Monday, February 2, 2015

Yanis!


The new Greek Finance Minister, Yanis Varoufakis, is a Marxist and a member of The Coalition of the Radical Left (SYRIZA is their acronym in Greek). He calls himself a libertarian Marxist FWIW. He is a dual citizen of both Greece and Australia, and he is a smart economist. He has an excellent grip on the history I explored in Fiat 33, Dirty Float and Global Stagnation, especially in regard to our (America's) exorbitant privilege as it emerged through the evolution of the international monetary system from 1944 to present, a privilege which he more or less now hopes to acquire for Greece.

In addition to his PhD in Economics, he is also an expert in Game Theory, about which he has written three books. Back in the late 80s while lecturing on economics at the University of Sydney, he was quite popular for mixing Game Theory with Economics. From the Sydney Morning Herald last Wednesday:

"As a young man lecturing in Sydney, the economist's area of expertise was game theory. Now he gets to put it into practice

In his late 20s, Varoufakis joined the university in 1988, cutting a striking figure amid the earnest and crumpled academics of its economics faculties. Long-haired, usually in jeans and a T-shirt, Varoufakis could deliver electrifying lectures on his chosen topic, the somewhat arcane discipline of game theory.

"He made economics a lot more interesting," said Helen Goritsas, a former student, now a senior lecturer at the Academy of Information Technology.

"He was young, very vibrant and dynamic. He had lots of charisma."

His specialty of game theory is possibly best known as the domain of management consultants and military planners - as far away from left-wing political economics as one could get.

The mathematical discipline studies strategic decision making in competitive situations. Its best known "game" is the "prisoner's dilemma", which shows how two individuals can "rationally" come to a decision that is in neither of their interests.

"He was aware of the limitations of game theory, but I'm sure he will apply what he learnt about strategic thinking to whole problem of Europe's political economy," said Frank Stillwell, another former colleague at the University of Sydney.

"And he will be doing it at a time when the future of the European Union is in the balance."

[…]

Varoufakis wants Greece to be allowed not to repay a large part of that debt, or at least have it restructured on favourable terms.

But he does not want Greece to leave the eurozone or dump its currency, recognising that any new Greek currency could be battered and the country would have trouble raising capital.

Game theory is, in the end, about getting the best outcome from a difficult situation.
Varoufakis used to tell his students that it showed that collaboration between rivals often produced the optimal result, Goritsas says.

With the parties remaining far apart on agreement, it will be a message he hopes the rest of Europe hears."

So if economic game theory is his thing, and now he's in a position to put it to the test, what's his first move? Well, here are a few quotes from him courtesy of HuffPo on Friday:

Varoufakis [said] "… to negotiate, to be taken seriously, you have to have a credible threat. You have to be prepared to blow the whole thing up…" […] " So, this is my recommendation: Prepare for a very tough, very painful, potentially explosive negotiation." […]

In a November 2014 interview, Varoufakis predicted that countries pushing Greeks to accept austerity -- such as Germany -- would be doomed to repeat the experience of the victors of World War I, who imposed such harsh conditions on Germany that many believe it led to the rise of Adolf Hitler.

"I think we'll have a repeat performance of that," Varoufakis said of Germany today
.

Sounds like he's serious, in a libertarian Marxist kind of way! ;D

I must admit that, although he's a Debtor and I'm a Saver and we are polar opposites politically, for some reason I like this guy! I may have to get hooked on watching him speak just to try and figure out how he's going to get Greece to force Europe to push that damn Freegold button! ;D

Sincerely,
FOFOA


186 comments:

Bjorn said...

Yes let´s hope it´s not all bluster. Push the button, push push the butt-on!

www.youtube.com/watch?v=oJDGcxAf9D8

tEON said...

So, was Yanis saying, a few years ago, that Euro QE insures that Germany, and surplus nations, will be bound to the Euro forever (removing any threat of leaving)?

gamblesmurf said...
This comment has been removed by the author.
anand srivastava said...

I just heard the whole talk. Wow. This guy is good. I am not sure that he is on the side of the debtors. I think he is trying to lie somewhere in the middle. He understands that Gold Standard is stupid. He understands that the Money exists due to the "Belief" of people who are using it. So he understands things. I don't think he even likes printing. He is trying to fix the problem with Greece. IMO he doesn't think that the way Eurozone exists now is sustainable.

I would think (not sure what he thinks though) that it needs a fund (through taxing the richer countries) to fix the imbalances that inevitably will crop up from time to time. This should be normal. Not all countries can be the most profitable at the same time.

2015 75 said...
This comment has been removed by the author.
2015 75 said...
This comment has been removed by the author.
2015 75 said...

Sovereign Debt Big Bang coming October 1, 2015. According to Martin Armstrong.

anand srivastava said...

What do people think about Yanis's proposal? I am afraid, I don't much understand Banking :-(.

http://yanisvaroufakis.eu/euro-crisis/modest-proposal/

tEON said...

Like his TedTalk video I watched before this one, I don't really understand his 'solution' but rather see a continuing stream of, often valid, criticisms. His deficit/surplus-related understanding mirrors FoFoA's and later in the video his structural model failures mimics Rickards'. What is his solution?

tEON said...

Sorry, this is the one I was referring to: TEDxAcademy - Yanis Varoufakis - A Modest Proposal for Transforming Europe

DP said...

Financed fully by EIB-EIF bonds (along the lines of EIB-bond financing that has a sterling track record), idle savings in Europe and, importantly, internationally can be shifted into productive investments in the European regions where they will help provide essential public and private goods (which are, otherwise, under- supplied), rebalance competitiveness, as well as generate the incomes from which the most precarious debts can be repaid.



As FOFOA said...

He has an excellent grip on the history I explored in Fiat 33, Dirty Float and Global Stagnation, especially in regard to our (America's) exorbitant privilege as it emerged through the evolution of the international monetary system from 1944 to present, a privilege which he more or less now hopes to acquire for Greece.

DP said...

EIB raises finance from world's savers, invests proceeds into struggling economies of Europe (currently, Greece at top of list).

Struggling economies can grow based on these investments, and therefore can repay their debts. Therefore EIB can repay world, and the shareholders of the EIB (nations of Europe) earn the spread.

Everyone's a winner, baby, that's no lie.

tEON said...

Thanks DP!

Knotty Pine said...

Sounds like MMT. He gets a lot right but fails to recognize what it means to save. From the link provided by anand:

"If EIB-EIF bonds are to be issued on this scale, some fear that their yields may
rise. But this is far from clear. The world is awash in savings seeking sound
investment outlets. Issues of EIF bonds that co-finance EIB investment projects
should meet these demands, supporting stability and working to restore growth in
the European periphery. We therefore submit that joint EIB-EIF bond issues can
succeed without formal guarantees"

BTW there are numerous interviews available on RT's Boom/ Bust channel. Yanis is a frequent guest.

DP said...

De rien, avec plaisir! =)

He goes on to point out that there is nothing currently stopping the EIB/EIF from issuing bonds for investment in this manner, except a convention that 50% of the investments they will buy into should be financed by the member state whose jurisdiction it falls within. Which is a problem since these struggling peripheral economies that actually need the investment, cannot afford to invest 50% into the projects. Therefore, it happens but not to an extent that makes the difference.

He wants the ECB to issue bonds of its own and contribute the other 50% alongside the EIB.

It seems a bit complex & perhaps awkward, to me?

Why can't the ECB simply add EIB/EIF bonds to its list of eligible collateral, and turn the QE guns in that direction? If the ECB can be permitted to buy covered bonds from private commercial banks, why can't it buy the bonds of the public EIB/EIF? And let those institutions then provide 100% of the skin for the game.

Motley Fool said...

Having watched about 25 mins of the video linked, till the end of Yanis's part, I have to say there seems to be marked differences between his view and ours.

