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

[WildspitzE]

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

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.

I think that you're spot on, because "when you get the money" (vs others) makes a big difference. Also, the money that gets paid back to the creditor in turn gets paid back to its lenders, most if not the whole capital structure of FIRE entities is debt. If you follow this creditor-lender chain through, you will ultimately end up at individuals...savers (or tax-payers). Thus, it is the creditors' lenders who ultimately get hosed by inflation, not the FIRE entity. It's the depositor or the person receiving a benefit under an insurance claim. FIRE entities make their bread and butter on the differential in rates/yields, or excess spread, regardless whether they go up or down -- or inflation going up or down. An inflationary environment, where money is made available to reduce defaults and coupled to the excess spread concept, seems to me to be more benefitial for FIRE entities.

[c1ue]

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

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?

Martenson's numbers are always suspect.

I would simply point out that consumer and corporate loan data seem to show an ongoing level to down overall loan amounts outstanding, but that the federal deficit seems to be growing geometrically. The same debt increase also applies to state, local, and municipal governments.

[Starving Steve]

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

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.

I am an optimist: 1.) I hope that mankind will reduce its birth rates as the standard of living rises, worldwide. Unless this happens, of course mankind is doomed. The mathematics of exponential growth in the population will kill us. So on this issue, I agree with the environmentalists.

2.) There are certain innovations that will help us buy some time: a.) thorium fuel for reactors; b.) carbon-fiber to replace aluminum and steel in cars; c.) anti-matter for energy production; d.) sea water de-salinization by filtering; e.) taller skyscrapers; f.) re-forestation worldwide; g.) education reforms as outlined above; h.) minature atomic-power plants for hospitals and skyscrapers; i.) libertarian-socialism; j.) global currency backed by gold or energy units; k.) car-planes, car-boats, and car-trains; l.) robots everywhere; m.) fusion reactors; n.) much better bicycles; o.) co-existence and communication with animals; p.) religious zealots held accountable for their crimes; q.) globalism and a global consciousness; r.) re-cycling; s.) replacement parts for people; t.) user-friendly everything; u.) sea farming for food and oil; w.) synthetic oil from coal, bitumen, and tar; x.) more use of natural gas in vehicles; y.) shale oil recovery; z.) electric cars; aa.) more urban sprawl, not less.

Five-hundred or more years away: sea cities, possibly underwater;
One thousand or more years away: the terra-forming of Mars and the Moon begins.

[DSpencer]

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

I think that you're spot on, because "when you get the money" (vs others) makes a big difference. Also, the money that gets paid back to the creditor in turn gets paid back to its lenders, most if not the whole capital structure of FIRE entities is debt. If you follow this creditor-lender chain through, you will ultimately end up at individuals...savers (or tax-payers). Thus, it is the creditors' lenders who ultimately get hosed by inflation, not the FIRE entity. It's the depositor or the person receiving a benefit under an insurance claim. FIRE entities make their bread and butter on the differential in rates/yields, or excess spread, regardless whether they go up or down -- or inflation going up or down. An inflationary environment, where money is made available to reduce defaults and coupled to the excess spread concept, seems to me to be more benefitial for FIRE entities.

So unless someone can show why this line of thinking is wrong.... The question becomes: Is Krugman an idiot or is he just doing his "job". His story is plausible if given a superficial glance, but didn't this guy win a Nobel prize?

Since Jtabeb brought up economist jokes, this seems fitting:

A mathematician, an accountant and an economist apply for the same job.


The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."


Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."


Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

[jpatter666]

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

So unless someone can show why this line of thinking is wrong.... The question becomes: Is Krugman an idiot or is he just doing his "job". His story is plausible if given a superficial glance, but didn't this guy win a Nobel prize?

Since Jtabeb brought up economist jokes, this seems fitting:

A mathematician, an accountant and an economist apply for the same job.


The interviewer calls in the mathematician and asks "What do two plus two equal?" The mathematician replies "Four." The interviewer asks "Four, exactly?" The mathematician looks at the interviewer incredulously and says "Yes, four, exactly."


Then the interviewer calls in the accountant and asks the same question "What do two plus two equal?" The accountant says "On average, four - give or take ten percent, but on average, four."


Then the interviewer calls in the economist and poses the same question "What do two plus two equal?" The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, "What do you want it to equal"?

