The Sixth Wave
Yes,
we will be addressing the seriousness of the culmination of the last
three waves. 2015.75 was the start of the Big Bang — the midpoint in
this wave. It began with the revolution against the monarchy; what comes
this time is either real Democracy or authoritarianism. Government is doing everything in its power to achieve the latter.They KNOW what is coming. Everything they created is crumbling before their eyes. Socialism has been robbing the people to further the corruption in government. It has lowered the living standards and has subsidized education and medicine to the point where they no longer need to be competitive. These are two areas that will need serious reform. Tracking money and people will not prevent the demise of the political-economic system we find ourselves within. What comes after this crisis is the unanswered question.
Mainstream vs. Austrian Economics
JZ
ANSWER: Both schools are wrong for both assume that the business cycle began with the industrial revolution. The mainstream group follows Marx and Keynes and assumes the business cycle is a flaw within the modern industrial economy; the Austrian schools are fixated on assuming this is caused by paper money.
Both are DEAD WRONG. This is the same limited thinking as global warming where nobody looks at the data before 1900. Forest fires and volcanoes put up more CO2 than cars. Here the assumption is that the business cycle was somehow born with the Industrial Revolution and paper money. Sorry, any investigation of history reveals there has ALWAYS been a business cycle and its cause has nothing to do with the Industrial Revolution or fiat money. It is inherent within human nature, and we swing political systems left and right based upon the same inherent emotional tendencies of people. There will be people who flatly disagree with me that only gold is money. No matter what evidence I put forth, they will never change. The same is true of diehard republicans or democrats. Some just hate the other and they cannot even explain why they belong of those groups.
The problem with both camps is that their assumptions begin with the Industrial Age. Neither has done extensive research before this period nor have they ever bothered to look. They are fixed in their ideas and everything begins with that era. There is no testing their theories over thousands of years. It is like looking at the Dow Jones only since 2011 and concluding it always must rise.
The idea that fiat money is responsible for the business cycle is not very practical when paper-like monetary systems existed in ancient times, such as when Egypt issued coins after being conquered by Alexander the Great. Paper money was also in China, and in fact, China never issued precious metal coinage and their currency was always fiat since the emperor was God’s representative who declared what value money would be, which is precisely fiat. Fiat can be tangible coins that are debased. Gold would be fiat if government declared its value is fixed at whatever price. Fiat is the declaring of value irrespective of any commodity value.
Gold has NO real commodity value outside of demand nor does silver. Both were totally dependent upon demand, based upon desirability like art. Cattle and bronze had a tangible value for both served a consumption purpose as food or as plows and swords. Therefore, tangible money must have a “use” other than money.
Gold and silver were prized objects but had no utilitarian “use” value outside of jewelry. Gold was desirable but was not a vital commodity that served a purpose beyond its prized status like art. Therefore, numerous monetary systems have existed that were not gold based since the medium of exchange had to have a “use” value other than as money. That was the core of all barter systems – I give you this for that.
As far as mainstream economists assuming that government can manipulate demand, even Paul Volcker admitted in his “Rediscovery of the Business Cycle” that this idea of “new economics” has failed.
I believe more in Adam Smith and the invisible hand. Money is whatever people say it is. Dictating money shall be gold, seashells, cattle, paper, or slave girls as St. Patrick reported in Ireland, is still fiat – the dictating by government what shall be money. Money is not a store of value; it is a medium of exchange. In that case, it is merely an agreed upon medium to supplant barter. That’s all.
We have two camps arguing with each other and at the core of both is the assumption that government is in control one way or another. I disagree. The people are in control and those in power are there ONLY until they go too far. A revolution always takes place. There are no exceptions throughout history. In the end, the people must consent to be ruled and it must be a rule that is fair and equitable. Whenever politicians, dictators, or kings forget that they require the consent of the people to rule, that is when they fall.
Market Talk – Nov 5, 2015
By the time the US markets opened most of the European dealer talk was of the GBP sell-off with many expressing delight that it was not the Euro in the spot light again! Stronger Jobless Claims helped sentiment for the US Dollar, which of course did not help cable but did provide another positive day for the DXY, last seen at 98.10.
The US Treasury market saw renewed steepening on the back of the Jobless Claims number earlier today. However, it really was not going to be that much of a move ahead of tomorrow’s release but we did see 2’s drop 1bp whilst 10’s and 30’s gained a basis point. The belly of the curve was rather as it acted as the pivot, eventually closing the day almost unchanged.
Also, worthy of a late note is that both the yellow and the black gold continued to be sold today. TWI lost 2% whilst Gold lost only 0.25%.
All eyes down for the non-farms tomorrow. Expectations are for a +180k and 5.1% print
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