherently volatile.

When values coincide, a price is struck that establishes the monetary value at that moment - and ONLY at that moment. Subject to change at the next moment. Price stability is a dream and an oxymoron at the same time!

Sun, 01/05/2014 - 14:53 | 4302003 Caviar Emptor
Caviar Emptor's picture

Yes, we bankers agree on price all the time. Price also depends on the golden rule.

Sun, 01/05/2014 - 16:11 | 4302204 free_as_in_beer
free_as_in_beer's picture

Do unto other before they do unto you?

Mon, 01/06/2014 - 05:28 | 4303850 Theosebes Goodfellow
Theosebes Goodfellow's picture

He who has the gold makes the rules.

Sun, 01/05/2014 - 19:04 | 4302752 Unpopular Truth
Unpopular Truth's picture

Just curious: If bitcoin had already been co-opted, then why don't the banks start offering bitcoin services (and charge fees)?

The value would go up, and these powers that allegedly have co-opted it would make even more money

Sun, 01/05/2014 - 20:03 | 4302912 BoNeSxxx
BoNeSxxx's picture

They will... just aren't ready yet.  It would crush the current monetary meme and it's not time for that yet.

Hegelian Dialect (their playbook) suggests that they will create a good crisis when they are ready... There will be a mad scramble for wealth preservation and massive deflation (or inflation) and guess what will be conveniently standing by as the 'people's' currency?

Sun, 01/05/2014 - 17:17 | 4302398 caShOnlY
caShOnlY's picture

... except Bitcoin!

do you really believe they are fighting off PM's tooth and nail while another enemy walks right in?  Digital currency is the end goal of a FIAT issuing government.  All "cash" businesses will no longer be cash (taxes), black markets (narcotics, guns, etc...) almost eliminated, nothing purchased without some type of record produced.  Only bartering leaves no trail.

Accept Bitcoin! they want you too!

Sun, 01/05/2014 - 17:42 | 4302475 BoNeSxxx
BoNeSxxx's picture

Correct.  The next currency WILL be global. It WILL be digital.  AND it WILL (likely) be Crypto-Based.

I differ with the 'who' behind the end goal... It isn't FIAT issuing government.  It is FIAT issuing Central Banks.  They captured the government a century ago.  Taxes are required by the government (enforcing arm) so that USARY can be paid to the central banks... nobody would turn their labor (or a percentage of it) over to some banker thugs.  But they will turn it over to the government because the government is good and will care for and protect you... Or so the fariytale goes anyway.

Sun, 01/05/2014 - 20:27 | 4302949 caShOnlY
caShOnlY's picture

It isn't FIAT issuing government.  It is FIAT issuing Central Banks.  They captured the government a century ago.

a big green arrow upward to you, Sir.  A very good correction. 

Mon, 01/06/2014 - 05:31 | 4303853 Theosebes Goodfellow
Theosebes Goodfellow's picture

~"The next currency WILL be global. It WILL be digital.  AND it WILL (likely) be Crypto-Based."~

The next currency will be gold. If it was not the Chinese would not be buying the shit out of it. Why is this so? Tell me how much "currency" you would have after an EMP event if it was digital?

Sun, 01/05/2014 - 13:15 | 4301824 DeliciousSteak
DeliciousSteak's picture

Not really. Rome didn't fall as much as it faded into irrelevance. I have a gnawing feeling the US will stick around as the superpower for a long time to come, and if it doesn't it will go out with a bang. Nuclear bang.

Sun, 01/05/2014 - 13:30 | 4301846 NoDebt
NoDebt's picture

We're fadin', baby!  We're fadin'!

Sure, we'll be the world's superpower for a while yet.  Helped, in part, because we'll keep redefining what a superpower is to a lower and lower standard.

Beating expecations ALL the way down.

Sun, 01/05/2014 - 14:29 | 4301950 Caviar Emptor
Caviar Emptor's picture

But think of all the potential for wonderful nostalgic movies, songs, books and theme parties!

Sun, 01/05/2014 - 13:27 | 4301839 TheFourthStooge-ing
TheFourthStooge-ing's picture


This is the fall of the Roman Empire, v. 2.0

It sure seems that way.

I went straight to chapter ten (The US Shale Gas Revolution - A Game Changer?) and I'm afraid Louis-Vincent is a cornucopian believer in skittle-shitting unicorns.

If the US can meet most of its energy needs through domestic production,

It can't, not without a major reorganization away from an automobile-based economy.

will it still need to maintain a large navy and defend the world’s sea-lanes?

That's not a matter of need, but of want, and those that want it don't give a rat's ass about the opinions of the American public.

If the answer is no (as seems likely), then should we not expect another peace dividend to unfold in the US similar to the one that followed the fall of the Berlin Wall?

Another peace dividend? There wasn't even a first one. The MIC and Wall Street saw to it that new enemies were propped up as quickly as possible. Now with the War On Terra®, there's not even a clearly defined enemy which can give up and spoil the gravy train of the defense/security contractor welfare queens. The US is still in the process of losing the cold war. The Russians were smarter in this regard, as they decided to stop playing a game with no winners 25 years ago.

Better yet, current projections have US oil production rising from the current 7.5 million bpd to 9 million bpd before the end of the decade.

Apparently Louis-Vincent hasn't examined well depletion rates as they pertain to tight oil drilling in North Dakota.

While he may be correct in his conclusions in other chapters, in chapter ten he was swinging for the fences and didn't even get a foul tip.

Sun, 01/05/2014 - 13:50 | 4301882 El Vaquero
El Vaquero's picture


Apparently Louis-Vincent hasn't examined well depletion rates as they pertain to tight oil drilling in North Dakota.

While he may be correct in his conclusions in other chapters, in chapter ten he was swinging for the fences and didn't even get a foul tip.

Exactly.  And furthermore, he doesn't even look at US oil consumption in releationship to projected US oil production.  So we're going to be producing 9mbpd of oil in 2020?  So what!  We're consuming somewhere around double that amount right now.  He also makes a big deal over shale gas.  Again, so what!  Using it as a replacement for liquid fuels, such as gasoline and diesel, means that the amount we have won't last as long, and it is also not nearly as convenient.  You can't carry around spare natural gas cans nearly as easily and more importantly, it takes energy to compress the stuff into a tank suitable for a vehicle. 


Without a technological breakthrough combined with a massive reorginization of our economy that is not going to happen by choice, we're all going to get a lot less mobile and probably a lot more hungry in the future. 

Sun, 01/05/2014 - 13:56 | 4301893 skbull44
skbull44's picture

And if Chapter Ten is so off-base, one has to wonder about the other chapters and thus the conclusion. Always 'fun' to predict the future, not so much fun when it ends up being compared to the reality that eventually unfolds in ways no one could have foreseen...