From what I can glean of his overview of history, he does seem to have a good idea of what has come before.

At some point he says that the euro was created with the idea that the $IMFS will survive; while we say the euro was created with the idea that the $IMFS will disintegrate. In his final remark he says that the euro is busy failing due to the $IMFS failing and will not survive in its present state, unless it is restructured; we say the euro will rise like a phoenix as the $IMFS fails.

To me this is a large difference in POV, and I posit he is another that does not understand the structure of the euro vis a vis gold, and it's relation to the $IMFS.

TF

tEON said...

Really enjoyed THIS INTERVIEW with Yanis Varoufakis from a few days ago (Jan 30th). This BBC journalist tries continuously to bully him and misconstrue his comments - and he politely, but directly, corrects her each time. His patience is wearing quite thin with her by the end.

Edwardo said...

Anand wrote:

He understands that Gold Standard is stupid.

What is stupid, or to put it less indelicately, what is ill advised, are the maintenance of systems, monetary or otherwise, that are fundamentally rigid. Fixed (monetary) regimes are incapable of dealing with the kind of shocks and volatility that complex systems routinely exhibit. In fact, they engender instability.

Fixed exchange rates, fixed credit schemes-see the various iterations of the gold standard-and a variety of political systems are, by their very nature, ill suited to the needs of humanity in the present reality. That is what it appears the world is now groping towards an adequate understanding of.

burningfiat said...

It's a (genius) trap. Thank you Greek people for once again trying to save the world from the German empire.

https://www.youtube.com/watch?v=Zvl9N9GdraQ

Everything playing out according to Mr. Panos' plan, yes?

DP said...

Vote for Panos and all of your wildest dreams will come true.

Indenture said...

"Mr Varoufakis said Greece had been living for the next loan tranche for the past five years. “We have resembled drug addicts craving the next dose. What this government is all about is ending the addiction,” he said, noting it was time to go “cold turkey”

http://www.ft.com/cms/s/0/baf9d212-aa17-11e4-8f91-00144feab7de.html#axzz3QbqBG800

fftastic said...

Yanis view of the cause of the global crises:

"What was it that tripped up the Bretton Woods system, causing it to lose its footing and to collapse on 15th August 1971? The answer is: the US government’s inability to exercise self-restraint vis-à-vis its own capacity to exploit its exorbitant privilege; its ability, as custodian of the world’s reserve currency, to print global public money at will so as to finance (without substantial new taxes) a stupendous military-industrial complex, the Vietnam war, Lyndon Johnson’s, otherwise splendid, Great Society policies etc..

And what was it that brought us the Crash of 2008? Again, it was an American failure at self-restraint. Only this time, it was not the US government’s failure (even if a case can be made that it happened on the US government’s watch) but of the private sector in general and of the banks in particular: The American financial sector failed spectacularly to exercise self-restraint vis-à-vis its capacity to exploit its newfangled exorbitant privilege: its ability, as custodian of global financialisation, to print global private money at will; a capacity that was functional to the maintenance of American hegemony and, therefore, one that was at odds with any serious type of regulatory constraint upon the bankers."
excerpt from here

His solution for the euro crises:
link

He obviously fails to link the cause of the global and european crises to the structure of the IMF$!
He thinks it's "the US government’s inability to exercise self-restraint vis-à-vis its own capacity to exploit its exorbitant privilege."
But then he proposes that all will be well again for europe "through enhanced cooperation" (within the same IMF$):
"While broad in scope, the Modest Proposal suggests no new institutions and does not aim at redesigning the Eurozone. It needs no new rules, fiscal compacts, or troikas. It requires no prior agreement to move in a federal direction while allowing for consent through enhanced cooperation rather than imposition of austerity."

Can anybody feel a big disappointment for him coming on?

burningfiat said...

From one Marxist to Another:

https://www.youtube.com/watch?v=OLlrH8q5d3M

I feel the mood from this song, wanting to blow the whole thing up... :)

Indenture said...

burningfiat's video link inspired further investigation:

http://www.greece.org/main/index.php?option=com_content&view=article&id=113&Itemid=119

"The unbelievable strong resistance of the Greeks delayed by two or more vital months the German attack against Russia; if we did not have this long delay, the outcome of the war would have been different in the eastern front and in the war in general, and others would have been accused and would be occupying this seat as defendants today."

sean said...

I think he has a good understanding on where we have been, but is not yet quite sure where we are going

Bright aurum said...

Nice discussion so far, but rather fruitless in terms of "old monied interests" .
Greece has no leverage and cannot make any credible threats anymore. They can miss the payments on the debt for sure but they cannot renege on the debt should they meet an unified European response. Come FG a lot of greek gold will be flowing in opposite direction of debt, meanwhile a patchwork can be created to make the creditors whole it terms of the schedule of the greek payments. Money printing yes, a the euro was meant for printing.
On a side note. Since my town is only 100 km. from the Greek border, there have been recently a lot of brand new greek issued stacks of euros coming in.
You see the 500 euro banknotes come generally from the Germanic CBs and are issued with an X in front of the serial number for Germany or an N for Austria (a much smaller economy than Germany`s as a matter of fact).
Sh!tty CBs like Greece`s are not trusted with larger denominations and for good reason (I am oversimplifying of course but larger denominations are certainly a rarity) anyway. My point is that freshly cut banknotes are coming in to our banks. Normally one would think that the european CB keep their M0 reserves in the larger denominations that are more easily distributed to the local branches should a need for this emerges. This was surely happening in our own near banking collapse 6 months ago. I was frantically withdrawing euros as soon as they came. And luckily for our government they have negotiated an european loan just in time to lull the sheeple again. At first came the brand new stacks of 500ds than 200ds than 100ds and by the time the 50s came the crisis ended and the sheeple returned the M0 to become M1+. Now only Y marked brand new stacks of greek made 20s are coming which means only two things. Either the Greek CB is scraping the last reserves out of its vaults or it is printing (/or allowed to print) out of desperation. No ECB loan. No X marked euros. Just NO.
Cheers,

fftastic said...

@Brightaurum

Definitely no allowance to print! Reread this.
The main point is:
"The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.
"It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."
and further:
"Monetary discipline forces fiscal discipline on the politicians as well. And when crises arise, economically disarmed nations have little to do but wipe away government regulations wholesale, privatize state industries en masse, slash taxes and send the European welfare state down the drain."

"The horror of austerity is not the consequence of Greek profligacy: it was designed into the euro’s plan from the beginning."

And I agree with A/FOA/FOFOA:
The structural design of the Euro reveals the "injustice" in the structural design of the world reserve currency aka $.
The more the Euro is used the more pressure it exerts on the dollar leaving no way out for the IMF$ but to collapse under it's own weight. The Euro is europe's answer and alternative to the American Hegemonism.

The Euro does it's job. No printing allowed!




Roacheforque said...

It's interesting that he notes "churning" from a viewpoint of foreign Wall Street re-investment, as opposed to just "hoarding dollar reserves". In any event, no Freegold button will be pushed. It's agonizing enough just to gradually throttle it forward, especially with that brick wall of debt just ahead ...

Jeff said...

You can't press a button that's already been pressed.

http://english.alarabiya.net/en/business/economy/2015/01/30/Saudi-King-orders-massive-29-3-billion-spending.html

If you want something to count down, watch the saudi foreign reserves. Someone is spending like the dollar is going out of style.

Valora Oro said...

IMO, we have also to ponder that the Freegold button may be the European QE, which curiously coincides in time with Yanis. Up to now, all the main bond purchases by the ECB have preceded strong subsequent quarterly revaluations of Eurosystem's asset item 1, ‘Gold and gold receivables’. So, during that quarter, POG was rising sharply.

When SMP programme was in operation, POG in Euros was rising at the same pace. The subsequent OMT programme was never in operation, and POG in Euros was falling. Now, QE will start to work next March, and POG in Euros is starting to rise.

