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Black Swans And The Collapse Of Empires Swimming In Debt

Elaine Supkis passionately takes on Dr. Niall Ferguson. Her words in Niall’s LA Times excerpt are red. – Ilene 

Black Swans And The Collapse Of Empires Swimming In Debt

Courtesy of Elaine Supkis at Culture of Life News 

It is rather curious how people refuse to see obvious things. This is why so many things are ‘unexpected’ or a ’surprise’. People who do see obvious things are called ‘cynics’.  Cynics are the exact opposite of banking gnomes and their ilk.  Cynics disparage wealth and power in order to see reality and truth.  Often, cynics go around telling people, ‘You are doomed’ which makes them party poopers.  But then, often, they are right.  

black swan

Cynic – Wikipedia, the free encyclopedia

The Cynics (Greek: Κυνικο?, Latin: Cynici) were an influential group of philosophers from the ancient school of Cynicism. Their philosophy was that the purpose of life was to live a life of Virtue in agreement with Nature. This meant rejecting all conventional desires for wealthpowerhealth, and fame, and by living a life free from all possessions. As reasoning creatures, people could gain happiness by rigorous training and by living in a way which was natural for humans. They believed that the world belonged equally to everyone, and that suffering was caused by false judgments of what was valuable and by the worthless customs and conventions which surrounded society. Many of these thoughts were later absorbed into Stoicism.

The first philosopher to outline these themes was Antisthenes, who had been a pupil of Socrates in the late 5th century BCE. He was followed by Diogenes of Sinope, who lived in a tub on the streets of Athens. He took Cynicism to its logical extremes, and came to be seen as the archetypal Cynic philosopher. He was followed by Crates of Thebes who gave away a large fortune so he could live a life of Cynic poverty in Athens. Cynicism spread with the rise of Imperial Rome in the 1st century, and Cynics could be found begging and preaching throughout the cities of the Empire. It finally disappeared in the late 5th century, although many of its ascetic and rhetorical ideas were adopted by early Christians.

The Cave of Wealth and Death is the habitation of all religions. All religions preach sharing, love and a rejection of material goods while at the exact same time, are greedy, self-centered, destructive and filled with intense hatred.  This is inescapable due to the fact that all things in this Cave of Wealth and Death are exact opposites at the same time.  The essence here is the totality of the contradictions.

The innermost parts of our brain control all the ‘higher functions’ which we call ‘thinking’.  Humans evolved very complex brains due to evolutionary pressures.  I might even suggest that when we got into the habit of not only using stone tools and fire but carrying around special stones and sticks, we evolved some very peculiar parts of the brain no other animal has or uses.

That is, the need to remember to carry these tools everywhere all the time and to protect the tools is uniquely human.  Animals have burrows, nests and even elaborate places where they stash stuff for winter or for sexual rites but none of them carry these things here, there and everywhere and have to worry about putting them down and picking them up again.

One reason we find so many random rock tools dropped by early humans scattered all about Eastern Africa is probably due to the high loss rate early humans suffered.  The need to control physical things all the time by carrying them around with us is very deeply buried inside of our brains where it connects to the rational thinking part that says, ‘Hey, where did I put down that screwdriver a minute ago?’

Much of the torment of Alzheimer’s disease is the loss of ’short term memory’.  The constant feeling of being at sea all the time causes people with this terrible disease to lash out at everyone as they struggle to  deal with all the emotional hell of not knowing where that rock one chipped so carefully has fallen.

I harp on all of this because all economic news is also religious news for both are rooted right next to each other and sexual impulses in the exact same place in our brains. Not in our clever front parts but deep inside.  This is why all religions are funny due to never being able to practice what they preach and why all economics is really emotional, not rational.  And why people with lots of wealth or religious power are prey to sexual impulses of the darkest sort.

Just like the banking gnomes love to lecture us about the evils of socialism…why, you might go BANKRUPT!…while bankrupting us thanks to them creating too much money out of thin air, so it is with everything associated with this part of our brains.  The dark forces at work there are the roots of all hypocrisy and all dissociative thinking that constantly plagues all humans.  We can’t escape this.  This is also why we can’t see obvious impending dangers: we don’t WANT to see it. We want to sail along merrily doing naughty and dangerous things because we like doing this.  And we love any status quo no matter how stupid it is.

red ink, debt

All empires have the exact same path of rise and fall.  This is why history is important: it lets us see exactly what will happen next.  All graphs of all bubbles are like the one above that I show here.  All of them have the same stubborn process so I will say definitively that this stubborn graph of the rise and bumpy fall of all systems, bubbles, empires, fashion fads, manias and human systems is a fundamental characteristic of all humans which evolved over time due to evolutionary pressures of the Great Climate Change Cycle which ushered in the Ice Age/Interglacial yo-yo cycles.