Sun, 01/05/2014 - 14:02 | 4301902 El Vaquero
El Vaquero's picture

You have to wonder, yes, but it could also be a case of the other chapters being within the realm of the author's knowledge and Chapter Ten being outside of the author's expertise.

Sun, 01/05/2014 - 16:14 | 4302224 akak
akak's picture

Exactly.  Kind of like Karl Denninger being able to provide such a wonderfully skillful and thorough diagnosis of the ills and crimes of the contemporary American economy and political scene, and then being so outright batshit CRAZY on the subject of gold, and monetary history and theory more generally.

Sun, 01/05/2014 - 16:16 | 4302228 Sparkey
Sparkey's picture

If a man doesn't know about shale gas, perhaps he just gets his info from his TV? If he doesn't know about the biggest Social Engineering project in US history, What could he know?,,,really?

Read and listen to the `Experts` but do your own thinking, the only true friend you have is Yourself!

Sun, 01/05/2014 - 22:15 | 4303232 El Vaquero
El Vaquero's picture


Read and listen to the `Experts` but do your own thinking...

While it might be folly to argue with Kip Thorne about the merits of general relativity because it takes years of study to even understand the subject, in general, this is very good advice.

Sun, 01/05/2014 - 16:42 | 4302294 janus
janus's picture

in principal, i don't necessarily disagree with your point(s), 4thstoogin...but, on balance, i'm pitching my tent in amongst the Gave camp. but before i get to frackin, i'll say that it seems we've all-but forgotten about that nasty lil 'supplemental' energy source over-stuffing major pockets of this country's hinterlands; and although this administration and the bolsheviks backing them are everywhere doing everything they can to pretend we can wind-farm our way back to competetiveness, 'green' energy is -- yet another -- crafty ruse concocted to corrode america and further 'neutralize' our various advantages.

this 'green' garbage ain't green at all, and it ain't got shit to do with 'mother earth'; it's fuckin red, and its manifesto stipulates that you imperialist swine are to be hobbled till you're limping through life like some fly-besotted bedouin or mange infested tribesman.   

pink-o communist fuckers, santa-janus is gonna ram so much goddam coal up your frackin asses it'll be spillin out your "life-parnter's" stockings.  petro for cars; gas for heat; coal for electricity.  we gots it all; and if'n we employ a modicum of wisdom, we'll get it back...'it' being America.

anyway, 4thstoogin, it's myopic to pretend we understand the limits and/or potential of this nascent technology -- in terms of both extraction efficiency and field discovery.  similar arguments to those you've made were inserted into the petro debate way back when two-stroke engines were drivin pistons on pulleys...we've always thought we'd tap it all long before anymore could be had.  

but, to me, frackin is almost incidental compared with coal.  our coal reserves are enormous...frackin incredible.  but it's 'dirty' and 'sinful' and 'greedy' and 'thoughtless' of us to utilize this astoundingly abundant -- and rather nifty -- hardened hyrdo-carbon.

ps.  mr. gave, grazie!  janus looks forward to his free read.

btw, all you 'patriotic' corn farmers cramming DC with your do-gooder lobbyists...well, i'll be happy to see you all burn in an ethanol-fired hell.  but, look on the bright side, the heat generated by your 'renewable' fuel would barely suffice in popping whatever corn was spilled on the refinery floor. 

i think i'll keep my personal auto -- thank you very much...and, what is more, i favor V-8s.

gitty-up, gitty-up,


Sun, 01/05/2014 - 18:32 | 4302625 trader1
trader1's picture

janus, you reckless C02 emitter!

with that type of thinking on a massive scale, we'll fulfill the minimum 4 C projected rise in the next 100 years  ;-)


Sun, 01/05/2014 - 22:01 | 4303193 acetinker
acetinker's picture

Methinks you're bein' a bit harsh with the fourth stooge.  You're both good guys.  I'll just leave it at that.

More to the point this Gave fellow should maybe be referred to as Captain Obvious.  The entire e-book could be condensed to a paragraph;

All you form-filler-outers and claim-processors can and will be replaced by machines.

Never mind, it only took one sentence.

Mon, 01/06/2014 - 08:48 | 4303958 supermaxedout
supermaxedout's picture

Green Energy

Seems you are missing the developments in Germany. The so called "Energiewende" (energy turnaround) is a revolutionary development which is turning the energy markets upside down.

Simply said its a concept covering all aspects of:  Alternative  energy production, energy storage, energy saving, energy transportation, From a technical point of view many, many problems are already solved and the effeciency of alternative energy is improving constantly at a high rate. For exmple one modern "windmill" is producing enough electricity for appx 7,000 households in Europe. Or its no problem to produce cheap solar energy in Spain and transport it to Germany. The necessary high tech cables enabling to transport electricity over long distances with very little loss of energy are industrial mass produced since appx 10 years (ABBs patent).  The only obstacle why this  European Solar Energy concept is not implemented is France. The electricity lines from Spain to Germany have to pass through France. But France is still in love with nuclear energy as well as fossil fuels (Total).

To store energy is also not that difficult if one really thinks deep about it. Thre are many, many possible ways how this can be achieved. The solution is not going to be one technology it will be many. The trick is to combine these different technologies in an effecient way. There are hundreds of small companies in Germany involved in this field plus the science funding has kicked in in big style.

The decision from Frau Merkel to pour big money into the research for a new energy concept for Germany is going to have worldwide consequences. A total new industry is on the rise. I would compare this with the discovery of coal as an alternative energy to wood.  Before the "coal time" there was only wood to be used as fuel. With the consequences, that Europes forests were nearly all gone for firewood, ships and housing. Coal changed evertrhing including the massproduction of cheap metals.

The alterantive energy technologies are faszinating. For example there exists now a technology which can produce normal plastic (polyethylen, polypropylen for example) with alternative energy plus water plus carbon dioxide from the air. 

A industrial size facility is already producing methan gas (from wind energy, water and Co2) and is piping this into the existing natural gas grid in Germany.  But to make plastic from methan gas is a standard technology.  That means you dont need oil or natural gas to produce any kind of plastic material. Just wind, water and air !  But this is just one aspect and just the beginning of the "Energiewende". Its going to be a another industrial revolution affecting the whole world both positive and negative.  Germany is going to be a winner if things continue while countries depending on the export of fossil fuel are going to be big loosers.    And this was  the reason why in the past alternative energy  was not on the wishlist of the US and UK. But Frau Merkel courageously uncorked the bottle and the genie is now not going back anymore.  She as a scientist (phD in physics) was well aware what she was doing and she had the German population behind her after the Fukoshima accident. Fukoshima was the turning point.

Mon, 01/06/2014 - 09:29 | 4304029 supermaxedout
supermaxedout's picture

correction:    One modern "windmill" is producing electricity for appx 1,000 European households not 7,000. 

