View on the Yahoo! Tech Ticker by clicking here.
-
-
I’m with Mish in this debate of course, since a credit implosion trumps a money printer, I but have the utmost respect for the adroit Swiss. The two of them have much more in common than either has with most other money managers or commentators.
I totally agree with Faber that the US is not a civilized nation anymore, entirely due to the expansion of the state. I could say the same about the UK, Canada, Australia and most of western Europe. The whole region feels like a big kindergarten where the teacher wears a .380 and a bulletproof vest.
Mike, please tell us what countries really make the cut, without being dependent on international commerce (a good swimmer tied to a 800 pound gorilla who can’t swim will drown anyway…)
Who isn’t tied to commerce? That’s not the issue — commerce never stops, even in wartime. The issue is civility and respect for human rights, including the right of property. The Swiss have that record, and while they have succombed to socialism and given up some sovereignty lately, they are still civil. Eastern Europe in many places seems more free than the west, as do parts of Asia.
Nowhere is anywhere near good as the old US, even the already socialist and corporatist US of a few decades ago. There is no place left to run. The US was that place.
Charles Tilly was right.
Which country in Asia are you thinking about ?
Singapore ? It is a very socialist country (the state influence on economic life is huge). Their only advantage is that they have very competent leaders. But “bottom-up” free society it is not. On top of that, it sits on a precarious strategic position.
Still, it is the best of the lot, so where else ?
For me, the best chance is still in the US, but after the collapse…
Toward the end of the second video I think Mish cuts straight to the heart of why the political system has tipped toward deflation:
a.) there is little sentiment left supporting additional massive stimulus spending
b.) the politicians seem to think they have already succeeded in saving the system, and that job growth will be coming any day now.
I think we’re seeing similar hints from the Federal Reserve in the discount rate hike and the bias toward tightening from some of the board members.
The government and the Fed have no idea of the massive deflationary forces that confront it, and thus no idea of what a huge level of money printing and stimulus would be needed to stop them. If they really wanted to stop deflation they’re already way behind the curve.
Charles, I understand your point. The US still has a strong culture and maybe even genetic endowment for entrepreneurship, and it is the only place with a serious contemporary movement and literature of Austrian / libertarian economics. That means a lot, though demographics are going to be a hard slog.
A collapse to me means the breakdown of the government and all of its shackles. There is cause for hope there, especially in the possibilty of secession for more libertarian regions, but a power vaccum can also bring even worse fascism that present today.
If you are tough and crafty, it will be a good place to operate for a long time to come, like much of corrupt Asia and Latin America, but richer.
I think Faber is right. For the foreseeable future, enough printed dollars will get distributed to the plebeians via loose fiscal policies to counteract otherwise deflationary forces. Of course, the excess reserves at the banks can also be forced into the economy by playing with interest rates on same reserves, but this wont be necessary. Americans will continue to party off the cliff until interest on outstanding federal debt becomes an unsustainable percentage of government revenues. This may happen sooner if rates spike or years later if rates stay low and debt accumulates at the rate of 1.5T/yr.( It would take approx. 10 yrs to reach 200% debt/GDP.) The end will be at hand when CDS on US debt widen violently a la Greece. Then what choice will there be except for a massive, final print to pay off all those fleeing depositors? In the meantime, Dow stays close to flat until the recognition of unpayable debt sets in.
“Charles, I understand your point. The US still has a strong culture and maybe even genetic endowment for entrepreneurship, and it is the only place with a serious contemporary movement and literature of Austrian / libertarian economics. That means a lot, though demographics are going to be a hard slog.”
I do not know about genetic endowment… do you think Mexican immigration has a genetic aptitude for entrepreneurship? I do not know about Indian and Asian entrepreneurship but it would seen that the Indian and Asian entrepreneurial immigrants are 2-3 sigma outliers of their own bell curve, but their next generation may suffer a regression to the mean.
The US attracted the world’s go-getters for 200+ years, and unlike China and Russia has not yet systematically executed them.
Immigrants as a group tend to be more entrepreneurial than the populations they leave behind, so sure, the newly-arrived Latins in the US are the best of their lot (it sure takes balls to strike out like they do). That said, the welfare state has eliminated the make-or-break dynamic of the old US, so simply crossing the border counts for a lot more than it used to — it used to be that you had to work hard when you arrived to have it much better than back home.
Also, current immigration law’s preference for family ties over skills is absolutely horrible.
You mention regression to the mean – this is also bad, especially considering that the genetics from older waves of highly successful immigrants are now several generations old.
Genetics aside, the cultural endowment I wrote about is still significant. The US is the only place in the world with a grass-roots (though now partly co-opted) movement for a return to the free market.
There are still a few people who remember the spirit of the old US, the idea. The US was not really about a place, it was an idea about a government that respected individual rights, including the fundamental right of property.
The rights of property, privacy, self-defense and in many ways the right of speach are all but gone. While not as restricted as under a few even more totalitarian states, they are nothing to write home about in the US anymore, and they get further encroached upon every year.