Defensive Interpretation on GD?

[mosullivan]

I have mentioned that I was extremely grateful to find this site. First, I learned to question my thinking which I was exceeding lazy in assuming gold would rise since inflation was a "no-brainer" This kind of thinking caused me to over allocate my portfolio to gold holdings. In any event (deflation or inflation) I am paying the price today for using inflation hedges too aggressively. This is what sought my quest to learn where I went wrong.

Somehow I stumbled on this site began reading and asking questions. I was able to see how and why the US Dollar was strengthening and for the first time I had my dollar down/gold up ("No Brainer") thesis pointed out for what it was, flawed. I recently asked someone to comment on Generational Dynamics but MORE IMPORTANTLY on DEFLATION and received the following response. IMO, it is over the top defensive and doesn't answer the simple question (or at least I fail to see answered) of this: How can we have an increase in the aggregate money supply (inflation) when we are losing approximately $1 trillion per week? All the printing, bailing, etc does not appear to me to exceed that which is being lost to stock, real estate and bond market (debt/money or simply what the Fed is printing). and yet I still don't get any answer from gold bugs, just attacks.

So with all that said, I wanted to see if John cared to reply to this when he has a few minutes. Just for the record, my quest is for knowledge versus assuming or to follow anyone. I don't have any agenda but simply wish to learn and better understand the world around me. Best Regards, MOS

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I am familiar with generational dynamics, it is nothing more than a neologism, a kind of "pseudonym" for economic historical determinism, of which I have been a student for many years, inspired by my studies and mentors at Yale.

The essential concept of generational dynamics aka (pseudo) economic historical determinism is this: all economic cycles repeat through history, there is rarely anything new under the sun. Analogously all sociological phenomena repeat through history, all political phenomena repeat through history. What that means is that the errors of previous generations are destined to be repeated by future generations, it is a form of pre-destination....ergo, that is the fundamental concept behind the name historical determinism.

Now that said, I disagree strongly with Xanakis on several key points, he is promoting a scam interpretation of US Dollar hegemony that is simply invalid. His generational dynamics is a derivative concept of economic historical determinism, very similar to the manner in which a CDO (Collateralized Debt Obligation) is a derivative concept of pragmatic loan procedure.

The central flaw in his thesis is this: he posits that deflation makes the US Dollar scarcer, ergo more valuable. In reality, it is NOT the current deflation making dollars "scarcer," rather it is the panic flight of all currencies into US Treasuries as an imagined flight to safety. Remove the panic tomorrow, and you will discover suddenly that the world is drowning in US currency, repeat, DROWNING. Because, as stated in previous theses I wrote elsewhere, most of those parking their monies in US Treasuries today are NOT doing so for investment purposes. Nobody rational of mind "invests" in financial instruments that effectively provide ZERO yield. Instead, nations/corporations/funds/people have been parking their monies in US Treasuries in hopes that this current financial storm will blow over quickly, then they can extract those dollars and use them to pay ongoing expenses, etc. In other words, most of those dollars will be withdrawn and aimed toward CONSUMPTION once the storm passes. Unfortunately, given the ongoing liquidity crisis, with one bankruptcy after another taking place throughout the world, the amount of goods and services available for consumption is dropping dramatically, even as I type this message.

Ergo, the current deflation will transmute overnight into a massive inflation of gargantuan proportions, that is the only possible destination of a currency that has been obscenely, digitally super-inflated by the mere "flick of a switch."

Xanakis forgets (or is oblivious) to the fact that we were in the throes of the Mother of all STAGFLATIONS when this crisis broke out. Certain sectors were deflating whilst simultaneously, others were inflating. It is simply impossible for a pure deflation to take place because of one notable anomaly that perverted all standard Keynesian economic theory: namely the fact that the worlds largest debtor nation controls the international currency regime. From this rather strange "logic," all market anomalies flow.

