Seeking Alpha

Michael Clark

Michael Clark
Send Message
View as an RSS Feed
View Michael Clark's Comments BY TICKER:
Latest  |  Highest rated
  • The Deflation Threat [View article]
    New Age words? I'm not much of a new-ager. I'm more of an old-ager, in fact. I'm seeing more fire and brimstone than love and forgiveness.

    What can we do now? We should have begun raising interest rates in 2001; we should have been destroying bad debts for the last 14 years, preparing for the next growing season in 2019. We have not done that. The strong dollar will buckle the global debt bubble. We need to support the dollar. Higher interest rates will do this. The FED understands that it is 'every nation for itself; and God against all'. This is now the future. The strong dollar will bring chaos to the world, debt crises will explode. The strong dollar will deflate the global debt bubble. We need the strong dollar. And we need to prepare for war, because this is what central bank policy has wrought.

    We would have had much less bad debt to destroy if we would have begun discouraging debt and rewarding saving fourteen years ago. Now we have a huge mess on our hands, yields sinking into a black hole, and "beggar thy neighbor policy" as a way of survival now, followed by everyone, the US first. QE is the 'beggar thy neighbor' policy. First you sucker them into massive debt, through QE; then you present the bill in a more expensive currency, and then they default; and then your banks collapse.

    We reap what we have sown. And we never learn, that is the problem. We always put greed on top.
    Jan 29, 2015. 02:35 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    Lawrence: The FED team in the 1930's was certainly composed of different players than the FED team in the 1960s; and this latter team was certainly composed of different players than the current FED team. I don't dispute that. My point was that they have failed mightily (different teams though they were, with different players) in their first defense of inflation; they failed rather signficantly in their second defense of inflation, and were bailed out in the late innings by a superb closer, Volcker; and my view is that we are heading for a major global currency debt crackup today -- made worse by FED micro-management.

    They are supposed to 'miitigate deflations': isn't that why they were created? 1929-1947: failure, big failure; 1965-1983, modest success, mainly because America had no debt bubble to destroy, which is the main role of deflations; today they have increased the debt in the world many times over since 2001, and they continue to think this is a liquidity crisis when it is a massive insolvency. They are still operating under the assumption that we can grow our way out of this depression if we keep interest rates low enough for long enough. I think this is insane.

    Debt, in the extreme, is death to the society. There is a time to grow debt, yes; and there is a time to reduce or destroy debt. That is the balance I write about. The Book of Ecclesiastes. A time for all things under heaven. The FED's (central banks') line through this entire crisis is that we need to encourage more debt. (Why? Because we have to save the banks? No, the banks can go. The banks should go, if they have destroyed the balance.) These policies are pathological. When did such a blinding lack of vision become so popular? Is there no room for philosophy in our thinking, just science?

    I believe we are being led by people who have no morality or no sense of decency or proportion or no vision -- then I try to rememeber that they are trying to protect a global system with hundreds of trillions of dollars of derivative exposure, one in which higher interest rates will be lethal. Then I think that they have painted themselves into a corner, in which the only path (not the only aceptable path but the only path) is lower and lower rates, until the currencies all die, and the global structure pops, formulating chaos. And I think: look what GREED has wrought.

    I read an interesting article today from a man who claims that zero interest rates prescribe the death of the currency. He writes mainly about the Swiss Franc. He says the Swiss Franc is dead. But look at the world's interest rates. A downward spiral, into a black hole. Look at the yields on our government bonds, straight down, in a death spiral.

    In my mind the FED has a very simple job. Lower rates when the Business Cycle growing season begins; raise rates when the Business Cycle growing season ends. Gradually lower rates for 18 years during the Business Cycle Growing season (1911-1929; 1947-1965; 1983-2001...); gradually raise rates for 18 years when the Business Cycle ends (1929-1947; 1965-1983; 2001-2019...) Encourage Growth and Spending for 18 years; encourage Saving and Discourage Debt for 18 years. All this micro-managing is destructive and creates a cult of personality that detracts from the mission.
    Jan 29, 2015. 01:29 AM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    No, Lawrence. I don't hate the rich. The rich are also good and bad, as are the poor. However, the longer the engineered inequlity endures, the more likely that polarizations will develop that will see the rich as being all good or all bad (from one perspective) or the poor as being all good or bad (from the opposite perspective) and then we will have a very ugly period of history in which to try to survive.

