Sunday, December 31, 2017

10 Years After

As we move past the first decade of the great financial CONfidence crisis, what have maturing generations of advanced economies learned? My thoughts should be well known on the matter, but I should probably leave this for others to conclude, based on the various topical dialogues of our evolving information platforms.

As we digest the news in this modern era of real time social commentary, we see that all information is socialized. One must concede that the comments in our news-feeds are at least of equal interest as the articles they pertain to. We can take that for what it is, understanding the breadth of motives and sources. But humans are by nature influenced by herds (real or fake, for what it's worth).

What is clearly evident, is that debts still masquerade on balance sheets as assets - even as they continue their systemic expansion.

It does not take a quant to recognize that when debt expands (as fundamentals deteriorate) risk grows. Are the world's great masses so worthy as to support this growing "debt as wealth" premise? Certainly not in the spent-out consumer economies of the West. They save in debt if they save at all. But in the East, where the little people still hold wealth by tradition, there are tons of "asset wealth" to balance worldwide debt. Many financial pundits, even Kyle Bass, have been handed their hats on this miscalculation.

Currencies may burn, but they will always be reborn and rise again from the ashes. It is the debt they represent that must be dealt with. CONfidence in the repayment of debt is the very foundation of our chosen monetary and financial system - that system will not change in essence until we have evolved into something beyond what defines our nature as being "human".

In particular ... it is dollar debt that must be dealt with, since it is dollar debt that has expanded most magnificently all over our wondrous financial world. It is true that in Another's time, all currencies were tied to the dollar for value. And had the dollar been Baker Acted prior to 2016, the inferno would have been apocalyptic indeed.

But last year, emerging economies, rich in the true asset wealth of CB balance sheets, were granted membership in club Phoenix. Now (as foretold by Roacheforque years ago) their currencies are backed by a new exchange rate system which will gradually render our existing FX system a matter of declining relevance (like its dollar flagship).

Mr Fantasy cannot save the dollar from its fiat destiny. But he can save the world from total dollar destruction. This is the fork in the trail by which Roacheforque had departed from the Euro obsession. Yes the Euro (and it's member gold) will help, but it is a regional hybrid asset. The SDR is the global hybrid asset that ushers in the preferred multi-polar construct.

Welcome to 2018. Mr. Fantasy endures ...


6 comments:

  1. The only fantasy here is that gold will somehow "save the system".

    The system doesn't want to be saved, because salvation requires repentance and the desire for redemption. It is unrepentant, and therefore irredeemable.

    Those that wish to recapitalize the system with gold wish to do so because they hold, via centuries of force and fraud, an outsized portion of it compared to the peoples of India, China, and The West. This will still allow them control.

    The new, equity-based, voluntary, market-determined, trustless, deflationary system is being born all around you, but just like those that are truly blind, you refuse to see it - yay, in sooth you misrepresent it to yourself, much like the misunderstanding of a man who'd salary depends on failing to understand.

    Gold (and the lesser, white metal) will flourish, but they will be last on the list.

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    1. Don't mistake where gold is as the answer. Where it's going is more important.

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  2. All currencies can be inflated, and every single human generation in history repeats the same mistakes.

    The problem is that you and others are looking for a platonic, "final solution" to the money problem, in the same way that others have looked for a final solution to a race problem or anything else.

    This itself is a peculiarly western way of looking at the world. You continue to believe things are linear, that progress moves the human species forward to a better state. Therefore, you believe that once the dollar debt problem is resolved, it will be some sort of final, utopian endpoint of all monetary history.

    Not true! Things will collapse, and this problem will go on for centuries, for millenia. It's inbuilt into human civilization.

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    1. You must not be able to read. You can write, it appears, but your ability to read, or to comprehend what is written, appears stunted. Have a Happy New Year anyway.

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  3. Once again you are spot on.....most people miss categorize gold as a currency instead of a store of value and ultimately a debt extinguisher.... in a world amassed in debt (particularly dollar debt). To your point the SDR will usher in a new era for global trade settlement which won't be "Utopian", but part of the necessary evolutionary change in a multi-polar world. All people need to do is take the blinders off and see the forest for the trees....as always thanks for your insights

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