We are experiencing existential, rogue wave events now, and who knows what is about to transpire. But one thing I feel certain is this: the status quo in which a consumerist nation (America) hands producing nations (e.g. China)
mere USA digits in exchange for real goods and services is likely about to end. Other nations will not stand for this ongoing status quo, in which their nations must suffer the most dire repercussions for US Dollar hegemony, whilst Americans remain relatively unscathed.

The only solutions: in the near term, there must be an immediate DEBT AMNESY/DEBT ABSOLUTION on an international/domestic level --- and in order for America's currency to become more substantive, the nation MUST repatriate its manufacturing sector ASAP, so that it can once again provide REAL and essential goods to the entire world, NOT merely electronic digits.

America has NO divine right or entitlement to be a consumerist nation, whilst expecting that the rest of the world is obligated to toil in sweatshops and make the goods that allow the nation to function. By way of analogy, imagine an heir who is handed millions of dollars from a hard-working previous generation, then spends his days playing tennis or attending sex orgies or whatever, while others all around him go off and toil in difficult jobs that enable the heir to live his rather decadent lifestyle. Do you not think that those around him might, at a certain point, greatly resent that heir's lifestyle, or his sense of entitlement that he has the divine right to "jerk off" and roll around "in the playground" while those around him toil for his benefit?

Anyway, ca plus ca change, ca plus meme chose, and that is the concept behind economic historical determinism, you would be better advised to study that field of history than its nouveau impersonators, like generational dynamics.

Just one further addendum to my response:

given the inevitable super-inflation ready to descend upon the nation, once the panic into Treasuries ends and those dollars are aimed back toward CONSUMPTION, that is why ultimately, only gold/silver and the gold/silver miners offer the best flight to safety in the intermediate to long term.

There is no escaping the fact that the US Dollar will face devaluation (or outright replacement from its currency standard role) and gold/silver will both be revalued significantly to reflect the radical diminution in the US dollars purchasing power. That is the only possibility, and the fact this is not happening yet has less to do with "deflation" and more to do with the corrupted Treasury acting once again to subvert markets, primarily for crony elites' financial gain, NOT in service of the national interest.

The focus on deflation is typical misdirection from the stagflationary forces that have been in effect for some time, and when it comes to misdirection, then Wall Street is the expert. There is simply no escaping this one categorical salient reality: the massive digitization of the US Dollar can only be inflationary, on both a domestic and international level. You cannot digitize trillions of dollars of currency overnight and imagine it has long term deflationary consquences, the entire concept is entirely preposterous, and even a six year old child (with neither an economics degree nor a school lunchbox) would tell you as much.
Reply With Quote

[malleni]

Dear Mos,

Great discussion again!

Best regards
malleni

[malleni]

Mos,

Unfortunately here on this Forum there are NO people which dare to discuss this EXTREMELY logical questions you (sorry - "your friend") arise here.
Damb Forum. Only one "true" is allowed.
All different meanings (with ground) - will be in best case - ignored.

Probably ONLY answer (if you get one) is - your discussion is "irrelevant".


NO discussion.
NO contra-facts.
NO historical events.
NO logical explanations.

Just - "believe" and "feelings" and .... "theory"...

[DisIllusionist]

@ mosullivan

Your mention of electronic currency being created by a flick of a switch (or click of a mouse) reminds me of the following article by AE Fekete.

http://www.professorfekete.com/articles ... lation.pdf

Fekete claims it may be possible physical paper to detach and trade at a premium over electronic dollars as a deluge of electronic dollars are created in a Keynesian attempt to reinflate. In addition, he claims that Treasuries are tradable for paper money so they would have negative yields as people trade electronic dollars for them. I'm not sure if this is really true since, as far as I know, the all new treasuries are electronic and are paid out through a bank account (electronic).

Any thoughts?

