debt
The Future of Gold, Oil & the Dollar
by Gregor MacdonaldThe ability of reflationary policy to mute the worst risks of debt deflation has been a source of enormous frustration for stock market bears ever since the 2008 collapse. Yes, the initial moderate rally out of the S&P500’s black hole was perhaps not so surprising in 2009. Bombed-out stock markets can always manage some sort of rally. But the ability of the rally to continue through 2010, and then 2011, and now 2012 has been quite vexing and painful for bearish investors.
Indeed, the entire post-2008 market phase has now produced an era of consistently poor performance for hedge funds. Recent data, for example, shows that an incredible 90% of hedge funds are underperforming the S&P500 through mid-September.
Will the pain continue?
The Future of Gold, Oil & the Dollar
by Gregor MacdonaldThe ability of reflationary policy to mute the worst risks of debt deflation has been a source of enormous frustration for stock market bears ever since the 2008 collapse. Yes, the initial moderate rally out of the S&P500’s black hole was perhaps not so surprising in 2009. Bombed-out stock markets can always manage some sort of rally. But the ability of the rally to continue through 2010, and then 2011, and now 2012 has been quite vexing and painful for bearish investors.
Indeed, the entire post-2008 market phase has now produced an era of consistently poor performance for hedge funds. Recent data, for example, shows that an incredible 90% of hedge funds are underperforming the S&P500 through mid-September.
Will the pain continue?
Finding Authentic Happiness
by charleshughsmithExecutive Summary
- Why buying into the Status Quo undermines personal empowerment
- Echew debt and consumerism. Instead, focus on cultivating resilience and social capital
- The importance of differentiating hedonia vs eudaimonia
- The key roles of Expectation, Narrative, and Challenge
- The foundations of happiness
If you have not yet read Part I: The Pursuit of Happiness, available free to all readers, please click here to read it first.
In Part I, we challenged the assumption that the successful pursuit of happiness is based on material prosperity and what we might call the psychology of the atomized individual.
If material prosperity is necessary but insufficient, and our social and financial order is sociopathological, what does an authentic pursuit of happiness entail?
For answers, we can survey recent research into human happiness, and consider “powering down” participation in a deranging social and financial order.
Pondering Power
The primacy of power in human society is omnipresent. Humans scramble for power in all its forms to improve social status and the odds of mating, living a long life, and acquiring comforts. What is remarkable about the current American social order is the powerlessness of the vast majority of people who have “bought into” the Status Quo.
When the public vehemently disapproves of a policy, such as bailing out the “too big to fail” banks, they are routinely ignored, and for good reason: They keep re-electing incumbents. Most have little control over their employment status, workflow, or income, and most devote the majority of their productive effort servicing private debt and paying taxes that service public debt.
The one “power” they are encouraged to flex is the momentary empowerment offered by purchasing something; i.e., consuming. The corporate marketing machine glorifies acquisition as not just empowering but as the renewal of identity and the staking of a claim to higher social status – everything that is otherwise out of the control of the average person.
The dominant social control myth of our consumerist Status Quo is that wealth is power because you can buy more things with it. But the power of consumption is one-dimensional and therefore illusory. The only meaningful power is not what you can buy – a good, service, or experience – but what you control – your health, choice of work, income, surroundings, level of risk, and your circle of colleagues and friends.
The “wealthy” who own an abundance of things but who are trapped in debt are not powerful. Their choices in life are limited by the need to service the debt, and their pursuit of happiness is equally constrained.
The kind of wealth that enriches the pursuit of happiness is control over the meaningful aspects of life. It is no coincidence that studies of workplace stress have found that those jobs in which the worker has almost no control over their work or surroundings generate far more stress than jobs that allow the worker some autonomy and control.
Financial and material wealth beyond the basics of creature comfort is only meaningful if it “buys” autonomy and choice.
We all want power over our own lives. Once we free ourselves from social control myths, we find that becoming powerful and “wealthy” in terms of control does not require a financial fortune. It does, however, require sustained effort and a coherent long-term plan…
Finding Authentic Happiness
by charleshughsmithExecutive Summary
- Why buying into the Status Quo undermines personal empowerment
- Echew debt and consumerism. Instead, focus on cultivating resilience and social capital
- The importance of differentiating hedonia vs eudaimonia
- The key roles of Expectation, Narrative, and Challenge
- The foundations of happiness
If you have not yet read Part I: The Pursuit of Happiness, available free to all readers, please click here to read it first.