Sun, 01/05/2014 - 14:56 | 4302024 graspAU
graspAU's picture

“The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn't want to go bankrupt. People must again learn to work, instead of living on public assistance.”
- Cicero, 55 BC (Roman Philosopher, Senator, and Constitutionalist)

Sun, 01/05/2014 - 22:07 | 4303212 kchrisc
kchrisc's picture

"History doesn't repeat, the crimes of governmnet do."

Mon, 01/06/2014 - 07:32 | 4303905 Notarocketscientist
Notarocketscientist's picture

This will be infinitely faster than the Roman collapse......   when this goes it will go in a matter of days ..... one default will set this off ...... (a Lehman type event) .... perhaps a product of severe unrest (anarchy) in a failing state ............ that will destroy CONfidence ............ and because Central Banks already used up their biggest weapons from 2008 onwards ---- there will be no way to stop the dominos from falling.

The global economy - the industrial society that we built upon cheap energy over the last 200 years ---- is going to tear --- then it is, like a steel cable pulled beyond capacity ---- snap --- and you will want to get the fuck out of the way because the frayed strands are going to lash out and destroy all in their path

Sun, 01/05/2014 - 12:44 | 4301762 IridiumRebel
IridiumRebel's picture

ZH Exclusive? I hope to see more of these as the bulk of my news comes from here.

Sun, 01/05/2014 - 13:04 | 4301802 The They
The They's picture

you mean you don;t watch Democracy Now!?

Sun, 01/05/2014 - 13:04 | 4301808 DaddyO
DaddyO's picture

I would agree with your sentiment, although I do search the web for verification of stories I find on the various blogs and news sites.

My perspective is greatly influenced by the alternative news available on the web.

ZeroHedge is an important part of the overall info gathering I do each day, however ZH has succombed to its own success a bit over the last 12 months or so...

This post is a refreshing departure to what gave ZH such popularity in the limited time I've been here.


Sun, 01/05/2014 - 13:26 | 4301838 Balvan
Balvan's picture

You got to read everything and try to be open minded, because there are both truths and bias in everything. The more various sources you use, closer you are to the overall truth.

Sun, 01/05/2014 - 17:33 | 4302436 MontgomeryScott
MontgomeryScott's picture

Dad always taught me the following:

Listen to what everyone has to say. Apply factual analysis to their statements. Discount anything which cannot be proven scientifically or factually. Take all the rest for further analysis and possible acceptance. Never let your own bias get in the way of the Truth. You don't know the truth, either, so accept the fact that some think they do (and are mistaken, of course).

Now, I guess I will have to accept the gift of this free E-book, and read it in entirety. I find that usually the 'experts' can only predict future events based upon past events (which discounts the factor of the 'unexpected'). Some of these so-called 'experts' even tried to name this so-called factor as 'Chaos theory', in order to justify their past failed predictions. Ah, the hubris of the educated elitists...

It is NOT correct to assume that if you have 'more sources' you are 'closer to the truth'. If 99 people told you that you should touch the hot stove and it will not hurt, but one told you NOT to, would you discount the ONE in favor of the 99 that you claim are 'telling the truth'? D'ya ken, laddie?

Sun, 01/05/2014 - 14:38 | 4301966 IridiumRebel
IridiumRebel's picture

I do look for verification, but isn't that what crytical thinking is all about?

Sun, 01/05/2014 - 14:52 | 4301991 DaddyO
DaddyO's picture

Maybe "fact check" would be a better term...

Critical thinking is in short supply, even here on the hedge.

When I first got here to ZH, the level of discussion and hashing of ideas was breathtaking and not for those who hadn't fully thought out their ideas and positions, myself included.

I had many of my pet ideas and beliefs challenged, trashed and otherwise exposed for their bias.

The discussion has been diluted somewhat by the trolling that takes place, but ZH is still without peer in terms of really smart people discussing today's events with much clartity and unabashed opinion.

I'm sure there are many, many lurkers who would do well by joining the discussion and enlightening us low brows.


Sun, 01/05/2014 - 14:55 | 4302006 IridiumRebel
IridiumRebel's picture

Trolls are multiplying.

Sun, 01/05/2014 - 15:44 | 4302129 samsara
samsara's picture

And they feed themselves so you have to skip over large blocks instead of one troll comment. We need to call them out more maybe?

Sun, 01/05/2014 - 16:52 | 4302318 janus
janus's picture

i hope they continue breeding...janus stays hungry and his appetites are obscene.


Mon, 01/06/2014 - 07:34 | 4303909 Notarocketscientist
Notarocketscientist's picture

This is also good

Mon, 01/06/2014 - 07:36 | 4303908 Notarocketscientist
Notarocketscientist's picture

I do find the MSM sites very useful - what I normally do is have a look at them for explanations of various issues --- and that is helpful ---- because it means that I can rule out those explanations as truths ---  then I visit sites like ZH, Democracy Now, Testosterone Pit ---- trying to find the truth. 


Now I don't necessarily find the absolute truth on such sites - but I know with much certainty that these sites are at least making best efforts to seek the truth whereas I know for certain that the MSM is regurgitating propaganda handed to them by the various ministries of truth

Sun, 01/05/2014 - 12:56 | 4301777 q99x2
q99x2's picture

Did Rome have to suffer 8 years under Caligula?

And they even knew what his real name was.

Thanks for the ebook.

Sun, 01/05/2014 - 13:50 | 4301876 Rusty Shorts
Rusty Shorts's picture

Well, Washington D.C. was origianlly called Rome, Maryland... and the 7 hills...more here>>

Sun, 01/05/2014 - 12:52 | 4301783 Dagny Taggart
Dagny Taggart's picture

Great share. Thanks!

Sun, 01/05/2014 - 12:55 | 4301787 Soul Glow
Soul Glow's picture

Bernanke is lord.  Bow down to the Chairsatan.

Sun, 01/05/2014 - 13:01 | 4301798 Hedgetard55
Hedgetard55's picture

What, another article reiterating what ZH commenters have been saying for 4 years now? 


"The attached e-book is gifted from Louis-Vincent and the GaveKal team to ZeroHedge readers, with best wishes for a profitable 2014!"


Hah. Least you could do after parroting ZH commenters.

Sun, 01/05/2014 - 14:10 | 4301908 smacker
smacker's picture

My best answer to your rhetorical question is that political elitists who wriggle and bribe their way into power do not represent the views of the people they purport to represent. They have their own agendas and once implemented these cannot be changed because that would require them to abandon their own agendas and show humility. Political elites don't do humility.

Sun, 01/05/2014 - 14:52 | 4301998 KickIce
KickIce's picture

Because they want your attention on anything but the root problem - fractional reserve banking.

Divide and conquer.

Sun, 01/05/2014 - 19:36 | 4302856 Blano
Blano's picture

Lol, because the truth is they don't.  That's just the Pathetic Left parroting it so many times they hope people will accept it as truth, even though it isn't.