Edwardo said...
This comment has been removed by the author.
Edwardo said...
This comment has been removed by the author.
Edwardo said...

Jeff,

I'd like to think that the KSA is spending all those dollars because dollars, at least as we know them now, are destined to experience the much anticipated state change sooner rather than later. However, if Mr. Robb is correct the plot
is a bit thicker where such lavish expenditures are concerned.

Fred H. said...

FOFOA,
Thanks for that fascinating video. YF certainly is well versed in monetary history and also grasps that we are on the cusp of great change. He also correctly has recognized that major changes occur when society is politically ready for them and not before...cue the derivative super nova.....
I find myself wanting to shout at them that there is another way...a middle road that solves there dilemmas. A way that needn't be supported by arbitrary institutional artifices: Automatic currency adjustment, separation of MoE and SoV, and a mechanism for savers to protect their value from the time-honored tradition of governments overspending on their most enthusiastic supporters and cronies--and inability to make ANY hard decisions! (....hint Yanis...gold does have value) Any chance that such a brilliant man could ultimately be responsible for pissing away the Greek gold?...what a sad irony that would be.
Thanks again for the thought provoking piece!
Friedrich

Bright aurum said...

Thanks Jeff, Edwardo
http://www.newstatesman.com/world-affairs/2014/11/wahhabism-isis-how-saudi-arabia-exported-main-source-global-terrorism

M said...

Yanis is an interesting fella indeed.

Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Bright aurum said...
This comment has been removed by the author.
Sam said...

Like any well spoken Marxist Varoufakis makes an excellent macro argument for redistribution. On a CB level surplus creation is just as much of a problem as deficit creation. Both represent imbalance and instability. However in the real world when someone tries to blatantly redistribute the production of producers all you really get is less production. Freegold is a better solution. Let producers produce and debtors consume but give producers a means of saving outside the monetary system that isn't tied to the debts of the debtor.

anand srivastava said...

Sam:

I would expect an expert in Game Theory to know that when you redistribute the fruits of one's labor to other people, the producer will not have the incentive to produce as much. This will impoverish the whole system.

But obviously he as an avowed Marxist doesn't see this.

I guess he hasn't found a way to get out of the strait jacket of the Marxian Class Struggle. He needs to see that it is not only the poor that produce. The rich can also produce. If the market works well a poor person who produces enough should become rich.

The Marxists miss the basic fact that the Mind is a bigger producer than the hand. This is what differentiates us from the Animals. It wasn't our hands that made us the ruler of this world. It was our mind. Ignoring the mind will only make us animals. As we have constantly seen in Communist governed societies. They all go down, as they lose their producers. China has done some remarkable job in the last 3 decades or so. The rulers were a beneficiary of the $IMFS at the cost of the general population.

Marco Polo said...

Recommend a 2 hour film/documentary called Bitter Lake on BBC iPlayer. If outside the UK, you will need a VPN with a UK based server to access. Best free VPN have found out there is Open VPN. Bit of a fiddle to use and many of the free UK servers not always online, but better than paying!

Jeff said...

He who defects first defects best, Edwardo. I'd rather attend a saudi house party than a Greek communist party, but I hear it's hard to get invited to Sheik Yerbouti's parties as an american these days; even Obama only got a quick tour and shown the exit. Practically a media non event wasn't it, especially considering the first meeting between him and the new head of state, and very different from the past.

Looks like those parties are all caviar and prawn, no hamburgers, going forward.

https://www.youtube.com/watch?v=a2_K-kKSCr4

Marco Polo said...

What happened to Bright aurum's posts about the difference between the sexes? Did not get the chance to finish reading them and wooof - gone.

FOFOA said...

Sorry. They're back up for a few hours so you can finishi reading Mr. Polo. They're just a little too much (too long), a little too OT, and a little too provocative in a way that has nothing to do with the subject matter here. ;D

ein anderer said...

Marco Polo,
the rest of the world can view the film here:
https://thoughtmaybe.com/bitter-lake/

Bright aurum said...

No. I am sorry. FOFOA is right as usual. I will remove them myself in few hours.

Bright aurum said...

On topic.
Greece economy is about 3% of the eurozone. Probably 0. sth.% of world`s economy not sure about the freight fleet but I guess is only nominally greek.
So does it really matter what Mr.Varoufakis says? We`ll judge him better on his actions.

Phat Repat said...

Here's how far I got on the Bright aurum post:

Off topic
(part1)
WHAT IS MAN? (By Esther

Screech... Nuff said.

It's like me saying I can define a woman. Easy enuf, but why? I would rather spend the time navel gazing.

Back on topic...

Greek FinMin will end up being quite the useful tool in the end; and we will ultimately be grateful, but not in the way that he thinks. ;-)

Tom R said...

Bright - I think they may have said the same thing about Duke Ferdinand. "Who the hell is Ferdinand?" But the dominoes are set, the fuse is primed, choose your metaphor, things are ready to blow off, any excuse will do when the time is right.

Who can deny that the world is just itching to blow off some pressure. It could get ugly. Let us hope that the Euro currency does what it was designed to do, and acts as a safety net, a way for the markets to continue functioning.

vizeet srivastava said...

I am not against Karl Marx. I think he was too ahead of his time. Even today we can't have working cooperatives in every domain.
An Indian dairy cooperative is jointly owned by 3 million milk producers. Its name is Amul. It has worked for more than 65 years and it is still growing.
http://en.wikipedia.org/wiki/Amul
He theory had some substance. Communism was wrong way to implement it.

ReferencePointGold said...

FOFOA wrote-
He has an excellent grip on the history I explored in Fiat 33, Dirty Float and Global Stagnation, especially in regard to our (America's) exorbitant privilege as it emerged through the evolution of the international monetary system from 1944 to present, a privilege which he more or less now hopes to acquire for Greece.

Freegold does not give Europe exorbitant privilege. Am I wrong?

Sam said...

@RPG

Varoufakis wants Greece to be able to perpetually run a deficit without consequence. That is an exorbitant privilege.

Michael dV said...

RPG
and specifically…no …no one gets the EP in FG

ReferencePointGold said...

Hah. Thanks Sam. That does make sense. I am sure most debtors would want the same too. Alas natures wrath cannot be stopped.

Marco Polo said...

Interesting. Varoufakis is way more intelligent than most politicians, yet he is now a politician himself. He is exceptionally self-confident and the term charismatic has been used. Suspect he will succeed in baffling the other political players and not wanting to confess they don't understand, they will go along with whatever he suggests.

Bright aurum said...

Or he (Varoufakis) can succeed in making out of Greece a case of exemplary punishment by the $IMS.
Watch out Spain, Portugal, Italy.

KnallGold said...

Phat Repat: at least we know ourselves. Do you know why males don't have cellulite?

Because it looks shit. (I bet 1 ounce all males laugh here ;-)

Went back to Greece is the Word , the part about Argentina with the CPI graph:

"....But Argentina is still a good example for us to look at. In January of 2002 the currency devalued 3:1. At the same time the stock market rose in response to the devaluation and then stayed up (because the currency stayed down). But what is interesting about Argentina is that just prior to the devaluation, in December of 2001, inflation dipped into negative territory (deflation?) and the stock market dipped as well. Then they almost immediately exploded out of this head-fake in an unexpected devaluation. See the charts. The first is the MERVAL and the second is CPI: "

Always trying to catch patterns, that deflationary fake-out before inflation sets in, could sound familiar soon, I get the feeling of a turn the last days.

M said...

@ Marcopolo

If anyone is interested, just download Private Tunnel. You get a few Gig for free at the start. I cant recall how much. Then the next 50 g is only $12. I use it to get back onto forums that I've been banned from. Works every time.

https://www.privatetunnel.com/index.php/client-download

M said...