In Part I, we challenged the assumption that the successful pursuit of happiness is based on material prosperity and what we might call the psychology of the atomized individual.
If material prosperity is necessary but insufficient, and our social and financial order is sociopathological, what does an authentic pursuit of happiness entail?
For answers, we can survey recent research into human happiness, and consider “powering down” participation in a deranging social and financial order.
Pondering Power
The primacy of power in human society is omnipresent. Humans scramble for power in all its forms to improve social status and the odds of mating, living a long life, and acquiring comforts. What is remarkable about the current American social order is the powerlessness of the vast majority of people who have “bought into” the Status Quo.
When the public vehemently disapproves of a policy, such as bailing out the “too big to fail” banks, they are routinely ignored, and for good reason: They keep re-electing incumbents. Most have little control over their employment status, workflow, or income, and most devote the majority of their productive effort servicing private debt and paying taxes that service public debt.
The one “power” they are encouraged to flex is the momentary empowerment offered by purchasing something; i.e., consuming. The corporate marketing machine glorifies acquisition as not just empowering but as the renewal of identity and the staking of a claim to higher social status – everything that is otherwise out of the control of the average person.
The dominant social control myth of our consumerist Status Quo is that wealth is power because you can buy more things with it. But the power of consumption is one-dimensional and therefore illusory. The only meaningful power is not what you can buy – a good, service, or experience – but what you control – your health, choice of work, income, surroundings, level of risk, and your circle of colleagues and friends.
The “wealthy” who own an abundance of things but who are trapped in debt are not powerful. Their choices in life are limited by the need to service the debt, and their pursuit of happiness is equally constrained.
The kind of wealth that enriches the pursuit of happiness is control over the meaningful aspects of life. It is no coincidence that studies of workplace stress have found that those jobs in which the worker has almost no control over their work or surroundings generate far more stress than jobs that allow the worker some autonomy and control.
Financial and material wealth beyond the basics of creature comfort is only meaningful if it “buys” autonomy and choice.
We all want power over our own lives. Once we free ourselves from social control myths, we find that becoming powerful and “wealthy” in terms of control does not require a financial fortune. It does, however, require sustained effort and a coherent long-term plan…
Welcome to the Era of ‘Ugly’ Inflation
by charleshughsmithA year ago, in the wake of then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency has strengthened notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.
The Siren Song of 'Beautiful Deleveraging'
In a world of rising sovereign debts and an overleveraged, over-indebted private sector, history suggests there are only three possible ways out: gradual deleveraging, defaulting on the debt, or printing enough money to inflate away the debt.
Welcome to the Era of ‘Ugly’ Inflation
by charleshughsmithA year ago, in the wake of then-announced additional monetary easing measures by the Federal Reserve (which since sent stock prices on a rocket ride for the next nine months), many of our readers feared a major decline in the dollar was imminent. To add some balance to our site content, we asked Peak Prosperity contributing editor Charles Hugh Smith to argue the case for a strengthening dollar. He graciously accepted, and in the year since writing Heresy and the US Dollar, America's currency has strengthened notably vs. its fiat counterparts. Now, after the Fed's announcement of QE3 (plus), many of us are girding once again for dollar weakness. So we've invited Charles to once again play devil's advocate.
The Siren Song of 'Beautiful Deleveraging'
In a world of rising sovereign debts and an overleveraged, over-indebted private sector, history suggests there are only three possible ways out: gradual deleveraging, defaulting on the debt, or printing enough money to inflate away the debt.
The Middle-Class Survival Guide
by charleshughsmithExecutive Summary
- Recognize the signs of serfdom
- Calculate your income's vulnerability to the system
- Don't count on high inflation to inflate away your debt obligations
- 10 strategies you can start implementing right now to defend against the forces trying to sap your quality of life
If you have not yet read Part I: Middle Class? Here's What's Destroying Your Future, available free to all readers, please click here to read it first.
In Part I, we surveyed the key dynamics that have eroded middle-class wealth and income over the past 30 years. Some of these were conventional (higher energy costs) and some were unconventional/politically unacceptable (financialization; neofeudalism).
Regardless of what you identify as the primary cause, that the middle class (and labor in general) has lost ground since the early 1980s is undeniable, as is the ultimate failure of debt-dependent “growth.”
What can we do about it? It seems to me there are two responses:
- Avoid becoming a serf in the new financialized feudalism
- Avoid becoming dependent on the Status Quo and avoid collaborating/supporting those elements of the Status Quo that subsidize and protect the parasitic, inefficient, and unproductive sectors of the economy.