Sun, 01/05/2014 - 13:04 | 4301803 Cognitive Dissonance
Cognitive Dissonance's picture

Does knowing what is coming, even if only in general terms, assure us this knowing will be ignored?

Sun, 01/05/2014 - 13:06 | 4301811 One And Only
One And Only's picture

When walking into a shit storm it is best to know which way the wind is blowing.

Sun, 01/05/2014 - 13:13 | 4301822 Cognitive Dissonance
Cognitive Dissonance's picture

Normally your advice is sound. But the shit storm you forecast is coming from all directions.

<I advise doubling up on the full body condom and taking deep breaths.>

Sun, 01/05/2014 - 13:20 | 4301832 DaddyO
DaddyO's picture

The prevailing wind will push the majority of the sh*t from the east, as in China.

But your point is well taken, it will swirl from all directions once it hits our shores.

Hedge accordingly...


Sun, 01/05/2014 - 13:55 | 4301887 Soul Glow
Soul Glow's picture

Yeah, radiation is a bitch.

Sun, 01/05/2014 - 13:47 | 4301879 One And Only
One And Only's picture


Sun, 01/05/2014 - 14:00 | 4301895 El Vaquero
El Vaquero's picture

What happens when this shitnado meets the wind turbines we have been putting up all over the place?

Sun, 01/05/2014 - 14:33 | 4301951 NIHILIST CIPHER

 EV     "What happens when this shitnado meets the wind turbines"                                                                                                                                                                                                                                                     Al Gore and the rest of the Gaia loving leftist bullshit spewing morons will be buried in a pile of their own making....karma's a bitch.........bitchez.                                                                                                                                                                                                                                           

Sun, 01/05/2014 - 15:23 | 4302071 logicalman
logicalman's picture

I'm tired of all the bullshit around global warming.

Chemical and radiological pollution will finish us off anyway, long before GW.

Or maybe when the banksters know they are finished and decide to take us all with them by starting WW3.

I find there are 2 issues that have large parallels.

Few know the difference between currency and money.

Few seem to know the difference between weather and climate.

Sun, 01/05/2014 - 14:50 | 4301993 Uncle Remus
Uncle Remus's picture

Sticky wickets?

Sun, 01/05/2014 - 14:48 | 4301997 Uncle Remus
Uncle Remus's picture

Betcha that'll show a nasty hook on doppler.

Sun, 01/05/2014 - 14:54 | 4302005 DaddyO
DaddyO's picture


Bright purple, right?


Sun, 01/05/2014 - 13:12 | 4301807 itstippy
itstippy's picture

"...our control engineer central bankers have decided that the value of assets must no longer be driven by a price that would be reached today, but instead by whatever best price a given asset may have reached in the past." 

Get Bernanke on the phone!  I've got a self-storage unit stuffed full of Bean Bag Babies, Pet Stones, Giggling Elmos, and Flurbies.  I bought them as investments, but their values have plummeted.  If I can get their historical best price plus a modest 10% annual appreciation I could quit the trash business and me & the Missus could retire to someplace warm.   


If Mrs. Tippy could get "book value" for her porcelain Humble doll collection instead of eBay value we'd be living large.


Sun, 01/05/2014 - 13:59 | 4301899 tip e. canoe
tip e. canoe's picture

i know i got a couple of those blue clamshell "built like a tank" G3s lying around somewhere...they were about $2k a piece when they came out.

Sun, 01/05/2014 - 13:13 | 4301817 muleskinner
muleskinner's picture

There is only one problem with what ails America.

A very easy, simple solution to stop what ails the ship of state.

However, the plan is to make the hell hole one complete holy hell, designed in hell and committed to remain to keep it a hell hole forever.   A war of all against all, so the hell is going to be total and at a nonstop gone to plaid shitstorm, so get used to it.

A problem that can be solved, but it won't be.

Must be a special place in hell for the top neocon, Leo Strauss.  The sonofabitch deserves every rung of hell there is.  May he suffer pain and agony for eternity.

Stupid dumbasses like Leo Strauss deserve nothing less, every bit of hell there is.  He'll have Charlie Manson staring at him all day long.

Ship of fools 


Sun, 01/05/2014 - 13:16 | 4301821 JustObserving
JustObserving's picture
"Too Different For Comfort"

Here is something that is too different for comfort:

130 ‘radioactive’ Japanese cars banned from entering Russia


More than 130 used cars from Japan were denied access to Russia last year as consumer watchdog agency Rospotrebnadzor remains concerned about the contaminated water leaks at Japan’s crippled Fukushima nuclear power plant.

Strict control of all cargo, arriving from Japan, will continue in 2014 as well, Rospotrebnadzor said on its website. 

“In 2013, Russia has banned 165 batches of contaminated goods from entering the country. There were mainly used cars – 132, and spare parts for vehicles – 33,” the statement said.

That should help Japanese car sales globally.  How much is that doggie in the window?

Sun, 01/05/2014 - 14:56 | 4302012 Uncle Remus
Uncle Remus's picture

"How much is that doggie in the window?"

Yeah, FZ covered that too...Cheepnis

"Ladies and gentlemen,
The monster,
Which the peasants in this area call FRUNOBULAX
(Apparently a very large poodle dog)
Has just been seen approaching The Power Plant
Bullets can't stop it
Rockets can't stop it
We may have to use NUCLEAR FORCE!


Mon, 01/06/2014 - 07:42 | 4303918 Notarocketscientist
Notarocketscientist's picture

Eating anything from Japan is like playing Fukushima Roulette.   Anyone who visits that place needs their head examined - cuz I am sure the odds of getting cancer a few years down the road are high.

Sun, 01/05/2014 - 13:19 | 4301831 Balvan
Balvan's picture

I will catch up with this book later. Right now I'm reading Greenspan

Sun, 01/05/2014 - 13:40 | 4301868 wisehiney
wisehiney's picture

Gave is right. Who would risk investing in a new business now, with all of the over capacity and mal investment existing? Win their losing game by doing some "rent seeking" this coming Friday when the bogus jobs report comes out. Buy the temporary spike in long t-bond yields.

Sun, 01/05/2014 - 13:49 | 4301875 Sufiy
Sufiy's picture

All markets are manipulated


Rob Kirby: When China Doesn't Get Their Gold - That's When This Ends 

  Greg Hunter has conducted another very interesting interview and Rob Kirby points out one more time to the elephant in the room - derivatives market, which can be on fire once interest rates will start going up. With 10 Year Treasury Yield crossing today 3.0% line in the sand we have very interesting time ahead of us.

Sun, 01/05/2014 - 18:41 | 4302678 Volkodav
Volkodav's picture

Yes, Interesting Rob Kirby interview, that could happen in real.

Chine and Russia both already have much more than reported.

