• Sprott Money
    04/29/2016 - 05:58
    There is unfortunately no basis for renewed optimism that this current litigation will have any meaningful impact on precious metals manipulation – with respect to either silver or gold.

Guest Post: The "Solution" Is Collapse

Tyler Durden's picture




 

Submitted by Charles Hugh Smith from Of Two Minds

The "Solution" Is Collapse

So the root problem is the system, human nature, blah blah blah. There are no "solutions" that can fix those defaults. Thus the "solution" is collapse.

Policies create incentives and disincentives. Some are intended, some fall into the category of unintended consequences. Regardless of their intention, policies that create windfalls ("easy money") or open spigots of "free money" (or what is perceived as free money by the recipient) quickly gather the allegiance of everyone reaping the windfall or collecting the free money.

This allegiance is soon tempered into political steel by self-justification: humans excel at rationalizing their self-interest. Thus my share of the swag is soon "absolutely essential."

Humans don't need much incentive to pursue windfalls or free money--seeking windfalls in the here and now is our default setting. Taking the pulpit to denounce humanity's innate greed, avarice and selfishness doesn't change this, as seeking short-term windfalls has offered enormous selective advantages for hundreds of thousands of years.

That which is painful to those collecting free money will be avoided, and that which is easy will be pursued until it's painful. Borrowing $1.5 trillion a year from toddlers and the unborn taxpayers of the future is easy and painless, as toddlers have no political power. So we will borrow from the powerless to fund our free money spigots until it becomes painful.

It won't become painful to borrow from our grandkids for quite some time, and it will probably not become progressively painful, either, because we will suppress the pain with superlow interest rates and other trickery. The pain will more likely be of the sudden, unexpected, "this can't be happening to me" heart-attack sort: the free-money machine will unexpectedly grind to a halt in some sort of easily predictable but always-in-the-future crisis.

"Solutions" that turn off the free money spigots are non-starters, not just from self-interest but from ideology. Any attempt to tighten the spigots steps on ideological toes, as each spigot is ideologically sacred to one political camp or another.

Liberals don't want to hear about scamming of their sacred "we must help everyone in need" welfare programs, and conservatives don't want to hear about cartel looting of their sacred "free enterprise" system.

And so we have gridlock, what I call profound political disunity. Everybody at each trough of free money fights tooth and nail to keep their spigot wide open, and so the "solution" is to borrow 10% of the nation's output in "free money" every year until the free-money machine breaks down.

Each ideology worships their own version of cargo-cult economics: if we wave the dead chicken over the enchanted rocks while dancing the humba-humba, prosperity and abundance will magically return and we can "grow our way out of debt."

We're like a sprawling family bickering over the inheritance: we'll keep arguing over who deserves what until the inheritance is gone. That will trigger one final outburst of finger-pointing, resentment and betrayal, and then we'll go do something else to get by.

The "solution" is thus collapse. This model has been very effectively explored in The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization by Thomas Homer-Dixon. The basic idea is that when the carrying costs of the society exceed its output, the whole contraption collapses.

The political adjunct to this systemic implosion is that the productive people just stop supporting the Status Quo because it's become too burdensome. The calculus of self-interest shifts from supporting the bloated, marginal-return Status Quo to abandoning it.

So the root problem is the system, human nature, blah blah blah. There are no "solutions" that can fix those defaults. The "solution" is collapse, as only collapse will force everyone to go do something more sustainable to get by.

Until then, arguing about "solutions" is a sport to be enjoyed sparingly.

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Fri, 06/08/2012 - 11:46 | 2507520 LawsofPhysics
LawsofPhysics's picture

yes, litigation and confiscation remain the only wild cards.  that's where your like-minded and heavily armed neighbors come into play.

either way, paper will decouple from reality, just so robo can still post that "silver is getting crushed" when in reality you won't be able to get any for delivery with any paper.

Fri, 06/08/2012 - 12:14 | 2507627 potlatch
potlatch's picture

I am a zen hermit, so I hold no metals.

 

I was not aware: are metal assets usually *not* available on demand?  Are they usually on paper or in paper? 

 

 

If I were to ever procure any metal, this boggles me.  What fool would do that?  Find an institution of storage you trust, and store the metal yourself.  Or is that naive of me?

Just a question: not an investor, just an observer and learner.