Getting Real About Serfdom
I am going to cut to the chase here, and I expect many of you to disagree. Debt is serfdom, period.
I often illustrate this point by asking two simple questions…
The Middle-Class Survival Guide
by charleshughsmithExecutive Summary
- Recognize the signs of serfdom
- Calculate your income's vulnerability to the system
- Don't count on high inflation to inflate away your debt obligations
- 10 strategies you can start implementing right now to defend against the forces trying to sap your quality of life
If you have not yet read Part I: Middle Class? Here's What's Destroying Your Future, available free to all readers, please click here to read it first.
In Part I, we surveyed the key dynamics that have eroded middle-class wealth and income over the past 30 years. Some of these were conventional (higher energy costs) and some were unconventional/politically unacceptable (financialization; neofeudalism).
Regardless of what you identify as the primary cause, that the middle class (and labor in general) has lost ground since the early 1980s is undeniable, as is the ultimate failure of debt-dependent “growth.”
What can we do about it? It seems to me there are two responses:
- Avoid becoming a serf in the new financialized feudalism
- Avoid becoming dependent on the Status Quo and avoid collaborating/supporting those elements of the Status Quo that subsidize and protect the parasitic, inefficient, and unproductive sectors of the economy.
Getting Real About Serfdom
I am going to cut to the chase here, and I expect many of you to disagree. Debt is serfdom, period.
I often illustrate this point by asking two simple questions…
The Most Predictable Next Events
by Alasdair MacleodExecutive Summary
- Why Greece is unlikely to release a new drachma
- Why globally-coordinated money printing is the most likely resolution to the Greek & Spanish crises
- Why the magnitude of derivative risk makes a Eurozone collapse much more frightening
- Why capital flight will get worse, and why gold will benefit from this
- Why Germany's odds for leaving the Eurozone are lower than most assume
- Why the time left before extreme action must be taken is than a few months – possibly only weeks
If you have not yet read Part I: Abandoning Ship, available free to all readers, please click here to read it first.
Here are some key points to bear in mind as the crisis progresses:
Greece: new drachma?
The Greeks would be crazy to embrace a new drachma, as recommended by neoclassical economists. A new drachma would be backed by nothing, unless it comes with full convertibility into Greece’s 111.6 tonnes of gold, assuming that actually exists. The complete lack of faith in any Greek government’s economic credentials would mean a new drachma in the absence of gold convertibility would rapidly descend towards its intrinsic value, which is zero. Interestingly, recent polls suggest that the Greek people understand this and prefer to remain with the euro.
The legality of changing deposits from euros to drachmas is highly questionable. Assuming the Greek government can force this through on domestic deposits that will leave an open question over loans, likely to be challenged through the courts. And in the past non-Greek banks lending money to Greek businesses have as a matter of course stipulated contracts to be governed by the laws of another jurisdiction.
Message: do not buy into the siren attractions of an independent drachma…
The Most Predictable Next Events
by Alasdair MacleodExecutive Summary
- Why Greece is unlikely to release a new drachma
- Why globally-coordinated money printing is the most likely resolution to the Greek & Spanish crises
- Why the magnitude of derivative risk makes a Eurozone collapse much more frightening
- Why capital flight will get worse, and why gold will benefit from this
- Why Germany's odds for leaving the Eurozone are lower than most assume
- Why the time left before extreme action must be taken is than a few months – possibly only weeks
If you have not yet read Part I: Abandoning Ship, available free to all readers, please click here to read it first.
Here are some key points to bear in mind as the crisis progresses:
Greece: new drachma?
The Greeks would be crazy to embrace a new drachma, as recommended by neoclassical economists. A new drachma would be backed by nothing, unless it comes with full convertibility into Greece’s 111.6 tonnes of gold, assuming that actually exists. The complete lack of faith in any Greek government’s economic credentials would mean a new drachma in the absence of gold convertibility would rapidly descend towards its intrinsic value, which is zero. Interestingly, recent polls suggest that the Greek people understand this and prefer to remain with the euro.
The legality of changing deposits from euros to drachmas is highly questionable. Assuming the Greek government can force this through on domestic deposits that will leave an open question over loans, likely to be challenged through the courts. And in the past non-Greek banks lending money to Greek businesses have as a matter of course stipulated contracts to be governed by the laws of another jurisdiction.
Message: do not buy into the siren attractions of an independent drachma…
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