@ Sam

"Varoufakis wants Greece to be able to perpetually run a deficit without consequence. That is an exorbitant privilege."

That wasn't how I interpreted it. Im not all the way through the vid on this post but doesn't he want the ECB to have an investment bank arm that issues its own bonds ? So that the EU can take market share away from the US ?

Flat Shoe Lance said...

This is hilarious. Reading through some of the posts it was hard not to notice similarities between freegold and Marxism.

Michael dV said...

Like this one Lance?
http://fofoa.blogspot.com/2010/07/debtors-and-savers.html

Motley Fool said...

Flat shoe lance

Name a few? As a matter of curiosity.

Motley Fool said...

Flat shoe lance

Name a few? As a matter of curiosity.

Woland said...

"Anticipatory plagiarism" occurs when someone steals your
original idea, and publishes it 100 years before you were born"
Robert K. Merton

"Behind all the complexities of modern political economy lies
the simple fact that human beings are, generally speaking, of
two persuasions: the first would spend tomorrow what they
earn today; the second would spend today what they hope to
earn tomorrow. From this rudimentary biological fact arises
all conflicts that lead to economic crises: to panics, depressions,violent and revolutionary transfuse of wealth, and
perhaps most wars".

Freeman Tilden, "A World in Debt" , p.141, 1936 ( guilty? )

DP said...

Emphasis on the hope to.

Sam said...

@M

A Marxist is a macro thinker. He said himself that economics is a “religion with equations”. He is entitled to his beliefs. He sees producers needing consumers just as much as consumers need production. So if you are a net producer like Germany you need a net consumer like Greece in order to maintain your economy. “Simple arithmetic” as he called it. In other words Greece does Germany a service by consuming Germany's excess so that Germany can earn profit and be wealthy. This service is just as valuable as the service Germany does by producing the excess goods and shipping them to Greece in the first place. To punish Greece (via austerity, ect.) and reduce their "income" would also necessarily punish Germany by damaging their economy as there will be less demand (“people with means to pay”) for German surplus products. Do you see the logic? It's hard to argue with unless you know about the pieces of the puzzle that are left out. Anyway, I believe he wants Germany and other Eurozone net producers to develop a surplus recycling mechanism like the one that propped up the American deficit for the last few decades. Instead of austerity he thinks Greece should ramp up its deficits which would allow producers like Germany to ramp up production and create more wealth. He sees this as what the US did and now that the Minotaur is dead the Euro will die too if they don’t make this change. As he said the US didn’t tighten their belt when they went from surplus to deficit. They aggressively expanded the deficit strengthening the economies of the rest of the world by putting people to work and buying up their excess production so they could earn profits.

MatrixSentry said...

Very good Sam. This is how I viewed his comments.

Michael dV said...

Sam
I assume what you left unsaid is that producers really need other net producers to consume.
That most would agree with.
Perhaps Yanis should read about Ben and Chen to see how far his thesis goes.
I don't think Europe can possibly but his logic. It sounds like a desperate plea from someone who will say anything to get what he needs rather than face reality.

Michael dV said...

oops I don't think Europe can possibly buy his logic...

vizeet srivastava said...

Sam,
Excellent explanation of his PoV
He is a game theorist. He might be speaking what is best suited for Greece at this point. He is very sharp so we cannot trust what he says and what he does because in my understanding Carl Marx wasn't debtor. Carl Marx was not even saver because he talked about people (laborers) who could not save. Marx was against crony capitalism. He was wealthy himself so doesn't appear that he was against rich. Problem with Marx was that he believed in Utopia. In this view Yanis is kind of supporting crony capitalism. He doesn't have solution to the current economic problem so he probably thinks that best is to maintain status-quo.

vizeet srivastava said...

We are different from him since we see the structure of next financial system. He knows about past very well but he doesn't know what will be the structure of next financial system. He thinks that countries who are producing should keep on producing and countries which are consuming should keep on consuming.
Freegold will fix this problem by forcing countries to balance their trade. There will not be single currency which will be reference point.

PeaknikMicki said...

Besides EU is there seems to be some work on the global scene.
http://www.buenosairesherald.com/article/181004/govt-welcomes-un-debt-framework-debate

FOFOA said...

Thank you Marco Polo for the video recommendation and ein anderer for the useful link. I ended up watching the whole thing and I can extend the recommendation.

vizeet srivastava said...

I need to correct myself. Poor have to save actually to survive because they may not get food next day.

vizeet srivastava said...

If bail-in in Cyprus was right, bail-in Greece should also be right. Only problem is Cyprus had Russian money and Greece has German.

Tom R said...

I love this rhetorical question, "Investors are going to pay the price. But where else are they going to park their money?"

http://www.24hgold.com/english/news-gold-silver-how-much-longer-can-central-banks-push-bonds-to-absurdity-.aspx?article=6347831216H11690&redirect=false&contributor=Wolf+Richter

Phat Repat said...

KnallGold

Indeed...

I think you recommended that wonderful elixir, Bündner Röteli. I'm in mourning as I haven't been able to find that here in the US. Good news is I will have to make a trip back to acquire a bottle or three. :-)

Bitter Lake
Yep, thanks for that. Bottom line, nation building don't work and history may not repeat, but it does rhyme. ;-)

KnallGold said...

New frontier for Röteli possible then...or get yourself some Ouzo in honor of producing Greeks. They need more of them (producers).

"I'm finance minister of a bankrupt country"--Varoufakis.
Greece is bankrupt - did anyone refute this thesis yet???

queckshep said...

This gets really interesting.
ECB SAYS IT LIFTS WAIVER ON GREEK GOVERNMENT DEBT AS COLLATERAL
https://www.ecb.europa.eu/press/pr/date/2015/html/pr150204.en.html

Phat Repat said...

Oh no, not Ouzo. And now the ECB says the same thing. ;-)

FOFOA said...

Someone emailed me an excerpt from this 2005 article suggesting that the man dancing right at the edge of a cliff sounds like Yanis' game theory strategy:

A Nobel Laureate Who's Got Game
By Michael Kinsley
October 12, 2005

So you're standing at the edge of a cliff, chained by the ankle to someone else. You'll be released, and one of you will get a large prize, as soon as the other gives in. How do you persuade the other guy to give in, when the only method at your disposal -- threatening to push him off the cliff -- would doom you both?

Answer: You start dancing, closer and closer to the edge. That way, you don't have to convince him that you would do something totally irrational: plunge him and yourself off the cliff. You just have to convince him that you are prepared to take a higher risk than he is of accidentally falling off the cliff. If you can do that, you win. You have done it by using probability to divide a seemingly indivisible threat. And a smaller threat can be more effective than a bigger one. A threat to drag both of you off the cliff is not credible. A threat to take a 60 percent chance of that same thing might be credible.

This puzzler is dredged up (more or less intact, I hope) from memories of my favorite lecture course in college: "Games and Strategy," taught by Thomas Schelling, who was awarded a Nobel Prize for Economics yesterday. The Nobel honors his role as one of the godfathers of game theory. Schelling's particular gift has been applying the theory to real life. I took the course because it sounded festive, which it wasn't. But under Schelling's spell, the world suddenly looked completely different.

Schelling was never a charismatic figure. Short, gaunt and tweedy, with wire-frame glasses, he talked in a slow, slow monotone, stripping away irrelevant detail and exposing situations ranging from the nuclear standoff of the Cold War to a family's decision about what to have for dinner as stark dramas of warring self-interest. This was game theory.

Classical economic analysis generally assumes that we each take the world as we find it. We can "maximize" our own "utility" (as economists romantically describe the pursuit of happiness) in any circumstances, but the circumstances are a given. Game theory was born to deal with interdependence: situations where what I do depends on what you do, and what you do depends on what I do. That, of course, would cover almost all situations.

