Chris Martenson thinks we are past the point of no return.

[charliebrown]

http://www.financialsense.com/contri.../death-by-debt

In this article Martin states that no country has ever come back from a 260% debt to GDP ratio. (This is total debt, public, private and corporate)

US is 296%
Japan 471%
Russia 71%

Default will occur. I'm not sure what that looks like with country with a printing press.
High inflation, or default?

[jtabeb]

Re: Chris Martenson thinks we are past the point of no return.

NO Question, Inflation. Only question is High, Hyper, or total currency destruction. (By way of historical fact, default usually PRECEEDS inflation, so we could have BOTH, sequentially. Wouldn't that be FUN!)

[Starving Steve]

Re: Chris Martenson thinks we are past the point of no return.

http://www.financialsense.com/contri.../death-by-debt

In this article Martin states that no country has ever come back from a 260% debt to GDP ratio. (This is total debt, public, private and corporate)

US is 296%
Japan 471%
Russia 71%

Default will occur. I'm not sure what that looks like with country with a printing press.
High inflation, or default?

Once again sounding redundant, I disagree with Dr. Martin! The solution is to grow the pie bigger, and that solution is to drill for oil, frack the rocks, drill the bottom of the sea floor as BP did in the Gulf of Mexico, heavy oil and tar-sand refining to light oil, more algae to oil experiments, natural gas; dirty, filthy, and radioactive coal, hydro-electric dams everywhere, thorium atomic power as soon as possible, four-cylinder motors and small cars, five and six-speed transmissions, passenger rail, suing the pants off of Greenpeace and others blocking drilling and blocking atomic power plants, charge the eco-frauds with criminal and civil liability for racketeering (just as is being done now off of Greenland this week), educate the public and push-back against propaganda and mis-information from the eco-frauds, better roads and much higher speed limits, synthetic oil from coal, atomic power everywhere, five-minute building permits, five-day power-plant permits, general de-regulation for producers and exporters, de-salinization of sea water, more water projects like the California Water Project, and much better schools to teach engineering, hands-on applied engineering skills, applied math rather than math drills, applied science, and foreign languages from day-one in kindergarten through post-graduate education in college.

This is going to take a C-change in our approach to just about everything.

No, this is not sustainable for centuries to come, but I would ask: "How sustainable is poverty, freezing in the dark, returning to live in caves, and starving?" Centuries from now, we will have more energy solutions to grow the pie bigger and to raise our standard of living, just as we did throughout history...... China and India provide the model for how to dig-out of the Great Recession and to grow and produce, once again, just as we did in the 1950s.

[LargoWinch]

Re: Chris Martenson thinks we are past the point of no return.

Inflation... Hyper, or total currency destruction.

hmmm, wouldn't that be one of the same?

[jtabeb]

Re: Chris Martenson thinks we are past the point of no return.

No not really. The key thing is that sovereign default was the TRIGGER for the inflation event ( think Argentina).

[Starving Steve]

Re: Chris Martenson thinks we are past the point of no return.

That lawsuit filed this first week of June was filed by Cairns Energy Co. to seek a judgement against Greenpeace for up to $2 million U.S. dollars per day for each day that Greenpeace crosses into the legal exclusion zone held by Cairn's dilling rigs in the waters, offshore of Greenland. Cairn is a British Company, and the lawsuit was filed in the Netherlands. The Danish Navy removed and hauled-away the protesters from Cairn's drilling rigs..... (The story is courtesy of the Reuters news service.)

Excellent! I hope TEPCO in Japan takes note of how to handle Greenpeace and other disruptive eco-protesters in future. The Japanese Navy should also take note of how this was handled by Cairn Energy Corp. and the Danish Navy.

[DSpencer]

Re: Chris Martenson thinks we are past the point of no return.

Once again sounding redundant, I disagree with Dr. Martin! The solution is to grow the pie bigger, and that solution is to drill for oil, frack the rocks, drill the bottom of the sea floor as BP did in the Gulf of Mexico, heavy oil and tar-sand refining to light oil, more algae to oil experiments, natural gas; dirty, filthy, and radioactive coal, hydro-electric dams everywhere, thorium atomic power as soon as possible, four-cylinder motors and small cars, five and six-speed transmissions, passenger rail, suing the pants off of Greenpeace and others blocking drilling and blocking atomic power plants, charge the eco-frauds with criminal and civil liability for racketeering (just as is being done now off of Greenland this week), educate the public and push-back against propaganda and mis-information from the eco-frauds, better roads and much higher speed limits, synthetic oil from coal, atomic power everywhere, five-minute building permits, five-day power-plant permits, general de-regulation for producers and exporters
, de-salinization of sea water, more water projects like the California Water Project, and much better schools to teach engineering, hands-on applied engineering skills, applied math rather than math drills, applied science, and foreign languages from day-one in kindergarten through post-graduate education in college.

