The Equation That Explains It All

Tyler Durden's picture

Authored by Mark St.Cyr,

If you were just woken from some form of suspended animation from let’s say 2010 (ancient economic history in today’s terms) then informed of the current state of global political affairs and upheavals, U.S. employment (95+million not,) global currency gyrations, interest rates at not only 0% but some -0%, threats of escalating wars, threats of major confrontational war, GDP of the major global economies not only contracting, but below statistical stagnant, governments, as well as central banks with balance sheets of debt calculated in $TRILLIONS, some in the 10’s of, all financed at near or below 0%, and the Fed is only about a week away from raising rates into the teeth of what can only be called “uncertainty,” and much, much more. (There isn’t enough time, or digital ink to list them all.)

Nobody would be surprised if your first reaction based on your prior acumen (the ancient history of 7 years ago whether it be in stocks, business, or both) would to become immediately concerned that whatever portfolio, or wealth you may have had in the markets, may be worth far less today than when you were first put to sleep. And probably becoming ever smaller as you thought about what you might need to do next in order to preserve any that may be left.

That is, till someone explained to you the markets you went to sleep knowing of – are no longer – and the reality of the markets today you could never have dreamed up. Even if they let you sleep another decade or longer.

Today, the markets you once knew of are better described as the “markets.”

To clear up any confusion as to how, or why, the “markets” can now be at “never before seen in the history of mankind highs” once again after the resounding “NO” vote in Italy, where the entire E.U. experiment is now seriously undermined, and falling apart in real-time (Brexit first, Italy will surely now vote next, etc., etc,) below is the calculation that explains it all.

For under the rules of: If A = B and B = C, then A = C, you now have the magical formula to understand with Einstein like surety today’s ‘markets.”

If you have any doubt to the soundness of this expression, consider the following:

If a financial crisis appears (A) The central banks will intervene (B)

 

If the central banks intervene (B) The “markets” go up (C)

 

Thus, we need more financial chaos (A) To make even more all time “market” highs (C)

That is what “the greatest expression of capital formation the world has ever seen” has devolved into.

I’ve now come to the conclusion that even the term “casino” may no long fit. For these “markets” are no longer working on anything based on statistical math or economic expressions. Or, anything else related to understandable business metrics such as: a company’s value is based on net profits or any such thing.

No, there’s only one word for it now as to explain just how beholden it is to adhering, and repeating the above calculus. And it just so has it, Einstein said it best:

“Insanity.”

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dogmete's picture

The "people" are at fault for embracing a system that's flagrantly stealing their wealth. They bitch about it on and on but they don't really want it to change and they don't even have much interest in learning how it works.

EndOfDayExit's picture

The markets are functioning as they ought to - by discounting the most important variable at the moment, that is, the amount of spare money the market participants are expected to have in the near future, be it QE from central banks or all that extra cash the companies will soon be repatriating and spending on share buybacks. Economic fundementals are not important exactly because they suck and everyone knows it, just as everyone but a few nut cases is now a firm believer that the CBs will not allow this show to crash anytime soon.

It may be a bad idea to participate in this show with one's own money, but for those playing with somebody else's money what is not to like?

S Spade's picture

for the last eight years the markets have moved almost in lockstep with our skyrocketing debt, in a stagnant to negative growth economy...this isn't a market in the conventional sense, it's li'l more than a show for dough.  market makers / computer algorthitms throwing shares back and forth to rachet prices in a zero sum game (aside from squeezing shorts along the way)...where at the end of the day everyone holds the same number of shares, no one's lost, no one's gained, and the stock price is 5% higher.

ZeInfidel's picture

If A = B is different from If A then B.

This is dumb.  Should have used syllogisms explanation instead of formula.

Ajax_USB_Port_Repair_Service_'s picture

Feed the market black swans to faten it up for the kill.

yogibear's picture

Infinite bull market due to infinite money from the Fed.

A rope leash's picture

The only real question is how does something come from nothing.

 

?

arby63's picture

That's an excellent question. I must also wonder how long it can last. We're living in a very strange world full of scams and big government. There's not much else except on the local level.

I marvel at the gibberish commercials I hear on the radio and sometimes on TV (which rarely gets turned on at my house). Everything is a scam. IRS protection; loan scams; fixing credit cards; big pharma pushing pills; super foods; life insurance; etc. It's simply amazing!

These marketing campaigns cost MILLIONS of dollars! Not just any joe blow small business guy can afford to saturate the airwaves with non-stop commercials offering debt relief or a razor.

There's much more afoot. We're on a dangerous path of total economic devolution.

Kprime's picture

it springs from a quantum

subversion's picture

Is that the equation that proves Einstein was a poster child and a thief?

UnKeynes's picture

"woken"?  Is that "Millennial" for "awakened", perchance?

Just curious.

HopefulCynic's picture

I love it, they make it so simple to make money, and I like joining in, why not, I also want to benefit from their own undoing and that of the US. WIN WIN

stant's picture

The AnSErw is 48

opport.knocks's picture

The last posters here are far closer to the truth than the author, equations in the form of xyz = abc are absolutely useless in understanding markets.

Set theory, game theory and probability are where the rubber hits the road.

