Today, I listened to a rather clever fellow, David Murrin, ax ex-JP Morgan trader and current hedge fund manager talk about the current state of economic affairs and possible futures. This is worth a watch / listen.
Murrin is a proponent of collective behavior. Yet, Murrin has fallen for an illusion.
No man lives in the head of any other man. All behavior is mind-localized to individuals. Even in mobs, as there is one snowflake that kicks off an avalanche, so too there is one leader, that kicks off a chain reaction of mimicked behavior.
There is no doubt a biological component that prompts individuals to mimic nearby others so as to generate a safety-in-numbers result. Yet, that does not justify a belief in collective behavior as one individual in a herd can be killed off only one at a time and once one gets killed, the others continue to run free.
People tend to look closest to see what the nearby guy is doing and they mimic. With the advent of mass media, it becomes easier to expand the scope of what is seen as the nearby guy. When the players of mass media concoct a nearby guy for their purposes, we call that attempting to forge public opinion.
Always, there are some who hit upon the notion that being the leader being mimicked can be profitable relative to the ones who follow. And so those leader types become deceptive in outward appearance by design so as to lead followers to give up more of their right of ownership (i.e., property) in possession most often (i.e., chattel), in trades of property for property.
Inflation is credit score of central bankers. The higher the inflation, the less creditworthy central bankers are and their member bankers are.
Irredeemable bank note currency long ago replaced money (i.e., coined metal by weight and fineness). Money always had been the highest form of credit (i.e., it is a claim against the property of others who are yet unnamed or unknown). Today, banking systems' bank nots are the highest form of credit.
As central bankers inflate excessively, it becomes clear. Their credit worthiness can not be trusted. Smarter ones begin to see that property already traded away to take on bankers' credit was given away too cheaply.
Thus smarter people seek to pass off this unworthy generalized credit for property in real things, which have been recognized as things that people will need in the future to survive or to enhance themselves. Hence there is a scramble to trade away dollars for commodities, with oil and natural gas being the kings of commodities and particular crops such as wheat running close behind.
Under the current global trade regime that has trade settlement for commodities happen in U.S. dollars, other bank note currencies first must be swapped for dollars. Hence, these other generalized credit bank notes become worth even less in trades first for dollars since dollars have more worth being the trade settlement currency, which fewer people wish to hold as they scramble to buy real things, such as future claims on natural resources.
One must keep in mind also that as tens to hundreds of millions become unprofitable, i.e., their labor based on their skills becomes not sought after, their ability to trade their property in their work through time, i.e., labor, for property in other things, falls. That means those who produce other things will fall as there are ever fewer people with whom to trade. As this goes on, those who are inefficient at producing other things even in the face of rising prices being returned to themselves will go to ruin. The Axiom of Profit always holds sway—the sum of sales must at least break even or the producer goes to ruin.
Of course, the sum of sales is the summation of price times quantity. If quantity is falling faster than price is rising, sales will fall. Beyond the break even point, loss happens.
So even the production of sought-after commodities will fall eventually as many less efficient commodity producers eventually become inefficient ones since the quantities sought fall on rising prices. Those inefficient producers will go to ruin. Hence, far-seeing individuals now seek property (right of ownership) in commodities that in future, the fewer others who still have the means to bid, will seek.
The rotation out of generalized credit (bank credit) and risk credit (expected future earning power of firms fractionalized as shares of stock) and into real things, i.e., commodities of highest expected worth, will go on until too many get priced out of buying those real things. Eventually, those with property in real things will need to accept lower winning bids so they can gain generalized credit to buy property in things they wish to possess.
However, the time by which all of this winds through can take years, maybe at least a decade ahead.
Gab It
