Jim Rogers Blog - Uncle Ben is a Historic Disaster?

Bernanke Is Going To Go Down In History As An Absolute Disaster

Not true? Everybody is printing money is an effort to debase their currencies so that exports remain competitive, while consumers will suffer with rising prices that will not be reflected in inflation indices. The game is on.

First, we are not promoting Uncle Ben's actions and decisions in anyway - it is just that all these guys are boxed in and have few choices to consider. They are boxed in for a number of different reasons, but if we cut to the chase, physical-reality's constraints are now governing what both central bankers and their abstractionist economics can and can't do. 

So, what's really going on? The secret is we are past "peak everything" making the inputs needed for production and consumption outputs scarcer. As a result, if you are chasing these scarce physical objects with abstracts (money) and all the other chasers are doing the same, how would you try to win the chase? You are right, have more abstracts than the other chasers - which translates into what? Print more money.

What does the end game of this chase look like? Simple extrapolation says we will ultimately have printed lots of money, but for some reason it didn't create anymore inputs for the economic process anywhere. I wonder why that is?

So in a funny way we do not really blame Uncle Ben and his friends because not even Jimmy has come up with a solution to fix this predicament. Why? Simply because there isn't one.

INVESTORS' INSIGHTS

First Financial Insights

September 13, 2013  

Poor Uncle Ben and friends...are just boxed in. Reality Check!

    

Jim Rogers Blog : Global Economic Slowdown or Meltdown?

Jim Rogers : Global Economic Slowdown In The Next Year or Two

(Read More Above)

Well if Jimmy thinks we are headed for a slowdown; he is dead wrong. It is going to be more akin to a meltdown. Why?

First, interest rates at some point are bound to rebound. That is a simple mathematical calculation when completed has the potential to drive stock and bond markets down by fifty per cent or more. Include real estate properties in the market definition.

But the real big - big reason is that we are past peak everything, and that spells trouble as things move to the other side of the slope. If anyone thinks that have fewer things and more consumers is a good thing - they are need of prompt medical attention. In other words, smaller pies and more eaters will never be a good thing.

When will it occur? No one can predict for sure, but it should be within five years - and then continue much longer  All this should lead to more social, political and military disturbances. Making matters worse.

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First Financial Insights
September 8th, 2013  

Expect Another Meltdown...

Jim Rogers Blog - Banks Stop Printing Artificial Money

The Problem will appear when the Central Banks stop Printing Money Artificially

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There is one big problem with Jim's statement - Central Banks have alway and will always print money artificially. Why? First: How is money created? Where is it born? Who creates it? The answers to  these questions are actually quite simple. Money is created by virtue of a journal entry by a Central Banker in their books of account. There is little "physical" rhyme or reason for its creation, as the basis for authorizing the entry is a decision made by policy-makers based on the circumstances of the time. So the amount of entry is not determined by a set tried and true formula tied to GDP or any similar economic measure. It is largely arbitrary. 

So the paper you hold in your hands, bank accounts or use to ascribe other assets value is existentially nothing more than the fiat offspring of a Central Banker's accounting entry. It is not tied to national resources or future resource output potential in anyway - that would put  too much science into this mystical journal entry and money printing process. By the way, the more we print the more global stock markets go up as shown:

Global Stock Market Growth Flat J -Curve (Exponential Upwards)

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Therein lies the real issue, because as national resources behind the money supply are exponentially depleted by expanding populations, so is the de facto value of each money unit that had ever or will ever be printed.Thus, creating the basis for another exponential J-curve, as there is an inverse relationship between printed money and exponential resource output depletion. (see charts below) More and more printed money is simply needed to preserve the statu quo perceptions and defer social unrest.

Global Money Supply Flat J-Curve (Exponential Upwards) 

Global Resource Depletion Flat J-curve (Exponential Upwards)

Global Population Growth Flat J-Curve (Exponential Upwards)

Debasement in a sense actually started when the very first dollar was printed. The above hockey-stick charts show a fairly clear relationship between the expanding expanding money supply, resource depletion and population growth, leading to two logical questions: What's left? How long will it last?  The chart below uses oil as a surrogate for resources - and as expected the J-curve is inverted to the money, depletion and population J-curves above.



Global OIL Production (Extraction) Declines - Flat J Curve (Trending to Exponential Downwards)

Not only do these charts paint an obviously  bleak picture - the most important observation is that they are all going the wrong way - Exponentially!  And so is the climate right along with it as population growth spurs a J-curve in climate change as well as can be seen in the undernoted chart.



Global Climate Change - Flat J Curve (Exponential Upwards)

Bottom line is that the printing of money actually correlates with the respective J-curves population growth, resource depletion and climate change. While they correlate the printing of money appears to affect everything in the wrong way. But regardless of causation or correlation all these charts are forming J-curves going the wrong way.  But most importantly, they are doing in EXPONENTIALLY!   

Now try explain these simple J-curves to Central Bankers in Greece, Cyprus, Spain, Portugal, Nauru, Japan, Italy, Ireland, and the rest. Money is de jure or legal evidence from the issuing state that it is obliged to pay its holder the stated value of resource outputs through its various agencies. All is fine until there are no further resource outputs because inputs no longer exist for conversion by the nation's economic processes . As we can see in individual real nations noted, as these J-Curves continue to accelerate, the economic effects and value of money diminishes by country, and should ultimately do so in an exponential manner globally.   

What next? Just keep reading the international headlines.