These days, that would be the accountant's answer as well.....

[Slimprofits]

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

So unless someone can show why this line of thinking is wrong.... The question becomes: Is Krugman an idiot or is he just doing his "job". His story is plausible if given a superficial glance, but didn't this guy win a Nobel prize?

The Prize in Economics was not part of Alfred Nobel's will; rather, it was created in 1969 by the Bank of Sweden. Although governed by the same rules as the other prizes, the Prize in Economics has been criticized by many, including members of the Nobel Family, as being outside Nobel's original intent. As of 2010, faculty of the University of Chicago have garnered nine Prizes—far more than any other university.

http://en.wikipedia.org/wiki/Nobel_P...sies#Economics

[charliebrown]

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

Welcome back jtabeb! missed ya.

[WildspitzE]

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

Although governed by the same rules as the other prizes

bwahahaha!

the nobel peace prize being the most illustrious example...

[c1ue]

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

So unless someone can show why this line of thinking is wrong.... The question becomes: Is Krugman an idiot or is he just doing his "job". His story is plausible if given a superficial glance, but didn't this guy win a Nobel prize?

The correct term is "useful idiot" - someone who does something ridiculous but which helps you.

As for Nobel Prize in Economics - hardly a shining example of real world ability to understand economics.

1) Krugman in 1997:

http://web.mit.edu/krugman/www/hotdog.html

Greider's view, if I understand it, is that this is just a reprieve--that any day now, the whole economy will start looking like the steel industry. But this is a purely theoretical prediction. And Greider's theorizing is all the more speculative and simplistic because he is an accidental theorist, a theorist despite himself--because he and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day.

vs. Krugman in 2010

http://www.nytimes.com/2010/03/15/op...15krugman.html

At this point, it’s hard to see China changing its policies unless faced with the threat of similar action — except that this time the surcharge would have to be much larger, say 25 percent.

Suddenly Mr. Snide Free Trade is babbling about a 25% import tariff, when the writer he denigrated 15 years ago turns out to have been 100% right.

2) Merton/Scholes of Black/Scholes equation fame (Nobel Prize Economics 1997)

Long Term Capital Management (Greenspan Bailout 1998) - a hedge fund that was neither long term nor managed capital well.

3) Merton Miller (Nobel Prize Economics 1990)

Nobel laureate economist Merton Miller said Thursday Malaysia's move last year to implement capital controls is a failure that was at best useless.
"The Malaysian flirtation with capital controls...must be written off as a failure, and one whose costs will be borne by the Malaysian people for many years to come," Miller said in a keynote address to a regional economics conference in Singapore.

Riiiiight. Just a bit off on that call.

In fact, if you look at the decade of the 1990s - 7 of the so called Nobel Prizes in Economics were won by University of Chicago economists.

We're living their dream today.

[jtabeb]

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

If the current batch be Chicagoians, let us hope and pray that the next crop of economists comes from the Hyman Minsky School. It's the only chance in hell we have of formulating a sound policy response to this freaking mess. (or bring back Hudson as a presidential economic adviser) Hey Obama, you listening? You want to win the next election? Then you KNOW who you are going to have to listen to on economic policy!

I wish we could vote for economists too, not just political candidates.

[tombat1913]

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

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

No.
Inflation, think about the U.S., gold from $300-1500 in a decade.
Hyperinflation, think Argentina, the currency is still in use.
Destruction, think Weimar or Zimbabwe, think wheelbarrows.

[dropthatcash]

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

I'll see your Chris Martenson and raise you one Douglas M Casey; Crisis investing : opportunities and profits in the coming great depression printed 1979 and 1995
and I'll raise you; God's Plan in the Coming Depression printed 1998
and
How to Survive the Coming Depression by Alson Fry (Paperback - 1974)
plus
The Great Reckoning: Protecting Yourself in the Coming Depression by James Dale Davidson (Paperback - Jan 10, 1994)
and I'll add
How to Prepare for the Coming Depression: A Workbook for Managing Your Money and Your Life During Economic Hard Times by Mark Friedman (Paperback - Jun 1989)
and
The Coming Credit Collapse by Alexander Perry Paris (Hardcover - Jan 1, 1974) updated for the 80's!!!

I've got a dozen more should anyone wish to up the ante.

Nothing sells like miracle weight loss programs, effortless exercise machines and Armageddon.