Fri, 06/08/2012 - 12:45 | 2507716 Matt
Matt's picture

From what I can tell of the futures market, for every ounce of silver or gold that someone actually takes delivery of, there are 99 to 199 ounces of paper that are purely speculative, and settled in cash.

The big ETFs, GLD and SLV, are non-auditable and non-redeemable, so they may or may not have any, but either way, you are not getting it.

PHYS is audited and redeemable if you have a large enough stake to redeem, as I understand it.

If you buy gold and hold it, you have it.

I personally have not looked into storing gold in a vault, so I can't say anything about how easy it is to get your gold on demand.

Mostly, what people are talking about is not how things are now, but what will happen when there is an actual shortage of silver, now projected for sometime late 2015 I believe.

Fri, 06/08/2012 - 16:06 | 2508505 potlatch
potlatch's picture

thnx dudes who gave me the info.  I am not an investor, and I did not realize the PHYS was that low, if that is the term: I am a college professor; we are all innumerate.

Fri, 06/08/2012 - 13:13 | 2507799 kekekekekekeke
kekekekekekeke's picture

get some PHYZ in your HANDS what is wrong with you!!!!!  from  a fellow zen hermit 

Fri, 06/08/2012 - 11:53 | 2507552 lasvegaspersona
lasvegaspersona's picture

Hendrix

did you capture that eclpse photo yourself?

Looks more like a total than an annular eclipse though.

Fri, 06/08/2012 - 11:55 | 2507562 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I downloaded it off the interwebs.

Fri, 06/08/2012 - 16:06 | 2508510 potlatch
potlatch's picture

teh intranets create opportunity which is the American Dream

Fri, 06/08/2012 - 11:59 | 2507570 Vint Slugs
Vint Slugs's picture

Yes, the silver market is extremely small.  No, the solution is to not buy it - silver isn't money and hasn't been since the 1870s - but to buy gold.  I've said it here before and will again: the big commercial short in the silver market is China (they hold hundreds of millions maybe more than a billion of ounces of silver).  JPM's not naked short; they just inherited the Chinese client when they took over the Bear Stearns book.

Fri, 06/08/2012 - 12:11 | 2507616 HelluvaEngineer
HelluvaEngineer's picture

Huh?  wtf were Quarters made out of?

Fri, 06/08/2012 - 12:48 | 2507726 Vint Slugs
Vint Slugs's picture

You don’t get it.  Broaden your understanding.  Here’s a reading list:  Menger, Mises, Rothbard, Reisman, Fekete.  Their writings are all freely available on the internet.  Pick one. 

Sat, 06/09/2012 - 15:47 | 2510791 RockyRacoon
RockyRacoon's picture

You didn't answer the question.  What were pre-1965 coins made of?   And for extra credit:  Why are they not made of the same substance today?

Fri, 06/08/2012 - 12:25 | 2507659 Ghordius
Ghordius's picture

I agree. silver stocks are becoming smaller and smaller in comparison to the industrial consumption to allow monetization. In this silver has nowadays the same problem as platinum and palladium.

Monetization is a process, and gold is not yet there.

If gold monetizes again - relax guys, I'm stacking, it is money, but it's not accepted everywhere and by everyone without comment - then silver could have a very, very small chance, later.

This does not mean that speculation is stupid, in the contrary, by not monetizing, it could have the hardest swings up and down.

A metal has to give price stability in order to become a monetary metal. Money is nearly always the one item that changes value in the least violent way. A safe haven of price stability. A reason why gold is being swung up and down, by the way...

Shake it and it does not become money...

Fri, 06/08/2012 - 13:34 | 2507908 SoNH80
SoNH80's picture

Good points-- the noble metals wear many hats.  Can be used in electronic components, as catalysts in chemistry, as ornamental objects, as forks and knives, AND as stores of value due to their rarity, durability, and.... "universal" acceptance as same among human societies.  That's where things get sticky, for now.  Try paying for a hotel room or new car with gold or silver coins.  Technically, if they're U.S. Mint, they must be accepted, but if they aren't, well.... we are at the stage where gold, silver, etc. are still ghosts pointing to the Emperor, and saying, "where's the beef?".  That is why gold and silver markets are muffled and manipulated, we're at a stage where the money thermometers should read 110 degrees, but someone has used a Sharpie to draw "60" over 110.  That's good enough for most, for now, unfortunately, but you can't repeal the laws of mathematics quite that easily forever.  It's simple-- if fiat currency is used as a store of value, and its supply is expanding at a torrid pace, how can its "value" hold?  Supply and demand, that's what it comes down to.