Joel

[Higgenbotham]

Fekete has the right idea, in my opinion. For the life of me, I can't understand why people have such a difficult time understanding that all categories of dollars are not equivalent, and that the market might seek out high quality (low risk) dollars for an extended period of time, while other types of dollar based debts are defaulted on and written off. For gosh sakes, the banks have been writing off hundreds of billions of worthless dollar denominated assets for months. It's not like anybody is hallucinating here; this is happening. There is no way for anybody to pre-determine how long that may last or to what extent it may last. If the argument here is that Generational Dynamics or any cycle based analysis tool is equivalent to economic determinism and therefore not valid, how can the same person then turn around and pre-determine how long a period of risk aversion may last (by stating that there will be an immediate flight out of treasury bills and into inflation assets)? The answer is they can't and neither can anybody else.

[mosullivan]

Hi Joel,

"Your mention of electronic currency being created by a flick of a switch (or click of a mouse) reminds me of the following article by AE Fekete"

That was in the context of what I pasted from someone who I thought had a rather defensive stance on GD. I am more concerned into learning and looking into arguments on deflation versus inflation. I still have more work to do for my own mind. One of the arguments that holding "ZERO" yielding treasuries means nothing to me though. I would much rather hold a dollar versus being down 40% in an "inflation hedge" Its true the dollar was weak from 01 to very recently.

But when deleveraging really (POPPED) with the big Lehman event, it became clear (at least for now) the dollar or world's reserve currency IS the safest place. Net, there may be LESS dollars (digits or take your pick)

Best Regards, MOS

[Higgenbotham]

In addition, he claims that Treasuries are tradable for paper money so they would have negative yields as people trade electronic dollars for them. I'm not sure if this is really true since, as far as I know, the all new treasuries are electronic and are paid out through a bank account (electronic).

Any thoughts?

Joel

mosullivan, I understood that everything below the solid line in your first post was written by someone else in response to a question from you.

Joel, all of the T-bills I have ever owned were/are electronic. When paying for the bill, the money is swept out of a checking account and upon redemption it is electronically deposited. There is another option, though. Upon redemption, the money can be moved into a "zero percent Certificate of Indebtedness" with the Treasury. That's one reason I question whether yields can be negative for long because if yields go negative, instead of renewing their bills, the holders could instead move the money into C of I until rates become positive again. Fekete seems to imply that an old paper T-bill that has matured can still be floating around in the system. That's not true as far as I know, but I've never owned one. If it were the case, it would not be earning any interest. I do know for sure that electronic bills must be renewed.

[John]

> I have mentioned that I was extremely grateful to find this site.
> ...

> he is promoting a scam interpretation of US Dollar hegemony that
> is simply invalid. ...

> a kind of "pseudonym" for economic historical determinism

I'm glad you like the site. I would hate to see what you'd write if
you didn't like the site. Would I be correct in assuming that you're
a Generation-Xer?

When I first came across Strauss and Howe's book, "The Fourth
Turning," shortly after 9/11, I had to spend the better part of a
year reading it over and over until I really began to understand it.
That book, and their book "Generations," are the two major
foundational books in generational theory. Even as presented by
Strauss and Howe, generational theory is an extremely complex, and
can't be mastered without many months of studies.

So you and "malleni" seem to be disappointed that you don't
understand generational theory, even though you haven't particularly
studied even the foundational theory.

If you want to actually understand what you're talking about, you
have to read at least one and preferably both of Strauss and Howe's
foundational books, and also read my two books, which you can read for
free on my web site. Without that background, you and "malleni" will
continue to make simple errors. If you really want to understand
what's going on in the world, then you have to plan on reading at
least those four books.

Saying that Generational Dynamics is a pseudonym for "economic
historical determinism" is about the silliest thing I've heard. It's
like saying that the theory of differential equations is a
"pseudonym" for building bridges. Generational Dynamics is not an
economic theory, although economics is one application. You should
familiarize yourself with the list of Generational Dynamics
predictions for further insight. And Generational Dynamics is not
deterministic, except in the sense that a weather forecast is
deterministic.