    One of the things that worries me the most about QE's results and exasperated inequality is that rabid fascism will be unloosed upon much of the world and we will have to go through the ravages of hatred again, on a large and violent scale -- and rabid fascism's dark twin, class hatred. Rabid fascism's glory is race hatred; rabid communism's glory is class hatred. Not a good polemic if we want to live with grace, which is the essence of the 'balance' I write about. If we lose our balance, our democracy, it will take many years to get it back.

    In my understanding of the world, the Day-Cycle separates the world into a vertical hierarchy, or classes based on wealth. The Night-Cycle MUST reduce that hierarchy, and eliminate or at least significantly reduce the gap between the rich and poor, so that we can avoid civil war during the Night-Cycle, class warfare. This is another reason FED policies are so abhorrent to me: not only are they making matters worse, creating more debt instead of limiting debt, they are also setting the stage for a hideous class warfare, transfering trillions from the world's taxpayers to the world's richest organizations, corporations and individuals. This is absolutely the worst thing to be doing at this point.

    I don't want a class war in America. But as we watch Greece we see the beginnings of a class war in Greece. This could easily spread like a wildfire through European have-not societies.

    We should be lessening the gap between the rich and the poor; instead we are widening it. The Cult of Money has never been more obscene than it is today. We are worshipping the false God. And we will be punished for it.
    Jan 29, 2015. 12:49 AM | Likes Like |Link to Comment
  • Today's 'Dip' Is A Warning---Get Out Of The Casino! [View article]
    I agree with you. I'm waiting for signals to buy them.
    Jan 28, 2015. 10:07 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    David: Bad things are happening because of our attempt to prevent bad things from happening. And it is going to get worse.

    Remember the saying: "The road to hell is paved with good intentions."

    You have a simplistic view of things: good things and bad things, separate and unequal, disconnected. Everything is a mixture of good and bad. Don't you see that?
    Jan 28, 2015. 08:08 PM | 1 Like Like |Link to Comment
  • Today's 'Dip' Is A Warning---Get Out Of The Casino! [View article]
    I join you, DavidLMO: salute to Mr. Stockman, who is seeing the shadow that the central banks have creation, in which we will all have to live and maybe die in the not-too-distant future.
    Jan 28, 2015. 07:43 PM | 3 Likes Like |Link to Comment
  • Global Means Global; 'Dollar' Means Trouble [View article]
    Remember, it's every nation for itself; and God against all. This is called the Chaos Factor. And from Chaos will rise (Chaos being the fiery cauldron of the alchemical melting pot) the new creators who get to create the Next Earth. We are living in mythology. Mythology is, in fact, us.
    Jan 28, 2015. 06:41 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    How was that a good thing? David, things happen in history that are not good things. You want only good things to happen, I know. Is it a good thing that Wall Street banks crash the global economy, are given money from taxpayers, and raise the amount of bonuses they pay to themselves for imploding the global economy. Good thing?

    Do you believe in evolution? Darwin argued that only the 'fittest' survived, those who survived the trials by fire, the testing rituals built into life, which I call the Night-Cycles. If you don't believe Darwin, I can understand that. But if you do believe Darwin, then how can you not see a similar process in economics and in the survival of the fittest or the largest companies through a deflation cycle? Of course, the FED is attempting to negate such theories by allowing everyone to survive through free money, captured from future American tax receipts.

    "Never give an inch." That was the family motto in Ken Kesey's novel Sometime's a Great Notion, about an old frontier family in Oregon resisting encroachment by the modern world on their way of life. Never give an inch": why? Because you think you are right. Yes, we all believe our perception is true, that we are right. But we can't all be right, if we disagree, can we. So either I am right; or you are right. We don't give an inch because we are invested in our opinions. They give us a secure identity; they help to give us a secure identity.