Sat, 06/09/2012 - 15:51 | 2510797 RockyRacoon
RockyRacoon's picture

My "quarter" is accepted at the local farmers market for as many ears of corn as I can stuff into one of those cloth shopping bags.   Who says it ain't money?

Fri, 06/08/2012 - 12:38 | 2507689 SilverSavant
SilverSavant's picture

Dear Slugo,

I know you really like the sound of your own voice, just as most of us do.   However, your claim that silver isn't money and that China is the big short seem to be a combination of prejudgious, in the first case and unsubstantiated rumor, in the second.   Do you have any facts to back up your claim about Bear Stearns Book?

Fri, 06/08/2012 - 11:44 | 2507511 LawsofPhysics
LawsofPhysics's picture

Tell us something we didn't know.  hedge accordingly.

Fri, 06/08/2012 - 11:44 | 2507515 hugovanderbubble
hugovanderbubble's picture

+1 CHS

Fri, 06/08/2012 - 11:56 | 2507564 CrashisOptimistic
CrashisOptimistic's picture

This guy *consistently* has the most worthless, time wasting articles on ZH.

As long as it generates click revenue, it's not going to stop.

The next of his articles that appears, I start visiting every other day instead of every day. 

Fri, 06/08/2012 - 12:00 | 2507577 Creepy Lurker
Creepy Lurker's picture

Don't let the door hit you in the ass on the way out.

Fri, 06/08/2012 - 12:05 | 2507598 Lucky Guesst
Lucky Guesst's picture

OMG Thanks for that laugh :-D

Fri, 06/08/2012 - 11:45 | 2507517 Gamma735
Gamma735's picture

Governments around the world are trying to spread out the pain instead of letting it all happen at once so that the people in power can remain in power. 

Fri, 06/08/2012 - 12:36 | 2507684 cougar_w
cougar_w's picture

This in fact is the only game that remains.

The effort even if successful will mind-fuck a generation. I don't think they care. For this alone TPTB should be shot.

Fri, 06/08/2012 - 16:02 | 2508487 Chump
Chump's picture

Where's the rest of that story about the dude who almost got eaten?  I'm glad I kept reading because at first I thought it might be furry erotica...

Fri, 06/08/2012 - 11:45 | 2507518 Stackers
Stackers's picture

Guns - check

Gold - check

God - check

 

Bring it on.

Fri, 06/08/2012 - 11:51 | 2507539 jcia
jcia's picture

grub?

Fri, 06/08/2012 - 12:15 | 2507622 El Viejo
El Viejo's picture

And maybe Gold and God are mutually exclusive. Somewhere, maybe in Revelation, I remember a passage about people throwing their gold into the streets.

Fri, 06/08/2012 - 13:59 | 2508002 New England Patriot
New England Patriot's picture

Perhaps you are remembering that in the new Jerusalem, the street is made of pure gold; Revelation 21:21. 

 

Gold and God are not mutually exclusive. God made gold. God also made man with an intrinsic sense of value for gold. Moreover, if you look at references to wealth throughout the Bible, gold is usually listed. What's more, the word for 'money' in both Hebrew and Greek, the two languages of the Old and New Testaments respectively, is the word for silver.

 

God gave us precious metals. 

Fri, 06/08/2012 - 15:30 | 2508371 El Viejo
El Viejo's picture

They shall cast their silver in the streets, and their gold shall be as an unclean thing; their silver and their gold shall not be able to deliver them ...

Ezekial 7:19

Fri, 06/08/2012 - 14:56 | 2508251 LFMayor
LFMayor's picture

translation error.  I think they meant Molotovs.   People were tossing their molotovs out into the streets.  Which explains why we have so many pottery shards instead of whole pots when they dig.

Fri, 06/08/2012 - 11:56 | 2507563 kridkrid
kridkrid's picture

Listen to me. You have to consider the possibility that God does not like you. He never wanted you. In all probability, he hates you. This is not the worst thing that can happen.

Fri, 06/08/2012 - 12:12 | 2507621 samsara
samsara's picture

That's your God,  Not his.

Fri, 06/08/2012 - 12:14 | 2507628 El Viejo
El Viejo's picture

Maybe we get the God that we wish on others.