The present hysteria about ‘climate change’ isn’t misplaced: we love status quo cycles and want them to be eternal but we are still in this unstable yo-yo system that began long before humans produced much of any CO2. I would also suggest that far from not knowing about the above graph that shows the boom/bust systems humans create, humans are exquisitely aware of this cycle system!  Which is why the doomsters always yell, ‘It is the end of the world’ every time we go in the down cycle of any system.  Note in the above graph and in ALL graphs charting ALL booms and busts of ANY fad, economy or system, do NOT show ANY stability at ALL.  The feeling that we are in a status quo stable system is an illusion.

Now, I am going to attack Dr. Niall Ferguson, the Black Swan Harvard professor.  He wrote a long and useless article that tries to explain why the collapse of various empires and bubbles can’t be seen.  He claims that we can’t see it because it is always caused by something small.  Therefore, it isn’t useful to probe too much into the underlying causes!  HUH?  Read him to see how much this guy is deluded by an inability to understand basic underlying systems.  He is all surface and can’t see the black swans paddling away in seas of red ink:

America, the fragile empire – Los Angeles Times – Page 3

If empires are complex systems that sooner or later succumb to sudden and catastrophic malfunctions, what are the implications for the United States today? First, debating the stages of decline may be a waste of time – it is a precipitous and unexpected fall that should most concern policymakers and citizens. Second, most imperial falls are associated with fiscal crises. Alarm bells should therefore be ringing very loudly indeed as the United States contemplates a deficit for 2010 of more than $1.5 trillion — about 11% of GDP, the biggest since World War II.

Understanding the underlying things is NOT a ‘waste of time’, it is literally life and death!  Once all the bad things are set in place, all it takes is one thing happening and bam!  It all collapses.  So do we ignore all the things going wrong and then try to prevent this one, little thing from happening?

HAHAHA.  Talk about STOOOPID.  This man, by the way, is a very respected professor.  If I were in his class and he said this, we would instantly be engaged in a very vile debate leading to him throwing me out.  Well, this is a vile debate.  If idiots like him win it, we are doomed.  If I win it, we may be able to at least see a tiny bit of the Cave of Wealth and Death which is dark as night.

These numbers are bad, but in the realm of political entities, the role of perception is just as crucial. In imperial crises, it is not the material underpinnings of power that really matter but expectations about future power. The fiscal numbers cited above cannot erode U.S. strength on their own, but they can work to weaken a long-assumed faith in the United States’ ability to weather any crisis…

Expectations have nothing to do with this.  The material underpinnings of power are simple to discern: is an empire running in the red or in the green?  That is, are ALL systems running in deficits or is there some part that is profitable or balanced?  For example, China and Japan both have the world’s largest sovereign wealth funds as well as running trade surpluses.  Japan has very great public debt but has half of its systems running in the green so it is safe for the time being.  China is running in the green. China is, in reference to my cartoon above, on the ‘up’ slope of the rise and fall of great empires.

Now, look at the US: ALL systems are running deep in the red.  Trade, government, tax, wars, all are losing or destroying or in the red.  On ALL fronts we are bleeding badly.  We still sail upon a vast sea of debt granted to us by rising empires….who are our rivals and who are working day and night to destroy our internal industrial base.  Joining them are all our elites who gain greatest wealth by cooperating with the Chinese 50 Year Plan to suck out all US industries.

Anyone with half a brain can see this.  There is no mystery here.  And to sink the US ship, all someone has to do is punch a small hole in the hull.  Then, all the red ink pours into the ship, it ceases to sail and sinks exactly like the Titanic.  The sinking is quite swift. But avoiding the icebergs isn’t impossible!  This is why sailing swiftly into icebergs is stupid and should be avoided.

….To understand complexity, it is helpful to examine how natural scientists use the concept. Think of the spontaneous organization of termites, which allows them to construct complex hills and nests, or the fractal geometry of water molecules as they form intricate snowflakes. Human intelligence itself is a complex system, a product of the interaction of billions of neurons in the central nervous system.

Here he is talking about the Cave of Wealth and Death, the place where sex, religion and greed live in happy disharmony.  It is NOT ‘intelligence’….this is pure emotions. Which is why poor Prof. Niall gets all tangled up in knots.  He first talks about how emotions cause a collapse of an empire due to people no longer having ‘FAITH’ in it…and then talks about how these emotional systems are ‘intellectual’.  They are NOT. Not at all.

As for fractals and geometry: it isn’t geometry at all, it is pure math.  That is, NOTHING runs to infinity, not even the universe.  All existing things INCLUDING mental cannot go to infinity.  Even if we imagine ‘infinity’ this is an illusion.  We really can’t do this EMOTIONALLY since infinity is death itself.  Any system of any sort that suddenly begins a steep incline towards infinity either blows up, collapses or dies.

I believe the entire universe was born when a system of rationalism suddenly began to do impossible things having spent eternity doing all possible and improbable things with invisible numbers.  The collapse of this activity led to an explosion.  This is irrational, of course which delights me because the very Cave of Wealth and Death is based on lightning bolts shifting from positive to negative in an explosive flash.