    I am willing to give you and Lawrence the virtue of your idealism and say, for argument's sake, that the FED is noble-hearted and is trying to save the world from the horror's of deflation, from the horrors of the 1930's style depression. I will ignore the transfer of trillions to the world's richest familieis and institutions for the moment. My question is: are the central banks succeeding if fixing our problems so we won't collapse into a 1930's style depression; or are they stalling only? Is there any indication that the global economy is recovering? Is America recovering? If America was recovering, would not TBonds be falling now, instead of rallying? All over the world yields are collapsing toward zero. Is this not an indication of a coming massive currency collapse, a global collapse? Do negative interest rates announce a currency's coming demise?
    Jan 28, 2015. 06:36 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    Ours is not working so great at the moment, Lawrence.

    Actually, look at the US history. You can certainly apply the Phoenix model: the Phoenix rises every 36 years, and comes after deflation peaks: 2019, 1983, 1947, 1911....

    The FED has actually had two opporunities to prove they could successfully avoid deflation in America. The first, they failed: 1929-1947. Dismal failure that resulted in depression and world war. Second, 1965-1983. This failure was less obvious because we took on almost no debt in the preceding inflation (1947-1965). Where there is no debt to destroy, the job is much easier. We did have inflation and deflation, high unemployment, much spiritual/cultural deflation, a lost war, a president thrown out of office in disgrace, lost prestige around the world, a counter-culture revolution that rejected the West as a culture and way of life...and we did need the fed fund rate at 22% to get through it at the end. Today: is the FED succeeding; we will see. The global economy seems ready to burst; world war seem possible; we have more debt now than we did in 2001; we have currency wars; not looking so good at the moment.

    In my view, deflation saves us from inflation; and inflation subsequently save us from deflation around the next turn of the cycle. But we only need to be saved from deflaltion AFTER it does its work, destroying debt, and lessening the gap between the rich and the poor -- the FED has increased that gap apocalyptically. I think you are a good man, Lawrence. Do you support FED polcities that tranfer trillions of dollars to the world's rich?
    Jan 28, 2015. 06:04 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    I don't regard the Weavers as great economists. The seasons end because the sun revolves around the sun, not because people do something that causes them to end. The economy rebalances because people ACT in response to changes in it. Very different things...
    Why do you have so little faith in people as to assume that they won't act in their own best interest to end deflation?

    You separate man (humanity) from Nature, assuming they do not reflect Nature, and that they are wholly, totally different than Nature. Perspectives change with the seasons; perspectives change with different generations.

    Everything in Nature and in Man ebbs and flows. So much fear that we will lose what we have. And we will lose what we have. But we will gain something else. This is a law of nature; we gain and lose at the same time. So much fear of losing the Old World; and then we gain a new vision, and begin to desire the New World; and then the new desire fuels the building of the New World. We always lose what we have and gain what we don't have.

    We have been bailing out corporations since 2001 when the Nasdaq bubble collapse signaled the end of the Business Cycle. Lower and lower interest rates to allow capitalism to survive even when many companies should not survive. ZIRP which allows companies to buy back their own shares and make a joke of Wall Street and Capitalism. We should have let the banks fail. We have a system set up for exactly that outcome. Instead we lied to ourselves, and faked a recovery, so that we could keep up the good face of capitalism. Capitalism is actually strong enough to accept both sides of the circle, the gain and the loss, the expansion and glory, and the contraction and fear -- but we like the public relations aspect of the perpetual win even more. So we faked things. And, in the process, we transferred trillions of dollars from the taxpayer to the world's rich, and recreated economic feudalism. That's what we have now.

    We don't have capitalism any longer; we have feudalism. That's how the rich always win. Until they don't; and then everyone suffers because of it. Because we chose the Great Imbalance (Greed) we will get the opposite Great Imbalance (Destitution and Chaos). That's what sin is, the lack of balance.
    Jan 28, 2015. 02:48 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    You see the world as good and evil. (By the way, who is Mr. Ryan?) I say this is your problem. This is why you can see only one side of the world, one half of the whole equation. Deflation is not the problem. It is the solution to the problem (the problem of too much deft, too much liquidity, overpriced assets). Deflation does become a problem eventually, much later, but not now. And when deflation does becme a problem, there is a way to fix that problem; with inflation, and lower interest rates.

    I realize you cannot let yourself see this version of reality, a flud version, where day flows into night and night flows into day. There is a reason you cannot allow yourself to see this reality. Because you are defending your view. Rigid defense of the Old World becomes a form of rigor mortis. When this view eventually shatters, as it always does, then your view will flow into its opposite, and become its hardening opposite. Self-love flows into self-hate; becomes judgment of the local creed.