For example, what is the best way for two kids to divvy up a candy bar? The answer is easy: I cut and you choose, or vice versa. Why is this the best? Because, like free-market economics generally, it channels self-interest to serve the general interest. The cutter will split the bar as close to evenly as possible, because the chooser will get the benefit of any obvious disparity. You can apply this kind of thinking to a dozen people dividing a large pie, or 300 million people trying to govern themselves.


Cont…

FOFOA said...

2/2

Economics is the social science that is closest to being a real science. It starts out with a few plausible assumptions about human motives and behavior (basically, that people act rationally in their own self-interest) and derives from them an impressive array of "laws" about the future. Game theory can also be seen as the application of econo-think to non-monetary aspects of life. There's nothing economists like better than to show how someone who seems to be behaving irrationally, or at least is marching to drummers unconnected to rationality one way or another, is actually maximizing utility like, well, mad.

Madness can be wickedly rational. If one of those two folks on the cliff can convince the other that he is just a bit nuts, that makes his threat to drag them both off the cliff much more plausible. Some defenders of Richard Nixon used to claim that the evidence of insanity that bothered a few Americans was actually a purposeful strategy to enhance the deterrent power of our nuclear arsenal.

Another favorite game theory anomaly: Weakness is strength. If you cannot do something, you cannot be forced to do it. A bus driver who cannot open the change box, even at gunpoint, is safer than a bus driver who can.

During the Cold War nuclear standoff, the challenge for both sides was to make a fundamentally irrational threat seem believable. Why would you start a nuclear war when the almost-certain result would be your own national destruction? Why would you even reply to a first strike by the other side with a strike of your own? The classic game theory insight was that your own safety depended on not being too strong. The other side had to be confident that it could survive and retaliate if you went first. Otherwise, in a crisis, it would be sorely tempted to go first.

People associate game theory with nuclear strategy, in part because of the movie "Dr. Strangelove." But game theory's real gift is to make all of life seem like a game. Which it is, isn't it?


-----

You should recognize the name Thomas Schelling from Focal Point Gold. He's the game theory economist who introduced the focal point concept (also called a Schelling point) in his 1960 book, "The Strategy of Conflict".

The dancing on a cliff strategy reminded me of this. ;D

Sincerely,
FOFOA

anand srivastava said...

Thanks queckshep.

This looks pretty interesting. I don't know why there are no comments outside.

I would think Greece is heading for a default based on this news.

I think the bottom line is that Greece cannot pay.

The party that won, won based on the election promise that they will not continue the Austerity program. The leaders are also Socialists, so they believe in what they had promised. So they are not likely to back down.

We also know that ECB cannot print without broad support for Printing.

We know that Germany will not be able to allow printing.

Germany will not pay the next tranche unless Greece continues with the program.

So I guess there is an impasse that will only break when Greece Defaults. I don't see how there will be any other solution.

I guess the crisis is going to start soon. And it is not going to be pretty for the Europe.

Bright aurum said...

The ECB had secretly broken the chain .No more exorbitant debt issuing privilege for Greece.

vizeet srivastava said...

@anand,

I think that is the black swan effect. People tends to avoid recognizing reality if it's consequence can be big.

Bright aurum said...

@ vizeet srivastava
It is a black swan chicken ;-)

Cangrande said...

Varoufakis' Suckonomics 1001
A critical analysis of his "Modest Proposal ..."

http://beltwild.blogspot.de/2015/02/varoufakis-suckonomics-1001.html

Zebedee said...

Chinese herdsman stumbles onto a 17-pound gold nugget......

'Oddly enough, on Feb. 5, 1869, the world’s biggest alluvial gold nugget (i.e., gold deposited by water) was found in Moliagul, Victoria, Australia. Dubbed the ‘Welcome Stranger,’ the nugget had a gross weight of 109.59 kilograms, and had to be broken into three pieces because there were no scales large enough to weigh it, according to Wikipedia'.

Chinese herdsman stumbles onto a 17-pound gold nugget

vizeet srivastava said...

Cangrande
""austerityty measures ..... exacerbate further the surplus recycling problem"
This is plain rubbish and an offense to the economic intelligence of even a layman like me.
Austerity reduces consumption in the deficit countries, thereby lowering imports. And, ideally, shrinking demand and falling production costs instigate entrepreneurs to find new markets abroad, thereby boosting exports."
After reading this I could not read further. Because he is plain wrong.
US with his debt has helped China export more. Austerity affects both producer and consumer. One country is over producing and other country is over consuming.
Over production and Over consumption both are problem. Austerity fixes both. For ECB long term financial stability is important so it wants austerity. But Yanis is right that Producers needs Consumers and Over producers need over consumers.
Best is not to have over producers and over consumers. That is the future. For Greece default is best for them. Forever austerity is not going to help them, and forever overconsumption also is not going to help them.

elgrilo said...

FOFOAs comment made me remind of this video. If you have not seen it it is pretty hilarious!
Split or steal, game theory at work!

https://www.youtube.com/watch?v=S0qjK3TWZE8

FOFOA said...

Nice video, elgrilo! :D

jojo said...

The interview of the two players is worth watching as well.
https://www.youtube.com/watch?v=zUdBd7BDNu8&src_vid=S0qjK3TWZE8&feature=iv&annotation_id=annotation_1155372699

Flat Shoe Lance said...

http://www.zerohedge.com/news/2015-02-05/who-said-it-if-rates-go-negative-treasury-will-likely-print-lot-more-currency

Did anybody read this? It sheds some light on the weaknesses of freegold.

jojo said...

Flatulance,

You keep taking shots at freegold and when asked about it, you run and hide for a few days. Only to return with another "shot" at freegold.

Why don't you state your perceived issues with freegold once and for all so we can chat about it?

If you are trying to troll, I suggest you RRTFB because there are far better examples of freegold trolling to be found within this blog. Your attempts so far are purile.

Flat Shoe Lance said...

http://www.straitstimes.com/news/opinion/eye-the-economy/story/japan-should-influence-china-within-the-aiib-20150203

This will be a seminal event when Japans joins the AIIB. It'll be denied and denied until oh, what do you know.

Motley Fool said...

Jojo

Yup. +1

Motley Fool said...

Jojo

Yup. +1

Indenture said...

FSL: What weakness does negative interest rates shed on the Freegold Thesis? How does a negative interest rate influence Super Producers and their choice of where they want to store their purchasing power?

Michael dV said...

jojo
I agree, we have had some outstanding (and persistent) trolls here. This guy isn't even close to be banned (so that's a mark against his trollishness I guess).
Since the 'work' of prior trolls is still preserved it would serve as a primer for those who are just entering the field.
I wonder if fofoa would be willing to organize an apprenticeship course. I do believe some of our banned trolls might be looking for productive work. I can see it now ...PhD Trollism....MA Trollishness...BA Troll Studies

Motley Fool said...

Michael dv

Haha, now there's a thought. :D

jojo said...

LOL @ MdV I like it!

Edwardo said...

Trolls are a tedious lot
Obsessively stirring the pot
They all crash and burn now it's flatulence' turn
Good gracious is that all you've got

g. said...

"Why is gold valuable" is a false question. "Why is gold more valuable then anything else" would be the correct question. The answer would be; because it has the slowest declining marginal utility. Varoufakis strikes me as a non-conformist, combattant and honoust person. However, I hope he does not put his former education as a political economist into practise.

Canadarob said...

I just found a huge hole in freegold,

http://www.theguardian.com/world/2015/feb/06/chinese-farmer-finds-gold-nugget-worth-25000-on-the-ground

How is free gold supposed to work if everyone finds giant nuggets of gold on their lawn?
........so........there's that.......

Canadarob said...

Great video elgrilo, my wife laughed when she looked over at it saying, "you only watch game shows with gold in it? (Gold balls) You really are obssessed".