Where history has been long, it is learned to conceal.


Sun, 01/05/2014 - 18:42 | 4302679 Volkodav
Volkodav's picture

Double post


Sun, 01/05/2014 - 13:48 | 4301883 Manthong
Manthong's picture

Congrats to ZH and the author for an Economics book made free and provided in PDF.

I look forward to the read and considering the author's perspective.

Sun, 01/05/2014 - 21:45 | 4303141 29.5 hours
29.5 hours's picture

Yes, there is a lot of good food for thought in the GaveKal report. I've been munching on it for over an hour and have a long way to go.




Sun, 01/05/2014 - 22:19 | 4303243 Manthong
Manthong's picture

The reason I like PDF is that it makes it easy to clip significant statements (with attributions, of course) for my book in progress - “Blood on the Bloomberg”.

Sun, 01/05/2014 - 14:01 | 4301896 DOGGONE
DOGGONE's picture

AND to deceive the people, these histories are kept out if sight!

Sun, 01/05/2014 - 14:04 | 4301903 orangegeek
orangegeek's picture

the MSM loses again


good show Tylers

Sun, 01/05/2014 - 14:32 | 4301949 IridiumRebel
IridiumRebel's picture


The mainstream media is on its last breath, and they are already scurrying to secure phony ‘alternative news’ websites in a bid to stay afloat, but the new era of news 2.0 is already here. And in this new paradigm of content consumption, reality is king. We’re talking about a model in which one person with a smart phone can generate millions of views on YouTube by filming a protest or civil rights violation. No longer are people required to tune into their nightly news programs to hear the ‘latest’ news.

Sun, 01/05/2014 - 14:10 | 4301907 dark pools of soros
dark pools of soros's picture

this must be written by NSA and out to steal your PM's!!!   burn this and all other voodoo ..  keep stackin!! if you can't hold brains in your hands then you can't use them!!!  who needs them!

gold gold!!  only more gold!!!!

Sun, 01/05/2014 - 14:20 | 4301930 IridiumRebel
IridiumRebel's picture

this must be written by NSA and out to steal your BTC's!!!   burn this and all other voodoo ..  keep Digitizin'!! if you can't hold brains in your hands then you can't use them!!!  who needs them!

BTC BTC!!  only more BTC!!!!

Sun, 01/05/2014 - 15:15 | 4302063 dark pools of soros
dark pools of soros's picture

Stackin bits to da Moon!!!  Major breakout today!

Sun, 01/05/2014 - 14:08 | 4301909 rejected
rejected's picture

Very good read,,, loonnnng. Answers some questions generates more. Here is one I am curious about.


How do all those laid off, replaced by robots, workers obtain the money (credit?) required to buy the now completely automated products?

Sun, 01/05/2014 - 14:18 | 4301920 dark pools of soros
dark pools of soros's picture

wait...  you read it and didn't tell the flock that this guy is slamming gold?   do you think they will actually read it?

Sun, 01/05/2014 - 15:26 | 4302078 logicalman
logicalman's picture

been asking that for years.

Sun, 01/05/2014 - 14:23 | 4301933 dragoneyes74
dragoneyes74's picture

I was gonna post about the textbook gold and silver reversal on New Year's Eve but I have a lot going on right now and I already wrote about it several times, so hopefully you were on it.  To be fair, I was looking for a stop run beneath the June lows and this was only 3-month lows, but it was the same exact pattern.  If you didn't recognize how PERFECT it was, break out your charts and let me teach YOU something.  This is the most important pattern in trading and the best example in months.  Add MACD and take a gander at Dec 31st in the metals.  Notice the protracted downtrend from the end of Oct high.  Notice the sideways/slightly higher movement through December and then the sharp move down to new lows with a stop run reversal that forms a hammer.  Not a perfect hammer but good enough.  Take a gander at the MACD divergence on the daily time frame.  Is that not beautiful?  But, wait, there's more.


Zoom into the 5 minute chart and notice what time the spike low happened: 8:45 am ET.  The 8:20am Comex session is the most likely time this would happen.  Isn't that beautiful?  But, wait, I'm not done, there's more.  Notice how the spike low immediately popped up about halfway and drifted sideways for an hour into the US open.  When there's a stop-run spike low, ESPECIALLY after a long downtrend that goes sideways, AND it happens in the Comex hour, if it breaks upward from the sideways drift it will have continuation you can count on a very high percentage of the time, and it is often a reversal of at least the short-term trend, if not more.  Meaning, you can count on it for at least a few days.  If the big money behind this move wanted to send a bearish message, the selling pressure would have continued after the sideways drift so it could close the day at the lows.  Isn't that beautiful?  But, wait, there's more. 


Look at the volume behind the move up from the sideways drift.  This is textbook.  There is nothing missing.  This is a trade, if you are anticipating it  and watching every tick that morning, that you can get really aggressive with because if the outlier situation happens and the move up from the sideways drift is a fake-out, you will know instantly that you must abort, so your loss is small even though your size is large.  If I still haven't convinced you, take a look at the gold and silver lows on 10/15.  If you still aren't convinced this is a reliable topping/bottoming pattern, take a look at Crude when it reversed recently at $91.  Look at Crude when it topped at $112 in Sept.  Take a look at the recent Euro reversal at 1.38.  Still not convinced?  Okay, let's break it down. 


Why does this work?  You have to see thru the price action and read what the big money is doing.  You have to understand their positioning, the sentiment, what is driving the move, and what are the mechanics and reasons behind a stop-run.  When the big money wants a trend to reverse, even short-term, they will quietly position themselves ahead of time as the trend followers push price to an area near support (or resistance) so all the early weak-handed contrarians out there can have a low risk shot at the reversal because they can put their stops just past that support level.  This is when the market is moving sideways after a protracted trend.  The Big Money is switching sides, or lightening up, and baiting people into building stops in one area.  Think about the mechanics of a stop run.  It is an exchange of sell contracts for buy contracts.  So if you're the Big Money players behind the algos and you built a big short position before the trend started and are now switching sides by taking profits on that short position and building a long position to prepare for a move in the other direction, OR just lightening up your shorts but holding a core position so you can build it back up at a higher price, what is the best way to get the best price for as much of your short position as possible?  Well, wouldn't it be nice if there was hundreds if not thousands of sell contracts all in one small area?   How convenient.  Now you can buy all of them and cover your shorts at the spike low price for maximum profit.   


Sometimes in the equities market it's just a backtest that doesn't quite pierce through but it reverses after a similar pattern.  This often happens when a trend ends with a scary V or inverted V move down that frightens everyone.  Since there wasn't time for stops to build, the backtest doesn't pierce to new highs or lows because there are so many people willing to get out that they jump at the backtest early due to shift in sentiment.  