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First Financial Insights
September 2, 2013

"Stop Printing Artificial Money"

     

The Jim Rogers Blog: Shale Oil not enough to solve Americas Debt Problems

The Jim Rogers Blog: Shale Oil not enough to solve Americas Debt Problems

(more video)

Shale's Big Shoes to Fill

No kidding? In fact, we have done this analysis once before using Bill Gross's (PIMCO) numbers that puts US total debt closer to $100 trillion once all contingencies, guarantees  and other unfunded future liabilities are thrown into the pot. And that's present valuing related assets using today's long-term treasury rates. What happens when they double?

So what would it take to pay off the US debt - you would  think that one trillion barrels in  world -wide oil reserves would do it?  Under strict assumptions it does, but then how do you run the future economy? To be fair, this assumes too, that all US debt is owed to foreigners. It isn't. The vast majority is owed to other citizens that Keynesian economists believe we should  not fret about under the theory  - it is just money you owe  to yourself. That could be a hard one to explain to pensioners if one day that debt is cancelled for whatever reasons.

Still. we are on-side with Mr Rogers, as it is going to take a lot more than shale oil to pay the debt and keep the "physical economy" running for a few more decades. Think about it!

INVESTORS' INSIGHTS
First Financial Insights 
August 6,2013 

Another set of NUMBERS

The Marc Faber Blog (Video): “It’s Gonna End One Day… Through War Or Financial Collapse”

The Marc Faber Blog (Video): “It’s Gonna End One Day… Through War Or Financial Collapse”

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No kidding, we guess Marc's finally starting to figure out what we have been saying for years. Sooner or later the abstract economy's - positive-sum game - is going to have to reconcile with the physical economy - a negative-sum game. The outcome of the imbalance correction will be brutal.

 

Or perhaps Marc picked up a copy of The Limits to Growth and discovered a practical application - Oprah calls it an "ah ha" moment when the penny finally drops.

 

INVESTORS' INSIGHTS

First Financial Insights

 

July 27, 2013

 

 

When the penny drops...

 

The Paul Krugman Blog - Detroit, the New Greece

The Paul Krugman Blog  -  Detroit, the New Greece (Read More) 

Streets of Athens, Remember? Circa 1967???

As Dr Kinesa points out in his recent article, there is a lot of analysis and navel-gazing required to sort out the problems of both Greece and Detroit, who share many similarities. By the way, a better title may be "Greece, the New Detroit?"

Why don't we just state the obvious here? That is about the differences between recent economic successes of China and for some time Japan, and failures of centres; such as Detroit, Greece, Portugal and others. Imagine over the years, that the winners actually have had a "economic business plan" that they execute to, by using both free and centralised policies and tactics. ( seems they also better learn and apply MBA thinking?) Meaning that over reliance on "invisible market forces" to attain the optimal economic state is not a panacea, in fact, it is plain foolhardy - results speak for themselves.

Anyway, when a National Business Strategy is employed, it creates a different outcome because it focuses the nation or centre on simple stuff like; What can we do better then others? Where can we build long-term sustainable comparative advantages? And thats where all that weaknesses, strengths, opportunities and threats thinking occurs, breeding realistic paths forward.

Bottom line; we see that the winners are executing successful National Business Strategies that have little to do with whatever is trending in the Schools of Economics. Imagine! 

That's our short take on it - but never forget what you paid for free advice.

INVESTORS' INSIGHTS
First Financial Insights

July 25, 2013

Streets of Detroit  -  2012

When did it really go Bankrupt???

The Marc Faber Blog : Somewhere down the line we will have a Massive Wealth Destruction

The Marc Faber Blog: Somewhere down the line we will have a Massive Wealth Destruction

Just a short post noting that Marc's 50% prediction is in line with what we suggest is a possible valuation adjustment in our July 17th comments on Paul Krugman's Blog - Prophecies of Maestrodamus.

Not a hard one to figure out as it is really just "present value mathematics" whereby if long 30 year bond rates double, then their market value dips by 50%. Very straightforward mathematics that no amount of economic theory nor policy measures can override as it is simply a hard conceptual constraint. Mathematics cannot be persuaded, legislated nor negotiated with - and that should come as no surprise to anyone.

Down the line, looks to be a scary turbulent road ahead. 

We will post more comments from this blog later on.

INVESTORS' INSIGHTS
First Financial Insights
July 21, 2013

What waits down the line?

The Guardian - SuperFreakonomics is SuperFreakingWrong

The Guardian - SuperFreakonomics is SuperFreakingWrong

 Business Media Protecting our Planet

This article brings out a number of salient points regarding the information propaganda game being played with climate change by the nefarious business press. Never, however, do Canadians forget that "the medium is the massage" - because media has the subtle profound power to define realities that don't actually exist. The list of outright lies built on misinformation with its brutal consequences are endless. Therefore, investors should, as a rule, have little faith in the objectivity of the mainstream business press that is sadly run by so many hidden agendas.  

Climate change as pointed out in this article is being panned or suppressed with the passion of an addict who denies their affliction. The usual media suspects are mentioned, along with other crazies, who are promoting hair-brained schemes* to remedy irreversible damages already facing the bio-sphere. More false PROFITS! 

*(Remember Get Smart? Let's Bring Down the Cone of Silence)

To invest effectively, the planet's hard physical constraints must be considered in any decisions we make. Denial or ignorance could be very costly. Is climate change that serious? The best way to answer the question is with the question: Why is, Mayor Bloomberg, spending $30 Billion on a seawall for New York City? 

That's a serious - REAL Business Agenda...


INVESTORS' INSIGHTS
First Financial Insights
July 9, 2013 

Climate Change - could be bad for Business?