4 ms·

Why the global financial system is about to collapse (2006)

10 points by jasonisalive 12y ago

jokoon 12y ago
off-topic: isn't there already some "serious fiction" about government being controlled by corporations ? Sometimes I wonder, I want to ask a real politician, in an age of technology, what would happen if corporations were able to control government or to replace its role ? What would go well, what would fail ?
- greenleafjacob 12y ago
  Chomsky?
- pron 12y ago
  You don't need to ask politicians -- just ask historians. The most recent example is the US prior to Teddy Roosevelt. That age -- the Gilded Age -- was a time of great economic growth combined with a great deal of suffering for the population. The people cried for help, and the government rescued them from the robber barons. That's how regulation came to be in the US -- as a reaction to corporations running the country. If you want to look further back, it's very easy to see the effect of weak central governments because powerful governments are rather new. The way pretty much all societies all over the world worked before centralized government was called feudalism, and that is -- one assumes -- precisely the form society would take again if corporations were allowed to roam free. The way I see it, you have two options: a strong government or feudalism. Pick whichever one you dislike less.
aristidb 12y ago
So I first thought this article might predict reasons for the "Great Recession" that would come a year or two later, but nope. "Spontaneous remonetization of Gold" combined with an erosion of the dollar... While the gold price is somewhat higher than in 2006, the dollar has hardly been eroded with inflation, quite the opposite: recent years are marked by below-average inflation around the world. Long-term interest rates are at record lows, nominal and real.
- jasonisalive 12y ago
  I posted this because I found it quite interesting, as I've found all of this guy's writings. Here he is more recently on Bitcoin - quite illuminating I think: http://unqualified-reservations.blogspot.com.au/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.com.au/2013/04/bitc...
  - lumberjack 12y ago
    http://unqualified-reservations.blogspot.nl/2010/02/from-mises-to-carlyle-my-sick-journey.html http://unqualified-reservations.blogspot.nl/2010/02/from-mis... I'm not sure I read this right but if I did this guy advocates monarchy over democracy.
    - peterjancelis 12y ago
      You read that right. The author is part of a movement known as the "dark enlightenment".
- notahacker 12y ago
  Yes. It would be difficult to have anticipated impending financial crisis more incorrectly than this article. The US economy collapsed due to systemic instability in the financial system rather than the US dollar[1], with the flight to gold lagging rather than leading the economic problems. Policymakers neither become more sympathetic towards the idea of returning a gold standard, nor found it necessary to act to dissuade people from buying gold. Instead they took the complete opposite route: large-scale fiat monetary expansion without the dollar suffering. Ben Bernanke - far less sympathetic towards a gold standard than Greenspan - kept his job. N. Gold prices started to drop again naturally as the US economy started to recover. [1]if anything, it could be argued to be exacerbated by a collapse in the prices of assets - housing - widely supposed to represent a solid store of value against the dollar due to their relatively stable supply
  - jasonisalive 12y ago
jasonisalive 12y ago
Part 2 of the article: http://www.safehaven.com/article/5206/why-the-global-financial-system-is-about-to-collapse-part-2 http://www.safehaven.com/article/5206/why-the-global-financi...
pron 12y ago
To those who might think this article contains some novel analysis of the financial system: it doesn't. This is your run-of-the-mill libertarian politics, but at least the writer is completely upfront about it (inflation is taxation meant to serve the goals of the government -> I think the government is too big -> we should take away this form of taxation by switching to gold).
- davidgerard 12y ago
  This is Mencius Moldbug just before he created neoreaction.
sudioStudio64 12y ago
I'm personally not a fan of economics as a subject and these kinds of amateur prognosticators in particular. I'm not denigrating the op's interest in the subject...I'm just saying that I think that economics is generally a field of political science and propaganda. If it were a real science they wouldn't have to do things like argue over who predicted something...you could make a predication and then test it verifiably. My main complaint though is that economics is largely justification for political policy/belief systems...at least in the US.
al2o3cr 12y ago
Goldbugs have successfully predicted 10 out the last zero hyperinflation events. Surely they can't be wrong! ;)