Are you still not convinced?  Look at the May reversal in equities the last three years.  Take a look at the equities top this past Aug/Sept.  Did you see how long it moved sideways at the highs, giving weak contrarians the chance to go short and build stops that kept getting run?  Look at the gold and silver tops in 2011.  Understanding the topping/bottoming pattern is the most important thing to know in trading, but there are a lot of veteran traders who haven't seem to have studied it at all, yet they are successful in their own niche.  Add this to your arsenal.  Does it happen perfectly every single time?  I would say of course not, but it sort of does.  Obviously, you can't blindly count on it b/c if it happened every time I'm sure it would stop happening from everyone becoming aware of it.  The point is you need to be aware of this pattern b/c there's no reason to guess when you should take the contrarian trade just because it feels oversold or overbought.  You wait for this pattern and if it's the small percentage of times when it doesn't happen and you get a V or inverted V reversal with some Black Swan event that never backtests, so what, you miss that one.  You could make a living just trading this one reversal setup the three or four times a year it happens in each of the different markets.  It probably doesn't apply to individual equities because they act more like insane children than anything you can count on.  While I am learning how to trade individual stocks, it's way more of a blind crapshoot than asset classes that have COT reports where you can get an idea of what's going on under the surface.  How about a "for instance" you ask? 


Take oil for instance.  The positioning got so extreme in Sept that the long side was doomed.  It was just a matter of time.  When the geopolitical risk faded and the topping pattern happened, that was a great risk/reward setup (that I didn't take).  I was 'fraid.  I waited till it broke the swing low and ended up taking some heat on that one until it worked.  The best time to take a trade is when it's hardest to pull the trigger.  It was small size so it didn't matter and isn't the point. Then oil unwinds, completes the bottoming pattern in the low $90s, which I caught a small piece of, again in small size b/c I don't like oil.  But here's the thing.  When it approached $100 again the positioning became really extreme.  Does that mean it can't go higher?  Of course not.  COT positioning isn't about timing.  It's a red flag that tells you when the odds are that the easy money is over and you should no longer be on the side of the Specs, especially not in size.  Commercials end trends.  I didn't think the recent oil top at $100 was all that shortable but it was definitely not a long.  You can't get that kind of edge in equities when some random dude can downgrade a stock to get a better price out of nowhere.   Does COT positioning work every time?  Of course not.  If it did it would stop working b/c everyone would become aware of it.  Take the Cattle trade in Nov.  Extreme positioning.  Didn't work.  The positioning is even more extreme now.  Unless something fundamental happens that scares the Commercials to cover, it's most likely doomed.  But what I learned from that trade was: WTF am I doing betting on cows?  I have no business in that market.  


A better example of COT positioning is the Yen, which is also extreme.  The difference is the Yen has a strong fundamental driving force in the BOJ's commitment to devaluation.  If Abe even whispers about slowing down, the unwind could be severe.  If equities sell-off it could unwind the Yen.  So you have to be very careful, however, there is fundamental fuel so it's possible to see the rare commercial-covering, insane grind lower.  You want a "for instance"?  Silver 2011.  How about equities 2013?  You know why there was no cyclicality?  Because the Commercials would cover so quickly on every down move, supporting the trend.  Why?  B/c they 'fraid.  Of who?  That bearded guy.  Market makers kill it in range bound markets, but they have to scramble for their lives in strong trends.  Eventually, they get their due because they have deep pockets and trends can only go on so long before they get exhausted and have to correct.  But the V-shaped and inverted V-shaped tops and bottoms that have no backtests are the outliers in my opinion.  Which means what you ask?  It means as long as you are buying pullbacks away from the highs, you should feel confident that if the market is going to reverse its trend in a meaningful way you will get an opportunity to get out on the "not quite guaranteed but almost" backtest of the highs if you can take the heat and believe it will happen.  Could the very next time after I tell you this be the exception that doesn't come back?  Sure, but it's the exception not the rule.  Being able to recognize the "typical" top and bottom pattern, especially when it happens with extreme COT positioning is the most important knowledge in trading.  It will help you avoid continuing to buy the dip when the trend has changed, and it will keep you on the right side of the trend while until it happens.  You can even top tick the trend reversal.  And if we get the rare black swan inverted V top?  Big deal.  Seriously.  If you've made profits all the way up the trend, what's the worst gap down in the S&P that could happen?  25 points?  30?  So, get out and short the rally.  You'll make it back.  You shouldn't be full size at the top anyway.


While I'm waxing philosophic, I will add that I'm happy to share my thoughts and trading ideas, but I'm not going to be bothered with updates if things change and I'm busy.  Trade management is on you.  If I happen to point something out you like but didn't notice and you agree with it and take the trade, I hope you trade it better than I do. And I have a lot going on right now and don't always feel like commenting.  I'm finishing up an animation of the pilot I wrote, directed, and acted in.  I wrote a 12-episode first season of a sitcom (that is my background), and had the chance to independently make the pilot as an animation, and it's coming out great, and nearly done, so I be busy yo.  I'll post it here when it's finished in a month or so.  I'd classify it as a somber comedy based in the inevitable depression that is our future.  Trading is not what I want to do with my life.  This animation is kind of the end of the road, though.  If I don't get anywhere with it, I'm gonna take trading more seriously and start a blog or something with charts and videos and whatnot.  I like the outlet.  But only if I feel like I'm helping.   I'm not into hurting people. 


Anyway, here's my thoughts on the asset classes I like to trade: 



Unfortunately, the easy money reversal pattern that I make sweet sweet love to is over, so now you have to be careful because the long side is counter trend so there are a lot of sellers out there looking to short the rallies.  Gold tends to ring a bell when it reverses, and while that was technically my favorite bottoming pattern, it wasn't the June low stop run I was expecting, so it was more like a handbell instead of a giant gong-like reverberation that says THIS IS THE BOTTOM (which makes it likely bearish).  The 50-day is right overhead current price.  And just beyond that is the downtrend line from the Aug high thru the lower Oct high to what could be the lower Jan high.  Because this reversal happened at the 3-month lows, it's possible that we get a bigger bounce that you'd think and grind our way to the 200-day, which by the time we get there would also be horizontal resistance at $1335 in gold and $22 in silver.  Because this is counter-trend and we've been up three days now, if you're feeling dangerous you could buy a pullback to the 20-day with small size, or the breakout of the 50-day.  The way I trade is I take half off after an undefined but decent bounce, which is now, and I let the other half run while I move my stop to break even.  I expect resistance at $1270, so I'll sell the rest there if we get there and look to buy a breakout of that downtrendline, or possibly short it depending on price action.  That's an important line in the sand, so you have to respect what happens there, if we make it.   I do expect this up move will run out of steam, so the long side is dangerous until and unless both gold and silver establish themselves for a couple days above that downtrend line.  If the 20-day is lost on a closing basis, I will abort any long exposure.  If that wasn't clear, I think there's more potential upside to this bounce but it is counter trend, dangerous, and will likely run out of steam.  