This is going to take a C-change in our approach to just about everything.

No, this is not sustainable for centuries to come, but I would ask: "How sustainable is poverty, freezing in the dark, returning to live in caves, and starving?" Centuries from now, we will have more energy solutions to grow the pie bigger and to raise our standard of living, just as we did throughout history...... China and India provide the model for how to dig-out of the Great Recession and to grow and produce, once again, just as we did in the 1950s.

Well we can all agree on that first part. You should just copy paste the above post and put it in your signature to save the trouble of re-typing it.

Not trying to be a jerk but I do find it odd that you believe every issue is directly tied to "Eco-frauds".

[cjppjc]

Re: Chris Martenson thinks we are past the point of no return.

Not trying to be a jerk but I do find it odd that you believe every issue is directly tied to "Eco-frauds".

Their influence runs very deep as Steve will no doubt tell us soon.

[coolhand]

Re: Chris Martenson thinks we are past the point of no return.

Once again sounding redundant, I disagree with Dr. Martin! The solution is to grow the pie bigger, and that solution is to drill for oil, frack the rocks, drill the bottom of the sea floor as BP did in the Gulf of Mexico, heavy oil and tar-sand refining to light oil, more algae to oil experiments, natural gas; dirty, filthy, and radioactive coal, hydro-electric dams everywhere, thorium atomic power as soon as possible, four-cylinder motors and small cars, five and six-speed transmissions, passenger rail, suing the pants off of Greenpeace and others blocking drilling and blocking atomic power plants, charge the eco-frauds with criminal and civil liability for racketeering (just as is being done now off of Greenland this week), educate the public and push-back against propaganda and mis-information from the eco-frauds, better roads and much higher speed limits, synthetic oil from coal, atomic power everywhere, five-minute building permits, five-day power-plant permits, general de-regulation for producers and exporters, de-salinization of sea water, more water projects like the California Water Project, and much better schools to teach engineering, hands-on applied engineering skills, applied math rather than math drills, applied science, and foreign languages from day-one in kindergarten through post-graduate education in college.

This is going to take a C-change in our approach to just about everything.

No, this is not sustainable for centuries to come, but I would ask: "How sustainable is poverty, freezing in the dark, returning to live in caves, and starving?" Centuries from now, we will have more energy solutions to grow the pie bigger and to raise our standard of living, just as we did throughout history...... China and India provide the model for how to dig-out of the Great Recession and to grow and produce, once again, just as we did in the 1950s.

Freezing in the dark is for steerage. The plan is that 1st class passengers will get off the sinking ship. All you need to know about the US's solution to this crisis can be learned by watching James Cameron's "Titanic."

Some people are starting to grasp this. For example, "Arab Spring" is not a democracy movement. "Arab Spring" is b/c the poor Arabs have deduced that they are going to be Leo DiCaprio, proverbially freezing to death in the middle of the ocean hanging on to a piece of floating debris.

I don't like the game, but this is the game unless someone stands up and becomes an adult & a leader & tells the truth of our predicament of resource depletion. Then we might have a chance to glide it in; otherwise, we're looking at a crash landing.

[raja]

Re: Chris Martenson thinks we are past the point of no return.

Mish has raised his 2nd Crash probability from 10% to 25%.

Inflation/Deflation will be a political decision.
Krugman believe TPTB have most to gain by deflation, or low inflation (makes sense to me):

Who Are The Rentiers?

Following up on my rentier post and the eurocentric followup, a question: who are we talking about? That is, who stands to gain from deflation, and lose if inflation is, say, 4 percent over a period of 10 years? Is it little old ladies living on fixed incomes, and salt of the earth workers who have scrimped and saved?
Well, no. There are, of course, some ordinary people who would lose a bit from higher inflation. But Social Security — the bedrock of retirement for most Americans — is indexed to inflation, and retirement accounts invested in stocks wouldn’t be hurt.
If you want to see who really has a stake in the inflation dispute, go to Edward Wolff’s latest on the American wealth distribution (pdf). Here’s the takeaway:
Holdings of assets, by wealth class, 2007
Financial securities are overwhelmingly held by the rich — more than 60 percent by just one percent of the population, more than 98 percent by the top 10 percent. It’s true that middle-class Americans own significant shares of deposits, and that some part of their pension accounts would be in bonds. On the other hand, middle-class Americans owe the lion’s share of debt; relatively speaking, the wealthy have hardly any.
So if you think about the distributional consequences of the choice between a Japan-style lost decade of very low or negative inflation and a Mankiw-Rogoff strategy of higher inflation for a while, it’s very much about benefits to the wealthy versus benefits to the middle class. Since I’ve been arguing that some inflation would help the economy recover, what we’re seeing in practice is that defending the interests of a small wealthy slice of the population takes priority over a possible recovery strategy.

