Consuming Our Future: Das Warns "The Model Was Always Doomed To Fail"

Tyler Durden's picture

Only lowering our living standards will achieve sustainable growth. That’s the message from Satyajit Das, a former financier who anticipated the GFC. Debt, energy consumption, housing affordability or superannuation – it’s all based on a financial system that’s in fact a completely fictional model. This model was always doomed to fail – eventually.

Beyond growth as we know it – How can we stop consuming our future?

Full Interview below

 

As Das concluded previously, nothing has really changed since the 2008-09 crisis. Low interest rates encourage borrowing. Artificially low capital costs have allowed unsustainable businesses to continue, generating sub-standard returns. Companies seek glib solutions to the complex problem of earning adequate returns by re-engineering their finances, rather than improve their operations.

Governments also are increasingly borrowing and adopting private-sector financial engineering techniques to deal with economic problems. Governments have increased their debt levels, in some cases resorting to forcing purchases of bonds by central banks, domestic banks, and captive institutions such as state pension funds.

 

Conventional and innovative monetary policies have supported aggregate demand and helped maintain economic activity to prevent prevented even deeper recessions. Policies that have sent both real and nominal interest rates to ultra-low levels have resulted in re-distribution of income and wealth.

 

According to a 2013 report from the McKinsey Global Institute, between 2007 and 2012, governments in the U.S., Europe and the U.K. collectively benefited by $1.6 trillion, primarily through reduced debt-service costs and increased profits remitted from central banks. Most of this wealth transfer came from households, pension plans, insurers, and foreign investors, mainly through lower interest earnings on savings.

 

It is time that businesses and governments focus on helping the real economy to solve large problems including debt, lack of growth, industrial stagnation, slowing innovation and productivity, aging demographics, income inequality, resource scarcity, and environmental threats.

 

Financial engineering masks the true performance and health of companies and nations. But the damage goes much deeper, deluding decision-makers into thinking that things are better than they are, and that solutions to problems can be deferred.

And worse still, the mispricing of assets across world markets has reached epidemic proportions.

Stock prices have made strong advances over the past several years, yet market analysts see further gains, arguing that the selloffs of August 2015 and early 2016 represent a healthy correction.

 

But this rise in stock values has been underpinned by financial engineering and liquidity — setting the stage for a global financial crisis rivaling 2008 and early 2009.

The conditions for a crisis are now firmly established: overvaluation of financial assets; significant leverage; persistent low-growth and deflation; excessive risk taking reliant on central banks for liquidity, and the suppression of volatility.

 

 

 

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RibbitFreedom's picture

Straight and to the point.

I really like the narrow focus and simplification of this excerpt for general sharing use.

This Might Hurt's picture

It must be by design that we never get a proper history or explanation of our money in school. Below a free video series, Econ 101, we all should have gotten in school.

http://www.themonetaryreset.com/search/label/How%20We%20Got%20Here?m=1

DownWithYogaPants's picture

Fucking Malthusians were wrong yesterday, today and they will be tomorrow.

Sorry but this dumb cluck thinks the symptoms of private central banking are caused by the "growth"

francis scott falseflag's picture

 

All you ever need to know:

 

Scrooge McDuck & Huey, Dewey and Louie

flicker life's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

fattail's picture

The malthusians just did not anticipate the Haber Process.  The idea of infinite growth without considering the debt or accounting for the indirect costs is just another political ponzi scheme brought to you by the purveyors of Big Government and Big Business.  They get theirs on the front end before the sheeple can do the arithmetic and realize they are stuck with the bill.

The sheeple are catching up.

detached.amusement's picture

it was funny that my tech retarded mom mentioned bitcoin at sunday dinner - "but its not really money, its made up"

and I had to counter with

"mom....DOLLARS are NOT MONEY either, they are currency and are intrinsically worthless..."

HRClinton's picture

Whatever. Even I know that this is a rehash of old stuff:

In a finite, closed system - like planet Earth  - everything is finite. 

Only a fiat money system, the stupidity of common people and the opportunism of weak politicians is unlimited. 

Bill and I are exceptions, of course. :-)

sinbad2's picture

I like the way Satyajit Das sticks to the point, the basics, and doesn't waffle on about abstract theories like so many of the so called experts.

ThirteenthFloor's picture

"We have been living beyond or means"

This is actually "Govt has been spending beyond its means". I do not approve spending on the the military intelligence fuckplex. If we had a little less rocke-plex and roth-a-debt war the last 150 years the books would not look as bad.

Guns taste better with a little butter on them, and spying on citizens goes better with fiat and a coke.

detached.amusement's picture

This is actually "an overtaken government saddling the citizens with so much illegal debt that they wind up being susceptible to complete subversion of the law."

