Non-linear Historical Development

We can extract linear trends, of growth and decline, in history (see The Story of Europe) but at a closer look it seems that history moves in a non-linear line. This expression is used, these days, very widely; people say that things do not go in a straight line, but what does that mean exactly?

In this post we will be looking at a graph that represents non-linear development. This graph is not the representation of a quantity but rather a quality, this is very important to understand and some might find it difficult to comprehend but in reality we experience this duality of quantity and quality on daily basis without noticing. Let us now examine a graph of non-linear historical development:

A Poetic Pause (2)

To coin newfangled wagers, and to lay ‘em,
Laying to lose, and losing not to pay ‘em;

 -Charles Churchill

Buying the Farm

“Buy agricultural land.”

-Nicole Elliott, Mizuho Corporate Bank-Speaking on CNBC

When I heard the senior technical analyst of an investment bank suggests buying agricultural land I almost fell off my chair, not because of the strangeness of the advice but rather because of the strangeness of the messenger. People who work in the financial world never advise you to take your money out of the system. It is worth noting that Nicole Elliot is a foreign exchange analyst and she is well aware of the real value of fiat currencies, namely none. Others are saying similar things:

A Poetic Pause (1)

                                          But, what was shocking,
Her small snow feet had slippers, but no stocking. 

-Byron

Good Times are Coming-The Permafrost is Melting

The sea ice in the arctic zone is melting, as the conditions of the sea change the permafrost is going to melt very rapidly (3.5 times greater than the average 21st century warming rates predicted in global climate models). The melting of the permafrost is going to release huge amount of CO₂ into the atmosphere (increasing it from 30% to 100%), which will function as a strong positive feedback into the warming mechanism. The bottom line is that good times are coming as the permafrost melts [research, thanks to Open Mind].

 As the permafrost melts the great plains of Siberia will be mild enough to grow cereals, solving the world’s food problem. The mighty rivers of Siberia will support hundreds of millions of people each (Egypt’s population is 70 million compared with Libya’s nine, all thanks to the river), this will solve the world’s overpopulation problem. The warming up of the northern hemisphere will cut the consumption of energy for heating that will elevate the world’s energy problem.

Weekly Lesson (16)

“Without acquiring the habit of elementary participation in civil affairs, without acquiring the feelings of a citizen, the male child grows up and becomes middle-aged, and then an elderly being of the masculine gender, but he does not become a man or, at any rate, not a man of a noble character.”

-Nikolai Chernyshevsky [my emphasis].

Defining Inflation

Introduction

In The Magical Jet Engine and Global Monetary Disconnect I wrote about a war in the realm of pure thought between those who see deflation and those who see inflation accruing in the economy. The inflation is proven by many charts that show the increase in the price of gold, oil, metals, food, etc., while deflation is proven by first stating the formal definition of inflation: “net increase in money supply and credit”, then a multitude of charts are given to prove that the sum of credit and money supply is decreasing and thus there exist a deflation.

“Before we can begin any discussion, it is imperative to agree on the meaning of terms. I happen to believe in Austrian economics and the definition I use when I speak of inflation is a net increase in money supply and credit. Deflation is the opposite, a net decrease in money supply and credit. For more on those definitions as well as rationale for discarding seven other definitions, please see Inflation: What the heck is it?“

-Mike Shedlock, Deflation In A Fiat Regime?

This definition is fairly young-twentieth century-so its not some ancient wisdom or holy commands set in stone. Despite its youth it originated in a time wholly different than ours, a time when there was a fixed reserve of gold anchoring the value of fait fiat currency, thus an increase in money supply and credit was the only factor in determining the inflation/deflation question, those innocent days are long gone now.

Shattered

Two Lines

The following graph is from St. Louis Federal Reserve Bank:

Click to view

Blue line: ‘Total Borrowings of Depository Institutions from the Federal Reserve’

Red line: ‘Non-Borrowed Reserves of Depository Institutions’

From the red line we concluded that US banks are insolvent, from the blue we concluded that the Fed (Federal Reserve) has assumed their liabilities. The result will be a terminal decline of the dollar (to zero) causing hyperinflation.

Meat!

Hay & Grass

The English say ‘make hay while the sun shines’ meaning that one should take advantage of the circumstances before they change. I didn’t really understand this saying-the literal and figurative understanding that I like to have of sayings-until I saw a television program about life on an English farm circa 1620. The program explained that English farmers would cut the wild grass growing in the meadows near their farm and leave it in the sun to dry, and then they would gather the dry grass, i.e. hay, and store it in a weatherproof barn. The hay would sustain their animals-cow sheep goat-through the winter. The saying should really be ‘dry grass while the sun shines’, which makes sense by itself with no need of agricultural knowledge.

This method of providing feed is peculiar to the northern regions while those who live in lower altitudes move their animals to the valleys in the winter and to the hills and mountains in the summer, taking advantage of the different climate between high and low areas and mirroring the behaviour of wild goats.

Further south people are forced to travel hundreds of kilometres in search of pasture, adopting a nomadic lifestyle to sustain themselves in harsh arid conditions. The nomadic life is the one most like the natural state of grazing animals, who travel exceptionally long distances-whether in the savannah or the tundra-in search of their main diet: wild grass.