Small Is Beautiful - Revisited
With all that's going on out there that is making it increasingly difficult for anybody to think about what 'condition our condition is really in', it's always a good idea to attempt simplifying things. Because the noise associated with harmful distraction, manufactured misdirection, and purposeful obfuscation is becoming 'fever pitched' as our economies slide further towards the necessary big change in the ways we organize and look at the way we live accelerates. In reading recent articles by James Kunstler, who is always a good read on such subject matter, one would be comforted to know you are not the only one thinking this way if that's what you are doing, thinking things like growth has become obsolete, and that radical change will lead to return to more feudalistic societies.
Of course this is not our first kick at the cat on this subject matter, our failing fiat currency economies, decentralization of economic / political organization, and necessary radical change, not by a long shot. You may remember my praise of the invaluable work of E.F Schumacher in my articles Small Is Beautiful (2011) and In His Genius back in 2008, looking down the road to today where this material is now catching people's attention because 'fiction (theory) is becoming reality'. Because nobody living in the material (real) world can deny that the difference in perceptions between 'infospace' and the real world is becoming epic, open to view by those who choose as instability becomes - unstabler. One only need look at the circus in Washington to know this is true, as the 'chosen ones' continue to turn the screws in a self anointed 'con job' designed to defraud the less endowed masses using psychology 101.
And while this can continue for some time yet, slowly but surely the tide is turning in the global organizational matrix, with Globalization rolling over, bringing world politics into a new era of decentralization, regionalism, and self-economic determinism. Both China and Russia are at the forefront in this regard, increasingly challenging Western domination in trade, colonization, and resource exploitation. Just this past week China made an unprecedented official statement regarding the USDollar's reserve currency role in the world and their desire for a new world order that is evidence Globalization is in big trouble, meaning one should expect process to hasten now. Accelerating system deterioration in the US will soon require a reaccelerating in currency debasement rates, which will in turn loop back into further system failure as inflation takes off; and again, the Chinese know this, and is why they are calling for change given they are still running fiscal surpluses.
But here too, China will not be running these surpluses forever either, so again, as process unfolds, the decentralization trend will accelerate whether we like it or not - for better or worse. The great leveling is underway, and many in the West are beginning to see the writing on the wall - terminally declining wages - along with the terminal decline in economy and living standards this will usher in. And no amount of distraction and bureaucratic shenanigans will change this as we return to smaller, more regionalized economies, as internal conflicts at increasing levels necessitates. Thus, it's best not to fight inevitability, but to embrace it - the good with the bad. One good thing will be although living standards will undoubtedly take a hit across the globe, income brackets, etc., still, the average person who accepts this would likely be happier once adjusted to a simpler reality. For those who fight this change - fight Mother Nature - things won't go so well.
Because we can't keep piling up more debt at an ever increasing rate to keep the top 1% living high forever. In case you haven't figured it out yet, the entire skullduggery concerning fiscal bickering in Washington these days is nothing more than ongoing installments of the same charade, referred to by the media as kicking the can down the road, all designed to obfuscate and distract from reality - the reality being not only is their fiat currency economy a fraud - but so are they. (i.e. the politicians, bureaucrats, etc.) And because our debt laden fiat currency economies (this is an international affair) are now fully mature and imploding from their own weight, process is accelerating, which means unwanted change will be forced on people. The bureaucrats are presently attempting to force necessary austerity and / or tax hikes on the private class as a solution to this macro-shift, which again, is why we have ever intensifying Theater of the Absurd in Washington every couple of months - to keep tensions high - and to remind the people of the consequences of dismantling 'the system'.
Unfortunately for all however, still, the system is being disassembled by natural forces, which will eventually bring about profound change - with decentralization as the key macro. No longer will people's work and efforts in Washington state be stolen by those in Washington DC through predatory confiscation or taxation - not with 'real money' so much more difficult to come by. The negative ramifications and impoverishment of the working class due to the capitalist's hollowing out of the industrial base in the US (the West) will take many moons to reverse, with the fat bureaucrats kicking and screaming all the way, but make no mistake about it - change is coming. Revolution is coming. The impoverished will not stay quiet forever. Hunger, jealousy, and anger - emotions - will force the issue. You can count on it.
So, what should somebody do knowing radical change of this nature is coming? The best answer to this question is obviously 'it depends', where exactly what this means for you can vary widely compared to somebody else. (i.e. the variables are numerous ranging from location to means.). For city dwellers, people are limited to attempting to preserve your wealth in precious metals, turning your backyard into a garden, and acquiring survival supplies. For rural dwellers however, the options expand to permaculture, structured agri-communities (not necessarily religious based), and farming / ranching. Of course if one is a city dweller and wishes to do more, relocating to a rural setting is an option if one has the means, those looking for a more simplified and 'traditional lifestyle' that will likely fit approaching 'radical macro-change'. And if the charts below are any indication, the tab for our consequence suspension 'free lunch' needs to be paid soon - meaning acceleration into this radical change is likely not far off now - bringing an increasing urgency to such decision making. (See Figure 1)
We know this because the NASDAQ will never make another bubble like it did in the year 2000 at millennium's turn. Bubbles like that do not repeat within a generation, and we are definitely not there yet with only some 13 years gone by now. Thus, the best tech stocks should be able to do is to repel off of what is labeled 'extreme bubble resistance' in Figure 1 above, that being the monthly plot of the NASDAQ / Dow Ratio. You will notice we are rapidly approaching this resistance point now, but are still within the range of less extreme recurring bubbles witnessed over the past thirty years. This subject matter and technical picture should not be new to you if you have been following my work for some time. Neither should this next observation, which looks set to trace out over the next fortnight as well, that being a possible monthly closing basis double top in the risk adjusted S&P 500 (SPX), as measured by the SPX / CBOE Volatility Index (VIX) Ratio. (See Figure 2)
For the rest of the story, please visit our site and subscribe.
Good investing all.
We have been providing this service for over ten years now, and our subscribers have been able to stay ahead of the curve in trading the various markets we cover, with a focus on US equities and precious metals. Coverage includes cutting edge fundamental, technical, and sentiment-based studies that have proven pivotal for our subscribers throughout the years.
So, give us a try. One will not regret it if looking for insightful big picture thinking that keeps you on the right side of the trade.