The video kind of puts Yanis' quote about having a "credible threat", in perspective. He's going to want people to know he will do what he needs to.

g. said...
This comment has been removed by the author.
M said...

@ CanadaRob

You have some reading to do. Stocks to flow.

For 6,000 years gold has been used to store wealth. Only a small percentage has ever been used by industry. This means that the vast majority of all the gold ever mined is still available for use. It is generally agreed that 170,000 tonnes of gold has already been mined and is still available for use. This is commonly known as the 'stock'.

Each year about 2,400 tonnes of newly mined gold arrives in the market. This is known as the 'flow'. That amount of flow (2,400 tonnes) is about 1.4 percent of the stock.

Even if that Chinese herdsman found a 2500 ton nugget in the field, the annual growth in the stock of gold would still be less than three percent.

Whilst readily available gold is equivalent to 71 years worth of supply (stock to flow ratio of 71 to 1), most other commodities have far less than 71 days worth of readily available supply.

M said...

Question....

How does the Baltic Dry Index make all time lows last seen in 1986 while the US mfg trade deficit breaks records ?

Is the Baltic Dry Index not telling us something about the physical plane ? Maybe the index doesn't count US bound ships I dunno..

It doesn't make one iota of sense.

Canadarob said...

@M it was a joke....

Lisa said...
This comment has been removed by the author.
Lisa said...

M

I'm not sure I understand why you find a low Baltic Dry Index inconsistent with an increase in the the US trade deficit?

There seems to be a worldwide slowdown in economic activity, and the Baltic Dry Index has been falling for quite a while.

(From Wikipedia - The Baltic Dry Index (BDI) is a number (in USD) issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the index provides "an assessment of the price of moving the major raw materials by sea. Taking in 23 shipping routes measured on a timecharter basis, the index covers Handysize, Supramax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain.)

A US trade deficit means the US is importing more than it is exporting. An increasing trade deficit could mean the US is importing more than previously, or exporting less than before, or perhaps a little of both.

Since the Baltic Dry Index is based on worldwide trade, it doesn't necessarily follow (to me at least) that what is happening with US trade deficit must be consistent with the direction of the Baltic Dry Index.

M said...

@ Lisa

Its the US manufacturing trade deficit specifically that I am referring to. This means that never before, has the US imported more real things compared to what it is exporting.

We already know that the US is importing more then before from the data. The jobs data today also shows record lows in mfg jobs.

The world is producing all of these goods that the US is importing. Raw materials from Australia, Africa ect , to mfg centers in Europe or Asia. And then from the mfg centers to the US. If the biggest end consumer of this process is breaking import records, then worldwide trade should not be grinding to a halt.

M said...

@ Canadarob. Ah..i figured after the fact

Canadarob said...

@M.
On a positive note, its good to see that if someone made the same retarded comment and was serious, you would just respond with a well thought out, respectful answer. Good on ya for not letting the trolls strip away the dignity of all who contribute to this fine site!

Canadarob said...

I did have a serious question that I posted but never got an answer about. I'll repost it and hopefully some one can direct me,

"I have another question I hope someone can help me with/direct me to an appropriate post.
I can't seem to really grasp the gold shortage idea.
Is it,
1. More physical being bought than mined?
2. The drain in the etfs that will cause a shock when its run out?
3. As Another said "don't look to what is being bought, look to what has been sold"?

I understand its not the shrimp buying which I get. Is it a combination of what I've listed or is it something I've completely missed.
Please don't respond with rrtfb because I am. Its just a lot of info and its hard to catch it all.
Thanks"

Lisa said...

M

There are about 317 million people in the US vs 7.1 billion in the world.

The population of the US is less than 5% of the world population.

That's one heck of an exorbitant privilege if I am understanding you correctly. I guess the other 95% of the world does not contribute much to world trade



M said...

Lisa

The US consumes more oil then China, Japan and India combined.

Who's population is 2.76 billion combined.

It is one heck of an exorbitant privilege which is why I don't think the BDI makes sense.

Bright aurum said...

@ jojo, MF, Indenture, Michael dV
The article from Flat Shoe Lance was surely crappy.
But not this comment found on page 2:

http://www.zerohedge.com/news/2015-02-05/who-said-it-if-rates-go-negative-treasury-will-likely-print-lot-more-currency#comment-5753842

I would have published it in its entirety bur I guess the musings for Yanis are fare more important.

Bright aurum said...

@M
The main costs when tansporting goods/ materials is fuel. So there you have it. Besides the overcapacity issue (fuel tankers excluded)

FOFOA said...

One of my readers compiled the entire blog into a single .epub document which is an e-book format that works on mobile devices like the Kindle, iPad and all tablets. It is similar to Matrix Sentry's pdfs in that you can read old posts offline. It has a few advantages over the pdf format like variable font and size.

An .epub viewer should come installed on your iPad, tablet or Kindle, but Adobe also makes a free .epub viewer for Windows so you can try it on your PC. Here's the link to install the Adobe viewer:

http://www.adobe.com/solutions/ebook/digital-editions/download.html

The file right now has all of the posts up through the current one. You can download it as a zip file or directly as an .epub document. It is 52MB and has every post but no comments. There are 3,565 pages of posts. All local links are embedded and take you to within the .epub document, and outside links open a browser and take you to the web if you are connected. Hi-res images are also embedded, so you can click on the pictures and they'll open larger in their own page within the document itself.

Here's the link to the .epub file unzipped on Mega. This is recommended unless you have the latest WinZip to unzip it:

https://mega.co.nz/#!CUMQhQ7b!qLPS2P1U9_bHP1qRZWgcxSdoezI9B5afmvbWaaXuvFA

The .zip file can be downloaded here:

http://www.filedropper.com/ffg2
The password for the zip is: fofoablog2008-2015

I don't use .epub or a mobile reader myself, so if any of you try it out, please let me know how it is. You can share your feedback here or send me an email.

Thanks!

Sincerely,
FOFOA

M said...

@ Ba

can you explain your thesis ?The index hasn't really recovered since 2008, regardless what fuel costs were doing.

Bright aurum said...

@M
Sure but with fuel costs down and fierce competition you`ll need very vigorous recovery that moves the BDI up. It may be that the marginal cargo ship became more fuel efficient or just slowed down in order to cut fuel costs. In my humble opinion BDI is worse indicator of economic activity of the world than the energy consumption mix (electricity included). Other things one has to consider:

Taxation and tariffs - the low hanging fruit for filling the governments coffers so taxes on imports were used to a great extent during the "Great recession" that in turn strengthened =>

The long term trend - to produce things locally where robotics negates the wage differential.

And ( a speculation based on what other industries are doing) large customers of shipping services create fleets of their own (to save on transportation), stop reporting the true figures and put pressure on the existing operators by operating one of the route directions (that is of no significance to them for they use the other direction for their main trade) at very low prices only to get some cash to offset some of the costs so that they do not sail empty on the way back.

Lisa said...

M

Not sure this Twitter link will work, but relates to your last response to me


https://twitter.com/iantalley/status/563454966665183232

fftastic said...

1/2

I'd like to share another observation about Yanis with you. Please read the following post in his blog, posted on October 25, 2013:
The Dirty War for Europe’s Integrity and Soul

Yanis is not only an astute connoisseur of monetary history, he is an intellectual rebel!
A modern (marxist) Robin Hood comes to mind. His analysis of the current european framework is spot on:
"A clueless political personnel, in denial of the systemic nature of the crisis, is pursuing policies akin to carpet-bombing the economy of proud European nations in order to save them."
And he definitely wants to see structural changes, at least of the european framework.
This makes him the scariest adversary the EU has ever faced.
The Troika will again try to buy Syriza's agreement with worthless IOUs.
But this time he will reject their "gifts"! It is his "marxist mission"!