I'd have said "the Constitution For the United States of America," but we havent used that since before the civil war.

Brazen Heist's picture

With years and years of doom porn, this whole thing is somehow still intact. There is central banking inertia holding it together, although nobody knows for how much longer.

Both a pyramid and an inverted pyramid at the same time. No wonder why they fiercely resist an audit.

Jäger's picture

The whole system is going to go supernova

TeethVillage88s's picture

I'm going to check the Hite & Masters Report, and the Kinsey Report... to get a sense of the Market this week.

canisdirus's picture

You can change the numerator or the denominator, but you don't need to change both. The system exists on effectively limitless labor willing to do anything for fake money.

If the population of Earth was reduced by about 7.25B, once everything shook out economically, everyone could live at their current living standards and it would be completely sustainable. The system couldn't exist without a massive population.

Brazen Heist's picture

Natural population growth is what drives the system in its most fundamental form.

And since the system manufactures consent and pushes agendas feverishly, the demands for stuff increases over and above what is generally sufficient.

Enter the debt ponzi. Debt is now what is keeping the thing from collapsing, but we all know this won't last until a reset is reached. Technological innovation is the only hope in buying extra time. Can kicking should be the symbol for this system.

Expectations, needs and demands need to adjust...downwards, for a re-balance. Perhaps mother nature has a surprise in store for us if we get too viral, or simply, our demented human natures will beckon it before she does.

logicalman's picture

No point getting too bent out of shape.

Nature cannot be fooled.

Thermodynamics will always win.

If the population fo earth was reduced to 2, everything goes tits up when the sun becomes a red giant.

Travelling to other planets is a non-starter, given energy requirements and having no real idea regarding habitability of distant planets/star systems.

To quote Slartibartfast, 'Hang the sense of it, and keep yourself busy!'

 

crossroaddemon's picture

I'm telling you guys... Trump was placed in that office to be the scapegoat. The economy is going to fucking implode, and he's going to eat 100% of the blame. I wonder what they offered him in excahnge for accepting the role.

francis scott falseflag's picture

 

Scapegoat. Shmapegoat.

 

Better him than Hillary.

logicalman's picture

Better than Hillary??

What isn't better than Hillary?

 

Singelguy's picture

I doubt Trump was "placed" n office. He won much to the chagrin of the establishment. However, as Rahm Emmanuel said, never let a good crisis go to waste, so the establishment will use this opportunity to accelerate the implosion and blame it all on Trump. Unfortunately, the implosion has been decades in the making, but a lot of people will believe that it is all Trump's fault. The best that Trump can do is get out in front of it and warn the people what is coming.

francis scott falseflag's picture

 

The Bangladesh model is doable in post Obama America.

 

Fur Shure

francis scott falseflag's picture

 

GOD will protect the worthy at the end.  (and punish the wicked)

 

I'm not talking about the Keeferian Jabber Bible Jesus either.

homiegot's picture

I've been constructing a lean to in preparation.

Trucker Glock's picture

Great Myths of the Great Depression

This is an essay written by Lawrence Reed.  I found it very interesting. 

https://youtu.be/Ta2m3D9Ig0g

.pdf version

http://econfaculty.gmu.edu/wew/articles/09/GreatMythsOfTheGreatDepressio...

Sledge-hammer's picture

No it was not doomed to fail.  Our Founding Fathers set up a darned wise and good foundation for a new nation founded on new ideas and a bright future.  We allowed jews to migrate here by the millions between 1870-1924 and from 1945-present day.  John Adams said that Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.  The jews are not a moral people and wholly incompatible with our Christian nation.  They parasitized the U.S. and created the monstrosity that is the USA today.  Our Founding Fathers would sh*t if they could see the USA today.  

 

Trucker Glock's picture

"Our Founding Fathers would sh*t if they could see the USA today."

Some of them would say, "Told ya so."  Read history and the Anti-Federalist Papers.  The CONstitution was the Patriot Act of 1787.

GreatUncle's picture

Would they be the same jews those who left europe to form the USA thought they left behind

Joe Mama 3's picture

I got a little homie by tha name of Das .............

and bitches who fuck em, gimmie dat ass !!!!!!!!!!!!!!!!!!!!!!  -   Snoop

TeethVillage88s's picture

By Mark D. Cook, Sanjit Das, Tyler Durden...

