Defensive Interpretation on GD?
Posted: Tue Oct 28, 2008 8:30 am
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.
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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
____________________________________________________________________________________________________________________________________
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.
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