10 points by jasonisalive 12y ago

off-topic: isn't there already some "serious fiction" about government being controlled by corporations ? Sometimes I wonder, I want to ask a real politician, in an age of technology, what would happen if corporations were able to control government or to replace its role ? What would go well, what would fail ?

greenleafjacob 12y ago
Chomsky?
pron 12y ago
You don't need to ask politicians -- just ask historians. The most recent example is the US prior to Teddy Roosevelt. That age -- the Gilded Age -- was a time of great economic growth combined with a great deal of suffering for the population. The people cried for help, and the government rescued them from the robber barons. That's how regulation came to be in the US -- as a reaction to corporations running the country. If you want to look further back, it's very easy to see the effect of weak central governments because powerful governments are rather new. The way pretty much all societies all over the world worked before centralized government was called feudalism, and that is -- one assumes -- precisely the form society would take again if corporations were allowed to roam free. The way I see it, you have two options: a strong government or feudalism. Pick whichever one you dislike less.

aristidb 12y ago

So I first thought this article might predict reasons for the "Great Recession" that would come a year or two later, but nope. "Spontaneous remonetization of Gold" combined with an erosion of the dollar... While the gold price is somewhat higher than in 2006, the dollar has hardly been eroded with inflation, quite the opposite: recent years are marked by below-average inflation around the world. Long-term interest rates are at record lows, nominal and real.

jasonisalive 12y ago
I posted this because I found it quite interesting, as I've found all of this guy's writings. Here he is more recently on Bitcoin - quite illuminating I think: http://unqualified-reservations.blogspot.com.au/2013/04/bitcoin-is-money-bitcoin-is-bubble.html http://unqualified-reservations.blogspot.com.au/2013/04/bitc...
- lumberjack 12y ago
  http://unqualified-reservations.blogspot.nl/2010/02/from-mises-to-carlyle-my-sick-journey.html http://unqualified-reservations.blogspot.nl/2010/02/from-mis... I'm not sure I read this right but if I did this guy advocates monarchy over democracy.
  - peterjancelis 12y ago
    You read that right. The author is part of a movement known as the "dark enlightenment".
notahacker 12y ago
Yes. It would be difficult to have anticipated impending financial crisis more incorrectly than this article. The US economy collapsed due to systemic instability in the financial system rather than the US dollar[1], with the flight to gold lagging rather than leading the economic problems. Policymakers neither become more sympathetic towards the idea of returning a gold standard, nor found it necessary to act to dissuade people from buying gold. Instead they took the complete opposite route: large-scale fiat monetary expansion without the dollar suffering. Ben Bernanke - far less sympathetic towards a gold standard than Greenspan - kept his job. N. Gold prices started to drop again naturally as the US economy started to recover. [1]if anything, it could be argued to be exacerbated by a collapse in the prices of assets - housing - widely supposed to represent a solid store of value against the dollar due to their relatively stable supply
- jasonisalive 12y ago

jasonisalive 12y ago

Part 2 of the article: http://www.safehaven.com/article/5206/why-the-global-financial-system-is-about-to-collapse-part-2 http://www.safehaven.com/article/5206/why-the-global-financi...

pron 12y ago

To those who might think this article contains some novel analysis of the financial system: it doesn't. This is your run-of-the-mill libertarian politics, but at least the writer is completely upfront about it (inflation is taxation meant to serve the goals of the government -> I think the government is too big -> we should take away this form of taxation by switching to gold).

davidgerard 12y ago
This is Mencius Moldbug just before he created neoreaction.

sudioStudio64 12y ago

I'm personally not a fan of economics as a subject and these kinds of amateur prognosticators in particular. I'm not denigrating the op's interest in the subject...I'm just saying that I think that economics is generally a field of political science and propaganda. If it were a real science they wouldn't have to do things like argue over who predicted something...you could make a predication and then test it verifiably. My main complaint though is that economics is largely justification for political policy/belief systems...at least in the US.

al2o3cr 12y ago

Goldbugs have successfully predicted 10 out the last zero hyperinflation events. Surely they can't be wrong! ;)