Background:

- Govts trend borrowing, use financial engineering for economic problems
- Govts trend debt higher
- Govts bond purchases by central banks, domestic banks, state pension funds.
- LIRP, ZIRP, NIRP re-distribute income & wealth
- McKinsey Global Institute, report 2013, between 2007 and 2012, governments in the U.S., Europe and the U.K. collectively benefited by $1.6 trillion,
- McKinsey Global states primarily through reduced debt-service costs and increased profits remitted from central banks
- McKinsey Global states most of this wealth transfer came from households, pension plans, insurers, and foreign investors, mainly through lower interest earnings on savings.
- Financial engineering masks performance, health of companies and nations.
- Deeper Economic damage from Financial Engineering deludes decision-makers things are better than they are, solutions to problems can be deferred.
- mispricing of assets across world markets has reached epidemic proportions.
- Das concludes nothing changed since 2008-09
- Das states Companies seek easy solutions to low margins, low profits, low market share, high debt, high leverage by re-engineering their finances
- CCT measures investor sentiment, complacency, panic, today CCT shows market similar to 1987, 2000, and 2008
- First, global stock prices tied to energy woes, Problem
- Second, global economies big currency swings, INTL trade uncertain
- Third, global banks realize AAA loans are not, banking vulnerable

Solutions:

- businesses and governments must help real economy,
- businesses and governments must Address debt, lack of growth, industrial stagnation, slowing innovation and productivity, aging demographics, income inequality, resource scarcity, and environmental threats.

My take: Das does not propose legislation at all, Das does not propose Regulation Changes, Das does not really have reform model or program or proposal, Das is not like a classic German or Frenchman who has Ideological or Philosophical or detailed position of values, nor does he have the guts to put his ideas, models, laws, regulations or solution into the mainstream.

We don't' live in an Age of Men, we live in an age of corruption and 'deep state'.

Maybe deep state A are Hillary, McCain, and deep state b are in a civil war with them.

wide angle tree's picture

Keep thinking inside the box. If you like your doom you can keep your doom.

People do not even know what it is like to be alive. Perhaps it is the definition of living that is irrational. Building a pyramid of compounding stupidity is not living. The illusion of living is what is being sold. The fake economy is not real.

Reichstag Fire Dept.'s picture

I've been following Das for quite a while....his math is tight.

quax's picture

This is such BS. Per capita Germans have only about a quarter of the power consumption of the average American, but their living standard is hardly lower.

Cell phones are already ubiquitous in piss poor Africa, because base stations can run on solar alone.

RIP American Optimism, it was nice to have known you.

joey stalin's picture

Nothing new.  The old 'Limits to Growth' crap that keeps getting discredited, generation after generation after generation. 

TeraByte's picture

Why does not this apply to 1%.

East Indian's picture

Feudalism ver 2.0 

 

But once oligarchs firmly establish themselves, they will ban the funny air-backed fiat, and introduce a gold standard. Nothing like gold standard to free the oligarchs from the grip of the banksters, and also to keep the serfs down.

But dont hoard gold; if you are not an oligarch, with a feudal gang under you, your gold will be seized by oligarchs...

UndroppedClanger's picture

I believe there is value in encouraging people to stop thinking of the changes that we must make for survival as a lowering of living standards, but instead as a shift away from hankering after the vacuous, meaningless drivel that adds nothing to life that's worth having: the latest smartphone, three different gaming consoles, a flatscreen TV in almost every room, kitchen units whose age never reaches double digits and so on and on.

Teach people the gentle satisfaction that comes from making or mending something with their own hands and the appreciation of the value of a thing that comes from truly earning it instead of flinging some debased currency across a counter for some plastic crap from China and I think we'd see a lot less waste and a much more sustainable future. We don't need as much as we think we do, not just to survive but to be happy.

Last of the Middle Class's picture

Only lowering our living standards will achieve sustainable growth.  


Actually you've hit the nail on the head. This has been the singular goal of the FED for more than 15 years now. 10 trillion in QE brings about a classed society whereby only the super elite are able to invest while not having to work 50 hours a week. If you're the bottom half you're on entitlements and have no chance of EVER getting ahead. What the FED has done is nothing less than economic tyranny.  Tyranny from a Tranny, so to speak.

gcjohns1971's picture

Only lowering our living standards will achieve sustainable growth. = Work more in return for less.

 

No.

Every working person is taxed at well over 50% when all taxes are included.   These taxes fund a variety of deadbeats: FSA deadbeats, Elitist saw-the-ladder-behind-me deadbeats, government deadbeats, and banker deadbeats.

All this is before monetary inflation is included... Which is stealing an additional 10-20% of your actual earnings.

Keep the entrenched interests.

Or keep your life.

Choose one.

We have reached peak government.

Canadien françcais's picture

The burden of government spending does not weigh primarily on taxpayers, but on the exonomically weaker.

The left is correct, you can't make Mexico pay the wall. But by the exact same rationale, you can't tax the rich. The burden will be diffused into the whole society, to the detriment of the less productive.

Same is true of the compliance burden. 

When the rich lose fat, the poor die.

 

tbone10's picture

The Deep State has only begun to undermine this so called administration