Imminentizing the Eschaton
(or how to avoid living off baked beans in a cave whilst everyone else is partying like it's 1964)
‘Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.’ Once the currency is corrupted, very little in a society will remain just and moral, which then disrupts the trust that is the foundation upon which human interaction is based. That in turn disrupts the pursuit of happiness.’ ~ Money & Liberty — James Turk (2021)
“Old man shouting at clouds syndrome” is how, some two years ago, one reader - a rabbi, if I remember correctly - of Pitchfork Papers, characterised the tendency to complain about the state of the world without actually doing anything to change it. Duly noted.
I suppose I would have to raise my hand and admit that I am a fully paid-up member of what is a fairly vocal, robust albeit marginal in the grand scheme of things community of cloud-shouters some famous, like Peter Schiff, Grant Williams, James Rickards and latterly even Stanley Druckemuller plus a raft of not quite so well-known but often equally erudite commentators, analysts, investors and economic thinkers who are convinced that sometime soon, perhaps very soon, this awful shitshow masquerading as a monetary system will come to an abrupt end and not before time.
However, it must be said for all of our doomsaying, we have been surprised by the consistent exercise of sheer brute political force expended to keep the show on the road, kick the can down the street, and whatever other clichés have come to describe the persistent unwillingness to allow market forces to do what they are supposed to. The primary function of said markets being the regular cleaning out of the malinvestments rife in an economy and the establishment of a long-term rate of risk-free interest consistent with maintaining the value of money over time. Given that the mallest of all these deployments of national treasure is the vast system of entitlements built up over the postwar period now compounding at a frightening rate, it is hardly surprising that those responsible for hawking these empty promises should be fighting tooth and nail to ensure that the greatest Ponzi scheme in the history of mankind should not become exposed on their watch. (The Cato Institute recently published estimates that tax rates would have to rise immediately by 50% in the US in order to have a chance of preventing the entire entitlement system from bankruptcy).
However, pointing out that there is something more than rotten in the state of Denmark and extrapolating that rottenness to its inexorable conclusion is a tricky business and one that has dashed more than a few careers on the rocks of governmental intransigence in the face of the forces of economic physics. As Morgan Stanley’s Chief Investment Strategist, Barton Biggs famously quipped, “Being right too early is almost indistinguishable from being wrong.”. Look to Douglas Casey whose excellent book “Crisis Investing” published in 1980 and which I reviewed in 2020 on its 40th anniversary, was tightly argued, well-founded. And entirely wrong.
If I ever get too caught up in my eschaton imminentizing, I return to this, my favourite sketch from the Secret Policeman’s Ball, a 1979 charity gala performance at Her Majesty’s Theatre, London for the best five minutes of comedy on record. Also applicable to all climate catastrophists everywhere.
My understanding of our world is framed by a fairly simple heuristic, namely that money determines morality and that the quality of a society’s money will eventually dictate the level of decay or entropy in it. The reason is quite simple and is captured in Aesop’s fable of the ant and the grasshopper. Our ability to extend our time preference of consumption from now to later determines the outcome of our life and always has for our species. The ability to survive the next winter is predicated on our willingness to both store some of today’s harvest for later consumption and for seed stock for next year’s harvest. Wealth is created when we postpone consumption of today’s income, and spend less than we earn to create savings. Those savings - the amount over and above what is needed to restock - are then converted into capital when they are invested in economic goods, such as machinery or production technology, either directly (in a factory) or indirectly (in the shares or bonds of a company that owns a factory), which then form the basis of future consumption. This is how wealth is built and holds true for individuals as well as for societies.
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