Fri, 06/08/2012 - 12:57 | 2507751 viahj
viahj's picture

maybe you both need to watch the movie that the persona of this website is based upon

Fri, 06/08/2012 - 12:27 | 2507662 Half_A_Billion_...
Half_A_Billion_Hollow_Points's picture

"Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium."

Fri, 06/08/2012 - 13:05 | 2507772 SubjectivObject
SubjectivObject's picture

Imagine that, a Deity with anthropomorphic penchants. 

The highest expression of animisim, I guess.

Fri, 06/08/2012 - 14:47 | 2508221 tmosley
tmosley's picture

I guess you never saw Fight Club.

Fri, 06/08/2012 - 15:49 | 2508430 SubjectivObject
SubjectivObject's picture

That's true; didn't recognize the dialog.

Fri, 06/08/2012 - 15:17 | 2508304 pods
pods's picture

 Now a question of etiquette; as I pass, do I give you the ass or the crotch...?

Fri, 06/08/2012 - 23:54 | 2509603 jumbo maverick
jumbo maverick's picture

Brought to you by planned parenthood.

Fri, 06/08/2012 - 12:28 | 2507667 Badabing
Badabing's picture

@ Stackers

Guns - check

Gold - check

God - check

and.......

  low key low tech is the best way to bug out whether it be a mountain hideaway, motor home or boat. Cabins in the woods are fine as long as no one knows where it is and has enough land to support your family, motor homes are another alternative but fuel and blocked roads may be a problem in a SHTF scenario. If you know how to sail and don’t get seasick a sailboat will be a good bug out alternative. For about the price of one oz of Au a good sailboat can be got.

Something like this http://longisland.craigslist.org/boa/3053289184.html small enough to single hand sail, and slip under the radar while being big enough to live aboard.

  People have been getting around sailing for as long as gold has been money, say somewhere around 5000 years. As for navigating a GPS works fine but when the systems fail we may not have the support equipment to operate a GPS. Line of site vectoring is a good low tech way to navigate as long as you don’t lose sight of land. A compass has worked for hundreds of years also and you don’t need to see land but drifting can be an issue. The most accurate way to low tech navigate is with a sextant. Some can be intimidated with understanding the use but once it’s explained it is quite simple. With a sextant a good time piece is also needed, each time zone is divided into 60 minuets and each minuet is divided into 60 seconds and at the equator a time zone is 1000 miles so a second is .2777777777 miles or a little over a quarter mile. Not as accurate as a GPS but it will get you within sight of your target. Food on a boat can be caught and water can be made using a small manual desalinater or a solar still.   

See:   http://www.teachersdomain.org/resource/ess05.sci.ess.watcyc.solarstill1/

 

Fri, 06/08/2012 - 13:21 | 2507844 mccoyspace
mccoyspace's picture

That is so funny. I was looking at exactly the same listings this week. The sea escape looks pretty good to me.
http://www.atomvoyages.com/
Is a site about the travels of a guy basically on the same page. Circumnavigating the globe with no electrical system on board.

Fri, 06/08/2012 - 14:05 | 2508025 Badabing
Badabing's picture

mccoyspace,

thanks for that i love this stuff!

have you checked the salty dog lots of cool storys in the log about repates

http://saltydogsailboat.com/

Fri, 06/08/2012 - 13:24 | 2507856 whaleoil
whaleoil's picture

One word, dude: pirates

Fri, 06/08/2012 - 16:35 | 2508057 Badabing
Badabing's picture

land or water pirates?

stackers did say "guns" check

Fri, 06/08/2012 - 13:11 | 2507803 kekekekekekeke
kekekekekekeke's picture

as someone much older and wiser than me once said: two outta 3 ain't bad 

Sun, 06/10/2012 - 11:53 | 2512116 e-recep
e-recep's picture

i don't get the god part. can't you live without believing in a deity?

Sun, 06/17/2012 - 20:32 | 2535148 Dr. Sandi
Dr. Sandi's picture

Yes, but you'll have less to feel bad about.

Fri, 06/08/2012 - 11:49 | 2507529 Dane Bramage
Dane Bramage's picture

Crises-driven society.  Even if there were a solution, not enough would care.

Fri, 06/08/2012 - 11:50 | 2507530 walcott
walcott's picture

How about renaissance?

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