Once you've read those four books, you should plan on doing some sort
of research project. For example, you might take some particular
country or region, and write a thorough generational analysis of the
country over a 100-200 year period.

An example of where you and "malleni" go wrong is in the other
thread, where "malleni" wrote something about Norway suddenly wanting
to join euroland. I think of this as a "very soft fact," something
that can change any day, depending on how the wind blows. Matt1989
responded with information about Brazil being a 2T nation (referring
to the "second turning," or generational awakening era). That's a
"very hard fact." Two years from, Norway may or may not still want
to be a euro country, but two years from now Brazil will be a 2T
country, with 100% certainty. And the fact that Brazil is a 2T
nation is very signficant in understanding how the world works.

Matt in particular has done quite a bit of research himself,
establishing the generational eras of dozens of countries, and
establishing generational timelines for Indian tribes during colonial
times.

You may also be surprised to learn that there are at least a dozen,
and possibly many more, members of this forum who have spent
literally years studying generational theory, usually having started
by reading the book "Generations" ten years ago. You're dealing with
many people here who are far more knowledgeable, and often far less
ideological, than you are.

Now, if you want to continue with having an ideological ax to grind,
go ahead, but you will not understand what's going on. What you need
to do, if you want to understand how the world works, is to undertake
a study program along the lines I've suggested. There are a lot of
people here who are willing to answer questions and help you.

Sincerely,

John

[mosullivan]

I'm glad you like the site. I would hate to see what you'd write if
you didn't like the site. Would I be correct in assuming that you're
a Generation-Xer?"

John,

There are 2 parts to my post and 2 "authors" My personal comments were ABOVE the line in my post. The section below the _______________ in my post was how someone ELSE reacted when I asked them their take on GD. Hence, my asking Isn't this a "Defensive Interpreation of Generational Dynamics" If you read what I wrote I thought they were extremely defensive. What I find when I ask most inflationists is that they don't want to explain some simple questions.

Sorry for the confusion.

Best Regards, MOS

[malleni]

Than you for answer John.

I have to say that I am not quite satisfied with your discussion.

You actually, didn't answer on any of the open questions which "MOS friend" arise.

Only what I could understand from your quite log explanation is - that just with logic in NOT possible to understand GD theory.
I (and everybody other) must read (if not write) at least 4-5 books about GD and than perhaps (probably depending of intelligence) - we will "understand".
With other words - there are NO simple understanding for GD!
Besides, I have to admit that I do not have any information about "historical determinism" theory neither.

I am as you know analyze engineer in the real life.
I try to analyze mechanical problems and those are in comparison to the social - quite easy.
I am not economist.

Only what I have as tool is to try to use logic.
Nothing other.

You have on the other side - a complete theory.
I do not understand - why is so difficult to try understand thinks on the - simple way?

I understand also that you do not accept any disagreement with your theory neither as well as you war probably angry because of Mos friends - way to express.
But - finally - this is a Forum...
You are the Admin... And that is clear that you could ban everybody who do not agree with you or have different opinion.
But - would it be good for you or forum... that is another question.


Generally I agreed with Gordos last long post on the "Financial topics".
The difficulties to discuss with you come (in my opinion) from your too personally understanding of this discussion.
(Of course - it is not so easy... I was angry when you "predict soon war in Europe" too.)

So - I thing that GD theory is interesting thing (although I did not read "the books").
BUT - I do not think that GD theory and especially particularly persons - are "the prophets"!
I absolutely agreed with Gordo on this point.
You or me or anybody - can try to predict something - BUT this is NOT "the facts" as you often presented it.
As you said in this discussion "hard" and "soft" facts... There are NOT "hard" facts in the Future - ONLY in the Past! Me, you or anybody here are NOT "the prophets!

Or perhaps you are... I do not know...

(We know one. Jesus Christ.
Even he had problem with people around him. Althought he declared that he was Gods don and prophet - very few people believe in it.)
I have also problem "to believe" - blind.