*Obviously the hardest thing in trading is knowing when to exit, mostly because it's impossible to be right.  You're either too early, or too late.  And playing counter trend can not only get you in trouble but it can cause you to lose a great opportunity to stick with the trend.  The best case scenario is taking a counter trend slice out and then reverse back in the trend.  But that is easier said than done.  It's probably better to just wait for the pullback and stick with the trend but that gets you in trouble and leads to missed opportunities if the trend has shifted and you don't recognize it.  There is no one-size fit all answer to this.  


Short Yen

The Yen got toasted at the 20-day.  This is the most interesting trade out there right now.  It has extreme positioning, however, something clicked in my brain recently and I think the short Yen trade is still in its infancy.  I was doing this with futures b/c I'm a short-term trader, but I've decided this is a long-term trade that I want to build a big position in, so I'm going to do it by going long the USD/JPY because it has positive carry and no commissions if I want to move partly in and out.  One year ago I was pounding the table pretty hard about shorting the metals.  This is not quite so easy because we're already so deep into a trend and too many people are thinking the same way, but I think Kyle Bass is right about the future of the Yen.  I think the Yen will be the first currency to be destroyed in this era.  I'm scaling into this position due to its overbought status but I will be adding on any pullbacks and will not be afraid of heat.  Unless Abe changes his policy, I think he will have no choice but to do a massive all-at-once devaluation and you want to be on the right side of the trade when that unexpectedly happens on some random weekend in the coming year or years. 


Long Dollar

This trade still has a lot of easy money in it (I will be shorting the Euro).  The dollar is sitting directly below it's 200-day.  If you look at the chart you will see back in Nov it had 3 spike fake-outs thru the 200-day that reversed and burned anyone playing the breakout.  So you need to be careful about it, but if the dollar breaks thru and holds, I expect it to run for at least a few weeks and probably a few months and maybe longer.  I think a test of the $85 high is in order.  But I will add, even though I danced a beautiful dance with the Euro all thru 2011 and 2012, this trade has stymied me the most in 2013.  I was still profitable overall but I was out of step.   Hopefully, that will change now.   I think Draghi will likely get looser in 2014 and the Fed will think it can continue tapering until the market slaps it upside the head, so...bullish dollar/bearish everything correlated to it.  Could that be equities?  Maybe, but not necessarily.  Remember, they are insane.   As long as the Yen carry trade is on (but before the Yen collapses) equities COULD continue to get more insane.  I will wait to short the Euro until the dollar breaks the 200-day.  Although, I might be tempted to sneak in small early if we get a bounce this week.  


*I think the currencies are the trades with the most room for profit for the foreseeable future



If it bounces back to the MA convergence, it's probably a short with defined risk strategies due to the possible positioning unwind and the likelihood of a bullish dollar this year, but I'm not sure if I want to get involved with crude.   She's a gnarly one.   I'll see if we get that bounce.  



The easy money is over from the bond short too.  If they lose the Sept lows and hold, there's no reason they won't keep going, but it's too oversold for me.  There's bullish divergence on the weekly charts, so we could see a sustained bounce at some point, and if equities top out for a prolonged correction, bonds might catch a sustained bid.  Not interested at the moment.  Too many conflicting forces at work.  



The easy money is likely over in equities, but I think you have no choice but to keep buying pullbacks, then lighten up on approaches to new highs, and scale out when you get a decent extension, whatever that means to you.  I'm talking indexes.  Obviously, the stock market is a bubble and the bull/bear spread is extreme, and there's a debt ceiling mess upcoming, but a trend is a trend.  You buy pullbacks until the positioning gets extreme and there's a reversal stick.  End of story.  I don't like it.  I don't make the rules.  I trade.   You will be right the whole trend and wrong once.  That sound favorable to me. 


The million dollar question is how deep of a pullback do you wait to buy?  I don't know.  When I'm uncertain I'd rather wait and see.  We'll see what the big money does this week when they come back from holiday.   I am concerned about the debt ceiling mess next month but it might be early for those concerns.  To me, the time to go all-in was after the taper announcement.  Now is a time to stay small, stick with pullbacks in strong stocks, take quicker profits, and wait for an obvious opportunity. They always come. It's a matter of discipline and patience to wait for them.  But that's just my style.  Tight and aggressive. 

I would like to point you in directions of a few people I respect and have learned from: (there are others)

I learned a lot about trading individual stocks and options from John Carter.

I learned a lot about options from Tom and Tony at Tasty Trade.  

I learned a lot about COT positioning from Steve Briese at Bullish Review.  You can get the info for free on Bar Charts, but Steve complies the data and has a take that's worth listening to.  I especially like when I agree with these guys but ultimately I do my own thing. 


Sun, 01/05/2014 - 19:50 | 4302886 Blano
Blano's picture

That was quite a dissertation.  Gonna be spending the right of my night digesting that one.  No Duck Dynasty for me I guess.  : )

Thanks for the insights.

Sun, 01/05/2014 - 14:31 | 4301939 smartstrike
smartstrike's picture

In 2007 GaveKal argued that Americans had massive savings that were not correctly counted. These savings were in form of 'sweat equity' that homeonwers sunk into their houses; that's home improvements that were not reflected in value of their homes.You see, Americans were rich beyond their dreams?

Do these shills ever write anything that does not reflect the status quo of the elites?


Sun, 01/05/2014 - 14:45 | 4301984 Caviar Emptor
Caviar Emptor's picture

The empire is already crumbling from within. The original guiding principles have eroded and are loosing direction. Except for the pursuit of happiness, which is soon to become the only principle any one will remember or care about. Happy, obese and apathetic.

Sun, 01/05/2014 - 15:20 | 4302073 Morgan le Fay
Morgan le Fay's picture

This is a remarkable achievement in that I did not agree with most of the conclusions reached in the first 50% of the book.  i did not read the whole thing, but i have to say when you start out with the wrong premises it's downhill from there. 

Think of it this way Mr Gave, US citizens essentially have to compete with their own capital which is not being invested in the US.  Furthermore, we have the burden of the Reserve Currency and massive regulations which someone today (in another Zero hedge article) estimated  equate to 1.5 Billion in costs to the US economy. 

All this intervention in Interest rates worldwide has created exceedingly high input costs in all areas except labor.  So in order to generate a profit companies have to overcome the additional hurdle of artificially high material and land prices.

But hey maybe i'm wrong and you're right and It's all the fault of those damn Robots...

Sun, 01/05/2014 - 16:26 | 4302249 jonjon831983
jonjon831983's picture

The Robolution is what has been interesting me and this brings up a lot points.

1) Robots do our work, it pushes employment to different areas and increases the competition for them.  Either really low wage menial stuff or further high tech stuff to design machines... (design machines that create / design other machines? then we'd be truly f'd).