[bpr]

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

The correct term is "useful idiot" - someone who does something ridiculous but which helps you.

We have a lot of "yous" and "mes" here. Who is the useful idiot benefiting here: TBTF Banks, Government entities (Treasury), Politicians, academia, or all of the above? (note: as you add beneficiaries the likelihood of myopic insanity increases: choose all of the above and it's pretty much the world is against you).

I tend to think that Krugman is doing his job as best he can. That means, addressing difficult questions about economics in a layman's terms with benign intent.

Simply explaining this stuff to people who have no idea how macroeconomics works is, truthfully speaking, a job. That's his. We can debate his effectiveness or bias all we want, but let's be clear on terms.

Who is he serving?

As for Nobel Prize in Economics - hardly a shining example of real world ability to understand economics.

1) Krugman in 1997:

http://web.mit.edu/krugman/www/hotdog.html



vs. Krugman in 2010

http://www.nytimes.com/2010/03/15/op...15krugman.html



Suddenly Mr. Snide Free Trade is babbling about a 25% import tariff, when the writer he denigrated 15 years ago turns out to have been 100% right.

2) Merton/Scholes of Black/Scholes equation fame (Nobel Prize Economics 1997)

Long Term Capital Management (Greenspan Bailout 1998) - a hedge fund that was neither long term nor managed capital well.

3) Merton Miller (Nobel Prize Economics 1990)



Riiiiight. Just a bit off on that call.

If your opinion hasn't changed over the last fifteen years, I'd say that's a problem you should probably work on. Especially when it comes to the topic of economics, which has uncomfortably encountered the age of "financial engineering."

In any case, I'm not familiar with the book discussed here, and if there's anything damning in these links it is this:

[his, Greider's] theorizing is all the more speculative and simplistic because he is an accidental theorist, a theorist despite himself--because he and his unwary readers imagine that his conclusions simply emerge from the facts, unaware that they are driven by implicit assumptions that could not survive the light of day.

This description can be used on Krugman himself, but what are the implicit assumptions that Krugman himself is guilty of perpetrating? More often than not, I find myself agreeing with him, though there are times that I feel he's off the mark.

In fact, if you look at the decade of the 1990s - 7 of the so called Nobel Prizes in Economics were won by University of Chicago economists.

We're living their dream today.

Indeed we are, and it's unfortunate.

[c1ue]

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

We have a lot of "yous" and "mes" here. Who is the useful idiot benefiting here: TBTF Banks, Government entities (Treasury), Politicians, academia, or all of the above? (note: as you add beneficiaries the likelihood of myopic insanity increases: choose all of the above and it's pretty much the world is against you).

I tend to think that Krugman is doing his job as best he can. That means, addressing difficult questions about economics in a layman's terms with benign intent.

Simply explaining this stuff to people who have no idea how macroeconomics works is, truthfully speaking, a job. That's his. We can debate his effectiveness or bias all we want, but let's be clear on terms.

Who is he serving?

That's exactly the point about the useful idiot: you don't need someone who directly works for you, so long as what the idiot does is in line with what you want.

That role right now for Krugman is the high bid in "The Price Is Right": No matter what stimulus spending is executed or how, he just wants more.

In turn the Republicans are doing the low bid.

But the key takeaway? It is a show.

If your opinion hasn't changed over the last fifteen years, I'd say that's a problem you should probably work on. Especially when it comes to the topic of economics, which has uncomfortably encountered the age of "financial engineering."

I have yet to see Krugman 'fess up via a mea culpa. So far he is still taking the stance that "it isn't really free trade".

This of course is hypocrisy of the highest order. If a nation chooses to deliberately undervalue its currency, then the dogma of comparative advantage states that everyone else benefits - the underlying belief system of capitalism.

But of course Krugman has shown no willingness to admit error or change his underlying Keynesian orthodoxy.

This description can be used on Krugman himself, but what are the implicit assumptions that Krugman himself is guilty of perpetrating? More often than not, I find myself agreeing with him, though there are times that I feel he's off the mark.

Agreement is nice - that's exactly what a pundit does.

However, as a supposed scientific contributor - i.e. the science of economics - agreement is not supposed to be the criteria for what you do or say.

IMO Krugman has long since morphed from any semblence of economist - as pathetic as that profession has been and continues to be - into a mouthpiece.