 

The Dugster's picture

2+2=4, Common Layman

2+2= approximately 4, Accountant

2+2= whatever you want it to be, Economist

whatamaroon's picture

If it wasn't for plastic we would still be living in tee-pees

Nolde Huruska's picture

God is love.

Love is blind.

Stevie Wonder is blind.

Therefore, Stevie Wonder is God.

QED

wisebastard's picture

so you have 6 and then you have to take a way 3, so you take away the 3 and BAM that leaves you with 6

micmac's picture

crystal clear 

Kprime's picture

“Asphinctersayswhat?”

turkey george palmer's picture

If ,the market goes up enough it will pay to invest if it does not then it will pay not to . Either way half get paid. So it's all fair.

Just invest and not invest at the same time and you'll do twice as well as if you hadn't done it. Except not doing it is still doing it so no matter what it will get done.

ichan's picture

Short sweet, and a punch like Tyson.

Man so depressing.

ichan's picture

Short sweet, and a punch like Tyson.

Man so depressing.

Rachid ELAÏDI's picture

https://a.clyp.it/tzqznycl.mp3

 

C'est cohérent mais pour être juste il faut voir l'application . par exemple ; Syrie est en guerre civile et la guerre civile est aussi en Irak mais la Syrie n'est pas dans l'Irak .certes ,il y a DAESH dans les deux pays qui fait le point commun ,mais chaque pays a sa propre guerre ; en Syrie , il y a une guerre pour renverser Assad et les autres composantes rentrent en ordre car les détenteurs considèrent Assad comme objectif ...en Irak , c'est un combat contre DAESH ,une sorte de libération de leur pays de la main d'une grande organisation criminel qui n'attaque que les pays à ressources (Pétrole;gaz...) et commercialise la vente du pétrole à un prix qui défie toute concurrence ! Par contre ,DAESH est une des sources à déstabiliser la Syrie,l'Irak ,la déstabilisation peut aussi exister au Maroc donc DAESH est une des sources de déstabilisation au Maroc. Pour être juste , les composantes de la déstabilisation existe partout dans les 23 pays arabes et en particulier au Maroc et qui peut donc être une des composantes de la déstabilisation est la police même ,qui maintient l'ordre et en même temps le désordre;quand il existe un désordre à l'intérieur de cette institution par le sureffectif et le nombre des bergagues affilés à la police ...en sus de la corruption même ,si le pouvoir en place leur accorde tout y compris de l'or ! Pour surveiller et maintenir l'ordre ,ce désordre se traduit par l'intervention de l'armée car aucune institution seule,ne peut éviter une guerre civile et donc une déstabilisation qui est dans l’œil de cyclone DAESH . Pour qu'il existe une relation de cause à effet il faut que l’État soit solidaire qui est par définition un peuple, une gouvernance et un pays ? Si donc le peuple est insatisfait de sa police ,l'équation est donc fausse,car il y a trop d’ingérence, trop de faible pensée ,un exécutif très bas et des démonstrations de force, sur un peuple démuni ,faible ,afin de donner les exemples ou de montrer quoique se soit et surtout une police sans formation si ce n'est des tacticiens de très bas niveau ,par exemple ,un premier policier qui fait un divertissement un deuxième qui est d'un autre service vient le contourner , un troisième policier qui est avec le premier policier et qui a pour rôle de surveiller et d'observer attentivement les réactions du citoyen victime, donc d'un niveau très bas et qui explique aussi la divergence des méthodes policières...car il faut savoir l'équation vraie est la satisfaction de la police par le peuple(une majorité et non l'absolue car comme disent les arabes '?????? ???)et donc pas par le régime en place(ni la maison blanche, ni les palais présidentiels ,ni les palais royaux...) cette équation peut s'écrire mathématiquement : A =B ET B=A avec A est le peuple et B les institutions de l’État et non du régime en place ,ici si j'ajoute C le régime alors A=B ET si B=C alors A ne peut jamais être égal à C ,car pour la simple raison qui est dans la définition même de l’État ,il y a donc,une gouvernance par le peuple lui même , qui suppose la satisfaction de ce peuple à ces élus qui sont choisis du propre grès du peuple même et, donc issue du peuple et non d'un régime qui achète,avec l'argent du peuple, les institutions de l’État en substance et en biens et j'ajoute donc l'équation suivante comme hypothèse un régime n'est jamais issu du peuple,même s'il est composé du peuple, il est la contre volonté du peuple ,d'où l'armée qui voit et observe les dérives du régime en place à faire des préférences qui n'ont pas lieux d'être si ce n'est de protéger le régime en dressant une partie du peuple contre le peuple , car même la police ,toute entière ,ne serait jamais solidaire et avec n'importe quel régime; une police qui profite ,certes ,mais sait pertinemment qu'un jour l'armée l'interroge d'où avez-vous fait cette fortune et cet avancement en grade ...et donc la meilleure équation qui existe et depuis l'aube des temps est A=B et rien d'autre... donc pour le Maroc une première république marocaine , un changement des régimes dans les 23 pays arabes ,car tous ces régimes ont un vérus qui s'appelle le régime dictatorial en place qui est la dictature même qui empêche l'équation A=B et rien d'autres...