[coolhand]

Re: Chris Martenson thinks we are past the point of no return.

Mish has raised his 2nd Crash probability from 10% to 25%.

Inflation/Deflation will be a political decision.
Krugman believe TPTB have most to gain by deflation, or low inflation (makes sense to me):

Who Are The Rentiers?

Following up on my rentier post and the eurocentric followup, a question: who are we talking about? That is, who stands to gain from deflation, and lose if inflation is, say, 4 percent over a period of 10 years? Is it little old ladies living on fixed incomes, and salt of the earth workers who have scrimped and saved?
Well, no. There are, of course, some ordinary people who would lose a bit from higher inflation. But Social Security — the bedrock of retirement for most Americans — is indexed to inflation, and retirement accounts invested in stocks wouldn’t be hurt.
If you want to see who really has a stake in the inflation dispute, go to Edward Wolff’s latest on the American wealth distribution (pdf). Here’s the takeaway:
Holdings of assets, by wealth class, 2007
Financial securities are overwhelmingly held by the rich — more than 60 percent by just one percent of the population, more than 98 percent by the top 10 percent. It’s true that middle-class Americans own significant shares of deposits, and that some part of their pension accounts would be in bonds. On the other hand, middle-class Americans owe the lion’s share of debt; relatively speaking, the wealthy have hardly any.
So if you think about the distributional consequences of the choice between a Japan-style lost decade of very low or negative inflation and a Mankiw-Rogoff strategy of higher inflation for a while, it’s very much about benefits to the wealthy versus benefits to the middle class. Since I’ve been arguing that some inflation would help the economy recover, what we’re seeing in practice is that defending the interests of a small wealthy slice of the population takes priority over a possible recovery strategy.

Rickards discussed the 4% inflation for 10-years strategy on King World News last weekend as well, & said it can work. My problem with the thought process from reading the history books is if you REALLY look where inflation shows up historically, it's in stuff you need to buy - food, energy, etc. In the US, we don't count that stuff as inflation....but with it, as calculated in 1983, it's already running 10% CPI.

IMO, the gap in this "inflate away the debt" logic is that we're already at price levels on food & energy that are destroying economic demand & pushing the economy towards recession. The issue is resource scarcity, but the economists have 150 years of institutional memory & models that disregard real inputs.

The paper world is meeting the real world with so far bad results, on their way to disastrous.

[charliebrown]

Re: Chris Martenson thinks we are past the point of no return.

I have mild insomnia, so I have time to think about things while I lay in bed trying to fall asleep. Amazingly, I have great clarity while laying in the dark with my eyes closed. We are seeing defaults dah
look at the walk away housing markets and personal and corporate bankruptcies. Since the total debt line on Martenson's graph is horizontal, does this mean that debts are being repaid and defaulted upon in approximately the same amount as new loans are being created?

If we are only 30% over the 260 do we only need a little inflation to get back into the traction zone?

What about Japan at 470% debt? Seems like there is now way to grow out of that.

[DSpencer]

Re: Chris Martenson thinks we are past the point of no return.

Mish has raised his 2nd Crash probability from 10% to 25%.

Inflation/Deflation will be a political decision.
Krugman believe TPTB have most to gain by deflation, or low inflation (makes sense to me):

Who gets the money that is fresh off the printing press? Is it safe to say that this would be "TPTB"?

If a money tree grows in your backyard, would you cut it down because you are a creditor and you are afraid that your new money will create inflation and erode the value of the money being paid back to you?

True, inflation does not affect everyone equally. Those who get the new money early benefit more (the politically connected). Those who get the new money for free to use as they see fit to make more loans benefit the most (the banks).

Am I missing something? If so, please enlighten me.

[jtabeb]

Re: Chris Martenson thinks we are past the point of no return.

"The paper world is meeting the real world with so far bad results, on their way to disastrous."

Could not have said it better.

What that classic punchline from a joke about economists...


"assume a can opener"

[jtabeb]

Re: Chris Martenson thinks we are past the point of no return.

Rickards also points out that while financial repression may work SHORT term there are 5 major reasons that it won't work medium to long term.

1. People can buy gold
2. Not getting the general inflation in assets and wages that are needed to work
3. Drives commodity prices to da moon causing a second recession
4. Unemployment is too high which is causing negative price premiums on labor
5. Risks disorderly repatriation of eurodollars which causes a poom type of event

So at best a regime of financial repression as it is called, is only a way to stop bleeding temporarily, but one that also risks sudden death of the patient ( us currency). He is very astute in pointing out why these tried and true techniques WON'T work this time, save for a short term reprieve.