Excerpt from his blog, regarding the caretaker Greek government in the spring of 2012:

"The caretaker Greek government was left with no alternative than to suspend its own payments to Greek institutions and individuals. Hospitals, schools, wages, pensions all diminished fast. But the concern of the great and the good was about Greece’s debt to our… ECB. You see, a year before, in an ill-fated attempt to shore up Greek government bonds, the ECB had purchased a bunch of them, at low, low prices. The ploy failed, as did Greece. Regardless, the ECB held these bonds and they started maturing. Had they not been purchased by the ECB in 2010, they would have been haircut together with the rest of the bonds in private hands a few months earlier, in early 2012. But no, the ECB cannot accept write-downs from member-states because it is against its charter which prohibits it from financing member-states. So, the caretaker Greek government, while putting Greece’s social economy through the wringer, had to find €5 billion in a few days to repay the ECB for one of these maturing bonds. But remember: the troika was not lending it any more and nor was anyone else."

And then his conclusion follows:

"The obvious thing to do, under the circumstances, would be for Athens to default on the bonds that the ECB owned. But this was something that Frankfurt and Berlin considered unacceptable. The Greek state could default against Greek and non-Greek citizens, pension funds, banks even but its debts to the ECB were sacrosanct. They had to be paid come what may. But how? This is what they came up with in lieu of a ‘solution’: The ECB allowed the Greek government to issue worthless IOUs (or, more precisely, short-term treasury bills), that no private investor would touch, and pass them on to the insolvent Greek banks. The insolvent Greek banks then handed over these IOUs to the European System of Central Banks (through the so called ELA program of the ECB) as collateral in exchange for loans that the banks then gave back to the Greek government so that Athens could repay… the ECB. If this sounds like a ponzi scheme it is because it is the mother of all ponzi schemes. A merry go around of Ponzi Austerity which, interestingly, left both the insolvent banks and the insolvent Greek state a little more… insolvent while, all along, the population was sinking into deeper and deeper despair. And all that so that the EU could pretend that its idiotic rules had been respected."

fftastic said...

2/2

Although he repeatedly affirms his intention to stay in the european union (read: STEAL the golden ball), I cannot possibly see that happening! I think he has already chosen (to) SPLIT!
(Thanks for the analogy.)

Sure, Europe can financially shrug off the Grexit. What they can not shrug off is the looming possibility of Greece becoming a symbol for prosperity without the EU, i.e. by joining SCO.
IMO the PTB will do everything possible to preserve their power by neutralizing Syriza's choice to leave the EU. Even if that means one or a lot more casualties.

So be careful, Yanis Varoufakis. You are not safe on european ground!

Indenture said...

Bright aurum: I read the ZH comment and while it showed great knowledge of the banking sector and the creation of 'money' through various means I fail to see how it relates to Freegold. It did not touch on the subject of The Debtors vs. The Savers nor did it show how physical gold (post transition) will satisfy final settlement. The comment did show that money (digits) can be created at will by the big banks but even if the banks are allowed to continue doing this after Freegold the settlement phase of exchanging all those credits for real physical gold will continually increase the value of physical gold. As long as people have the option to exchange digits for physical then their purchasing power will be preserved and the system can continue to create more digits.

Did I miss something?

Phat Repat said...

"That's one heck of an exorbitant privilege if I am understanding you correctly. I guess the other 95% of the world does not contribute much to world trade"

Perhaps things will change in the future, but meaningful contributions in the realms of medicine, technology, social advancement, etc... is purely a (developed) Western construct. So the (earned) ex priv is a matter of fact; with trickle down ex priv going to the remainder.

Once the social construct of the (developed) West has been adequately diluted (or Balkanized), then we will see parity with the ROW (and that's not a good thing, for anyone).

Motley Fool said...

M , Phat

Drugs are bad, mkay.

Michael dV said...

BA
All that Urban Redneck's comment proves is that meth is still available, in abundance, in his area. Seldom has one used so many words to express confusion and disorganization of the thought process.

Michael dV said...

BA
another comment about that comment...a guy who wants to seem well informed should know the difference between 'there' and 'their'....snobbish I know but...

Motley Fool said...

Just in case it is not clear...

No the USA does not bloody well account for 95% of the world's shipping.

...and Phat, western society started with the Greeks, I don't see their privilege. And no we will not necessarily see devolution. Innovation is a function of individual freedom, something the west had, and something that can be had by all under FG.

Motley Fool said...

Individual financial freedom to deploy your own capital judiciously (as that might not be clear).

Bright aurum said...

Exactly Indenture! So very right you are. This was very informative of how a large percentage of those less corrupt and brave enough to entertain painful thoughts about the future individuals do perceive it. So a lot of work still needs to be done to bring them from the dull and dim shadows of their current understanding to a brighter end of their trepidation - freegold. Otherwise a less than optimal result might come to pass not to mention a quite dismal one. Natzism, communism, new deal - all products of the human failure to overcome the similar challenges of a bygone era.

Bright aurum said...

@ Michael dV
Yeh. Not all can be as well-versed and articulate as FOFOA.

Edwardo said...

There is not their there you are
Learn this or you won't go far
Folks who detect this writing defect
Will tar you as being subpar





M said...

@ Phat, MF

I am not the one who brought up world population numbers and such overly simplified BS....Nor was I implying that the US was responsible for 95% of world trade obviously.

What I am implying is that the US Expriv is huge. And its enough to move any economic data needle.

Look at oil consumption.

The US consumes 18,840,000 barrels a day for 322 million people. 4.45% of the world population


India, China and Japan combined consume 17,546,000 for 2.78 billion people. 37% of the world population.

So 37% of the world consumes less oil then the US. To all the renowned experts here, what percent of other raw materials or finished goods do you think the US consumes/imports/uses a day ? Probably a higher percent then they do oil.

So the US trade deficit is showing that the US is importing more of everything then ever (which lets say, accounts for more then 37% of the rest of the world) , yet the Baltic Dry Index is making all time lows. This doesn't make sense.

Phat Repat said...

Yes, MF, drugs are bad; especially hopium and delirium. ;-)

Lisa said...

No M

I brought up simple explanations and statistics, since your
conclusion did not make sense to me.







Knotty Pine said...

@M, it appears there is an oversupply of space as 21 ultra large container ships were delivered in 2014 and 54 are scheduled for delivery in 2015. It appears that the container shipping industry is not always rational. Low fuel prices and an increasing supply of shipping space may drop the BDI even more.

Motley Fool said...

M

To add to KP above.

It is not very strange. The price is set by supply and demand. Due to the production cycle of these container ships being so long, and the prohibitive penalties of canceling an order, we are seeing at present the last ( I hope) of the ships being built on the back of the massive BDI boom of 2007/2008.

It will take time for the BDI to go up again, as few new ships should now be built, old ones will be retired, and perhaps world trade will increase again.

For now it is simple oversupply.

Motley Fool said...

Phat

Haha!

Phat Repat said...

Unfortunately, at this stage of the game, I trust very little of what I read, and that especially applies to most Gov/WS published numbers. Not much longer I believe. Tick Tock

Jeff said...

Tick tock indeed.

"As a result, we now expect oil prices to spiral down toward the end of 1Q and target Brent at $31/bbl and WTI at $32/bbl...

"In addition, a further drop in oil prices as envisioned by Sabine would probably increase risk aversion and safe haven flows into the UST market."

http://peakoil.com/publicpolicy/the-death-of-the-petrodollar-was-finally-noticed

Anasteus said...