All these complex systems share certain characteristics. A small input to such a system can produce huge, often unanticipated changes – what scientists call “the amplifier effect.” Causal relationships are often nonlinear, which means that traditional methods of generalizing through observation are of little use. Thus, when things go wrong in a complex system, the scale of disruption is nearly impossible to anticipate….

Hell’s bells, here it is again: all the economics professors have to pretend no one could anticipate the destruction or collapse of out of balance systems!  I accurately called all the effects and foresaw them clearly and knew they were inevitable.  BUT HE IS WRONG about what causes them: we MUST figure this out!  It is life and death. Here is his stupid story:

….Over the last three years, the complex system of the global economy flipped from boom to bust — all because a bunch of Americans started to default on their subprime mortgages, thereby blowing huge holes in the business models of thousands of highly leveraged financial institutions. The next phase of the current crisis may begin when the public begins to reassess the credibility of the radical monetary and fiscal steps that were taken in response.

ARRRGH!  I want to bang my head.  Back in 2007, during the summer, I noted that the G7 was busy attacking China over currency issues and that Japan joined the US in this business even while Japanese business with China now equalled business with the US.  The Chinese dragon warned Japan about this.  Japan sneered back that in August, 2007, they would flood China with Japanese carry trade loans.

China then said they would buy yen and hold them and thus make the yen stronger against the dollar!  I said, ‘Oh boy, that will kill the Japanese carry trade and the carry trade is where all the loans are coming from which fuels all the money markets!’  And sure enough, starting in August, 2007, the yen began to suddenly appreciate against the dollar going finally from 120 yen to the dollar to 84 yen to the dollar!

The resets that this triggered led to credit vanishing ENTIRELY.  This is how dependent the US and the world was on the Japanese carry trade!!! THIS IS VERY IMPORTANT and is being nearly totally ignored by our darling professors who protect each other, otherwise who would listen to any of them? Silly homebuyers defaulting were the RESULT of this collapse in the Japanese carry trade, NOT the cause of the collapse that followed the halt in Japanese loans to international bankers.

Neither interest rates at zero nor fiscal stimulus can achieve a sustainable recovery if people in the United States and abroad collectively decide, overnight, that such measures will ultimately lead to much higher inflation rates or outright default. Bond yields can shoot up if expectations change about future government solvency, intensifying an already bad fiscal crisis by driving up the cost of interest payments on new debt. Just ask Greece.

No population gets to decide if there is inflation.  Inflation is NOT emotional, it is physical.  You print too much money, it degrades itself.  People HATE this.  I know not one soul who loves inflation of necessities.  I do know that everyone LOVES inflation in property they own!  So if your car or house becomes more valuable, you are happy.  If food or fuel goes up, you are unhappy.

There is no such thing as ‘inflation’ or ‘deflation’ except as a model.  For there never is total inflation or deflation.  It is SELECTIVE.  When things are unbalanced the wrong things are deflated or inflated.  So we have property dropping in value while paying more for fuel: this causes tremendous distress.  The reverse is total happiness.

Ask Russia too. Fighting a losing battle in the mountains of the Hindu Kush has long been a harbinger of imperial fall. What happened 20 years ago is a reminder that empires do not in fact appear, rise, reign, decline and fall according to some recurrent and predictable life cycle. It is historians who retrospectively portray the process of imperial dissolution as slow-acting. Rather, empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.

The minute the Japanese carry trade ceased pumping red ink into the US imperial system, we began to see the outlines of the underlying sea bed because our damn ship sank!  It is STILL SINKING.  Spending more money isn’t fixing the sea of red ink.  Note the illustration above: one side of the graph is green with blue skies. The other is red ink and no green grass growing!  When we notice what was already going on, this was due to conditions changing.

Misspending on religious wars is the worst thing an empire can do when it is sailing on a sea of red ink.  The sea of red ink is often a sea of human blood for all flailing empires do the same exact thing: kill lots of people while struggling to stay afloat! The US economy now runs nearly entirely on the military/industrial complex. This is why idiots tell each other, ‘We still have production in the US.  We still manufacture things’.  Well, we aren’t allowed to offshore all our military production so it is still here but it is also a major, major contributor to the sea of red ink upon which we are trying to sail.

The inability of the public to pay simple loans is merely a hole in this ship of state that shouldn’t be sailing on a sea of red ink while the bottom is dropping drastically. Another metaphor that is useful here: the more we sail outwards in this sea of red ink, the deeper the ocean of red ink becomes, the more deadly our sinking will be for we won’t survive!

The sooner we turn around and go to shore, the shallower the waters!  We might swim ashore.  The Chinese pray that we continue to sail onwards and sink and never rise again!  Indeed, the US neocons hope the same thing for Russia!  Duh!

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