    Because you can only see one side of the equation, the raising of interest rates yu see as anathema, sinful, evil also. You see how mad that is. Interest rates, to be an effective mechanism, must be used in both directions, not just one.
    Jan 28, 2015. 02:34 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    Believe it or not, David, 'negative feedback' is part of the learning cycle. Unbalanced behavior (and massive debt is unbalanced behavior) generates pain of lost dreams in order to re-announce the wisdom of balance. You don't get the BOOM without the (shadowy) BUST. You want only half the experience of life, the pleasant half, the beautiful half: the success half.

    Every generation goes through hell and then through heaven. That is the plan. That is the law. My parents had hell in the first half of their lives; and heaven in the second half. The truth is, however, that the hell of depression and lost dreams for my parents was also a kind of heaven; and the heaven of material gain in the second half of their life, was also a kind of hell (on the inside). Hell has a heavenly side (shared discomfort and collective suffering you might call it); and the Heaven of material gain has a hellish inner side (isolation, fear of failure, lonely triumph).

    If you see things as always only either black or white you do not see the world accurately. Heaven and Hell are always very close to each other, not separated by vast amounts of space.
    Jan 28, 2015. 02:07 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    Yes. But if one truly understands that there is NO Perpetual Growth, then periods of non-growth must be dealt with politically rather than monetarily.

    Let the Republicans and their Capitalist religion rule during the Day-Cycle (1983-2001; 2019-2037) and let the Democrats and their Socialist religion rule during the Night-Cycle (1965-1983; 2001-2019). Let each understand that their rule is not permanent, is periodical, and requires their winningness to get into temporary retirement for 18 years. This would get us closer to the truth than a faux monetarism that seeks to simulate growth with perpetual interest rate repression that destroys the currency system of the world.
    Jan 28, 2015. 01:57 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]
    The priinciple of GREED does not just suddenly quietly leave the building. GREED is a habit and a pattern of behavior that, sadly, does not usually surrender but which probably needs to be executed, overthrown.
    Jan 28, 2015. 01:53 PM | Likes Like |Link to Comment
  • The Deflation Threat [View article]

    Always good to read you. "Fallen prices" used to be 'falling prices'. It is a process of course. Yes, there will be pain. Look at American history and you see MANY deflation cycles that caused pain, great pain. But America recovered. The deflation did not last for ever. Why will it last for ever this time?

    The owners of debt make out like bandits during deflation if they get bailed out by the government. But if they have to eat the default, then they don't make out like bandits. Banks fail. They always have. And those that take the most foolish risks SHOULD fail. How else do they learn? (I'm convinced they learn only in the short run -- but when the next 'temptation to great gain through great risk' period appears, as it does every 36 years, then many will fall for the mortal temptation again -- so I'm not sure most people do learn in the long-run.)

    Of course, there is a great 'moral hazard' (have to love that phrase) that as long as the government bails out those who fail greatly they will never be motivated to limit risk. Those who choose great risk should be rewarded when they succeed but they also MUST be punished when they fail, not bailed out by the tax-payer. Who heard of such a system that rewards both sucess and failure.

    Inflation is a season, that does end. Deflation is a season, and it also ends. If the fear is that the deflation season will never end, so we use false monetarism to prolong the inflation season for ever, we lose the regenerating mechanisms of both seasons -- we die a slow death by suffocation. See Japan for an example of this.

    In truth, the very rich are afraid of losing a dime of the money they made during the Great Inflation (1983-2001); and so they are getting the government to use the taxpayer to subsidize their losses during the Great Deflation (2001-2019), which is a horrible feudalism that will lead eventually to a political meltdown (Greece is just the beginning) that the rich will deserve, because of their overriding greed. This is the greatest theft of public money in the history of the world. Where is the moral indignation in people? Do they not understand this for what it is? Or are we all just morally dead?

    Inflation does end; deflation also ends. That is part of the magic of Nature. Winter ends; Spring begins; Summer growth ends; Autumn harvest begins and then becomes Winter. It is a very good system.
    Jan 28, 2015. 01:44 PM | Likes Like |Link to Comment