While one can certainly admire Yanis' insight, the advantage/preference of self-referencing money over metal seems to me the weakest part of his speech. After all, self-referencing money is the very base of all fiat systems that failed so spectacularly all the way throughout history. It's exactly their self-reference not bound to anything real and limited (in supply) that causes profligacy, unaccountable 'money' generation, missing discipline and overall misallocation of resources. The charm or metal fetishism lies in its universal acceptance (even up to deep archetypal psychological level, so to speak) and limited supply. Human nature, as history confesses without exception, is not capable to cope with temptation of abundant fiat creation if not curbed by something perceived as similarly strong and, which is very important, limited in resources. I'm not talking about gold standard but rather about fundamental and very close tie between money and gold, e.g. Freegold.
I think, a money system with no connection to gold, this way or another, is just an illusion.

Edwardo said...

Regarding the safe haven that is said to be Treasuries:

If Treasuries didn't make a multi-generational high in 2012, which is my bias, they are set to do so this year.

tEON said...

Yanis continues to reiterate that he is definitely, positively, for sure Stealing the Golden Ball.

Leopard said...

http://sputniknews.com/analysis/20150208/1017977151.html

Is Russia preparing to back the rouble with gold?

Edwardo said...

Leopard asked:

is Russia preparing to back the rouble with gold?

Former advisor to the Chairman of the Central Bank, financial Obudsman Pavel Medvedev recently told Russia's Svobodnaya Pressa that a gold-based currency is "absolutely impossible" for Russia or for any other country in the world, due to the precious metal's limited supply. He noted that the modern economy needs far more financial liquidity than a gold standard backed currency can provide. "In a word," he stated, "entering the gold standard is not possible –there is not enough gold to achieve it." It remains to be seen what the Russian leadership really thinks about the idea.

The key word in the above paragraph is former. But, seriously, if Russia has even a modicum of sense, they, and their fellow travelers, will lend their efforts towards establishing a free floating gold price.

Dasvidanya zoloty standart

Anasteus said...

Edwardo: Don't expect Russia to support the free flow any time soon. True value of gold won't be revealed until all players get their proportional piece of cake.
Now it's time of hidden looting and redistribution. It's in interest of all to continue playing the game behind the scenes.

Bright aurum said...

@ Gary
Greece has already stolen the Gold ball
Right now they`ll need balls of steel .

Ooops.. I guess those were just balls of PIIGS
Expect them to be squeezed .. squeak

Edwardo said...

Anasteus,

Don't expect Russia to support the free flow any time soon.

Perhaps not, but no single nation is going to determine timing. When the physical isn't flowing as it needs to that will be that irrespective of the particular wishes of any sovereign state. In the meantime, the idea that all the players are each going to acquire some optimal tonnage before the transition is fanciful. Everyone will not be in a maximal state of readiness before the curtain goes up. Would that the procession of epochal change were so organized and tidy, but it seldom, if ever, is.

KnallGold said...

DSM lists some 374 psychic illnesses (for example "Hoarding Disorder" lol). If 51% are crazy, what is the normal then??

Anyway, though, Asperger Syndrom has been scrapped in the latest edition DSM-V. Know your cards...

ein anderer said...

Will the Euro fall after a Grexit?
Varoufakis says so (Reuters, Feb 8th):
http://www.reuters.com/article/2015/02/08/us-eurozone-greece-varoufakis-idUSKBN0LC0QO20150208

ein anderer said...

(Seems to be a repetition of the news of tEON’s link above.)

Bright aurum said...
This comment has been removed by the author.
Bright aurum said...

@ Indenture
Would you please reconsider updating your reading list?

Indenture said...

Which reading list and how?

Bright aurum said...

https://matrixsentry.files.wordpress.com/2012/01/indentures-reading-list.pdf

Bright aurum said...

As I am trying to make a quick summary of the FOFOA articles so that I can put them later in somewhat logical order I noticed that some of the links he provided in them are already dead e.g http://www.safehaven.com/article-11110.htm - Fekete`s last contango :-(

wimms said...

Knall
Normal Personality Disorder:
http://isnt.autistics.org/dsn-npd-txt.html

Jeff said...

The special relationship or the less special relationship? Dueling divestitures. Tit for tat.

http://www.wsj.com/articles/saudi-arabias-kingdom-holding-cuts-stake-in-news-corp-1423058609

http://www.economicpolicyjournal.com/2015/02/s-lowers-saudi-arabias-credit-outlook.html

http://news.yahoo.com/old-questions-saudi-arabia-9-11-raised-anew-082808829.html

http://www.bloomberg.com/news/articles/2015-02-06/saudis-deepen-asia-oil-discount-to-a-a-record-low

Indenture said...

Bright aurum: Thanks for the heads up but I don't know if I'll fix anything. My list exists so I can point people to what I consider to be the core reading requirement for the beginning of understanding Freegold. I'm not too worried about a few broken hyperlinks.

Bright aurum said...

My second comment was not directed towards you Indenture. It was actually an expression of pity that a future reader will find some of the early FOFOA articles bleached out (such as Pompeii frescoes reexposed to the elements after the excavation) of context since they are riddled with hyperlinks and obviously hyperlinks age and die.

Michael dV said...

KG
Glad to see Asperger's Syn gone. When I saw people like Michael Burry MD claiming they had it I suspected it was less a disease than another way of saying 'people bother me'.
Even autism, which in it's full form is devastating, has come to be a way for some families to significantly benefit from generous medical benefits it they can get their borderline children diagnosed. Much of medicine is political.

tEON said...

When I saw Aspergers mentioned, I thought it was referring to this, so-called, news
http://www.washingtontimes.com/news/2015/feb/5/vladimir-putin-has-aspergers-syndrome-pentagon-say/

Airedale said...

Check out the reports here: http://www.tullettprebon.com/strategyinsights/
Quality...
Helpful in forming the big picture.
Fascinating to watch the end game accelerate.

Edwardo said...

PutIn says The Pentagon has Aspergers.

simpleminded said...

Gold will play its role after the WAR!!!!!!!!!!!!!!!!

jojo said...

This WAR?

jojo said...

Or this WAR?

simpleminded said...

You some stupid American, dear jojo,aren't you?

Phat Repat said...

Wait, when did the WAR end? You mean I missed it? !@#@!

Is it ironical that someone with the handle simpleminded calls someone else stupid?

Alex in Montana said...

Michael Lewis in Vanity Fair a few years ago exposed Greece as a third rate banana republic with no bananas. Pew Research, again a few years ago, did a poll asking Europeans about other Europeans. One question was, "Who are the hardest working people in Europe?" Every country, even the French, except one said the Germans. The Greeks said, "Well we Greeks are".

I've been to Greece and I lived in Germany many years. There is no comparison. I wish the Greek people all the misery life can afford. They are delusional and feckless.

simpleminded said...

I wish the American people all the misery life can afford. They are delusional and feckless. Here I've fixed it for you!

Canadarob said...

Please simpleminded, do enlighten us with more of your very in depth opinions. We here, hold you in very high regard.

Bright aurum said...

Tit for tat ad hominem attacks are disgrace for this blog do all please stop.

Franek said...

Can anyone suggest a good book as a gift to introduce someone to the subject of money/debt/banking? Something fairly involved but not overly technical that could be the right springboard for further self-study of the subject and Freegold, etc... Possibly, something of an eye-opening quality, the big-picture type....
Thanks,

M said...

Ah ok .. The goods that make up the US physical plane deficit are arriving via space shuttle.

Motley Fool said...

Franek

Economics in one lesson by Henry Hazlitt perhaps? You can get a free ebook if you search on google.

@M

You grasp that capacity for delivery and the price for that capacity are related but not equivalent?

Motley Fool said...

M

You know what the BDI is right? A measure of the price for shipping dry goods, not a measure of the volume capacity for shipping of dry goods.

M said...

MF

Yeah.

The demand for shipping is the lowest ever as we can see with the price of the PDI.

Whatever. I guess what I am saying is, there is trouble brewing in physical plane land. Thats what I think anyway. If everything keeps humming along perfectly regarding the US trade def, the physical plane vis a vis the financial plane, then im wrong. But if not...

Post a Comment