2) It appears more so now to me that governments are becoming trapped, enslaved by this new force.

ie. A gov't is influenced by big business AND competitive pressures with other countries to allow Robolution - or else they miss out.  The solution appears so far to be for governments to curb Robolution.  The dilemma is that other countries may not be willing to do the same (and of course political/business interests not willing).  A sort of prisoner's dilemma then with the first to defect winning.

3) We have potential for further deflation of pricing - if things get so cheap anybody can afford them.. save for the cost/available supply of inputs such as material and fuel.  HOWEVER, there will be deflation of wages as well.  So who can afford these things if wages decline faster than prices?  The dynamic is different also because existing conditions in place with high debt.


4) Another interesting point from the book is the IP aspect - the developed countries holding it have considerable power - and the companies can live off the royalties... it is of growing importance.

So yes, how do we invest in Robolution :P

Sun, 01/05/2014 - 16:34 | 4302263 logicalman
logicalman's picture

Once everything is made by computers & robots, we will all be able to take the day off.

One small problem, at that point, robots will likely be keeping humans as pets.


Sun, 01/05/2014 - 16:38 | 4302277 ebworthen
ebworthen's picture

Thank you Mr. Gale, Tyler, and ZeroHedge.

Downloaded, but not read yet; looks chock full off good stuff.

Sun, 01/05/2014 - 16:56 | 4302335 Professorlocknload
Professorlocknload's picture

"the value of assets must no longer be driven by a price that would be reached today, but instead by whatever best price a given asset may have reached in the past."


The guy lost me here. In a world of ever depreciating currency, of course nominal prices will use the last high as a new base. What the hell, does he think the price of a Ford is going back to $695, and a beer $.05 ?

Sun, 01/05/2014 - 19:54 | 4302831 itstippy
itstippy's picture

Fords and beer are generic consumables, not assets.

Houses are traditionally considered appreciating assets, good as investments or as collateral for loans.  But why should a ten-year-old generic suburban house be worth more now than when it was new?  Your Ford isn't.  Houses wear out just like Fords do.  Everything's been weathered for ten years: siding, roof, driveway, plumbing, mechanicals, etc.  Mother nature is relentless at destroying manmade wealth.

Ten-year-old Fords, beer, and houses should cost considerably less than brand new ones, even in nominal terms, unless there is something outstanding about them that makes them more desirable as they age.  

Sun, 01/05/2014 - 17:23 | 4302410 Black Forest
Black Forest's picture

Thanks for publishing that paper.

Sun, 01/05/2014 - 20:15 | 4302931 khakuda
khakuda's picture

Ditto. Nice read for a bitter cold afternoon. I'll be passing it along to some colleagues. I won't say it broke much new ground for those of us on the same page, but it was a very, very well stated and organized piece and appropriately critical of central bank policy which seems to be, "if we can't get it right the 1st or 2nd or 3rd or 4th or 5th time, we'll just keep doubling down in our intellectual arrogance, as we are smarter than everyone else and the markets as a whole."

Sun, 01/05/2014 - 17:48 | 4302483 The Econ Ideal
The Econ Ideal's picture

“Remember Louis, money managers are not paid to forecast. Money managers are paid to adapt.”

Hence BTFD/BTFATH. If those "money managers" lose money based on that strategy, they will simply say "there were no alternatives." This tome doesn't really advocate anything different. I think many of us are looking for something completely different, not the same old "invest in the next Ponzi scheme." The equity markets are a Ponzi scheme. 

As for the text on the collapse of the velocity of money, the author forgets that there exist many funnels for hot money with metrics that have replaced traditional measures such as velocity of money. 

Sun, 01/05/2014 - 18:13 | 4302567 highwaytoserfdom
highwaytoserfdom's picture

is Bitcoin Constantine's coinage reforms?

Sun, 01/05/2014 - 18:13 | 4302575 BidnessMan
BidnessMan's picture

But you have to sign up for some Scribd account to get the book?  Sheesh - no thanks. 


I get way too much Junk Mail as it is already.

Sun, 01/05/2014 - 19:32 | 4302840 realWhiteNight123129
realWhiteNight123129's picture

Good report on politics in China, way too broad brush on energy numbers,

There are 87 cars per 1,000 inhabitant in China, 65 in China and 780 in the US. He fails to account for the decrease in conventional oil production in shale areas and hte realities  of the well productivity.

Also there is an internal contradiction between the export of heavy equipment of China to the emerging world and a rosy scenario on energy, because the emerging world acquiring heavy equipment means a huge ramp-up in their own energy demands.




Sun, 01/05/2014 - 21:19 | 4303075 Atomizer
Atomizer's picture

Thanks Tyler, bookmarked for later reading material. 

Sun, 01/05/2014 - 21:58 | 4303184 Cabreado
Cabreado's picture

We've reached a point where (effectively) hiding behind corrupt points of control is not only glaring, pathetic and obvious, but ironically should also indicate how we got here.

We're stuck, though, because there are no forces in play to overwhelm the simply corrupt ones.

That is sad commentary on us all.

The only way out of this is via humility and insistence on playing by the rules.

Unless you never grew up...

Sun, 01/05/2014 - 22:27 | 4303260 Playtime's Over
Playtime&#039;s Over's picture

I hope I can add something useful.  I swear that so much of these problems just seem to suggest Americans are looseing IQ and can not do math?  Case in point.  Green energy.  Take 1 millions bushels of corn and make a big still. Then burn a millions gallons of petro to fire the still.  End product runs your vehicle and gums up the engine in time.  OR.....take the petro and make gasoline, car runs like a champ.  Take the corn and feed a couple of cities.  Which one costs less?  Which one is more "efficient" of resources?  My theory comes from watching Americans jump in the various lotto schemes nowadays.  Simple math tells you that your odds of winning are just short of impossible.  But folks are willing to reason otherwise and spend hard earned money to go up in smoke.  Sober intelligent people do not give away thier money?  Gees, I just realized I am talking about the stock market too.  Right now folk like me look like a fool, I wouldn't jump into the market for any amount of money because I don't have insider info when to pull my money out before they lock the doors and burn the fools inside.   

          I like ZH and learn something new all the time.  Lots of smart asses that just like to swagger, but lots of level headed stuff too.  

Happy New Year, maybe it will all go poof this year and we can set a torch to it all and start fresh. I can dream.

Sun, 01/05/2014 - 22:29 | 4303275 Playtime's Over
Playtime&#039;s Over's picture

Hmmmm, humility and playing by the rules?  Just what many Americans have been doing for a long long time.  Maybe we don't like the rules which forge our chains?????  Big problemo.

Sun, 01/05/2014 - 22:47 | 4303311 vachon
vachon's picture

Thank you, Mr. Gave!

Do NOT follow this link or you will be banned from the site!