September 15th, 2018 11:19 PM
—“You predicted the 2020 crash in 2006, right before the 2008 meltdown? Could you compare and contrast the 2008 crisis with what you see coming, and perhaps how the 2008 housing crash ties in to 2020?”—
1 – In the end all economics like all politics is and must be demographics. That’s the net of it right there.
2 – World demographics on the adoption of consumer capitalism and the exhaustion of western advantage.
3 – Western demographics, immigration, and rates of dysgenia will tip sufficiently to act as last resort.
4 – Since every generation is a reaction to the generation before it, people behave in predictable cycles.
5 – The long wave of generations means the world war generations are gone and the communist generation is almost gone.
6 – People school and swarm to opportunities until disequlibrium requires adjustment of patterns of sustainable specialization and trade because of a sufficient shock to collapse them. There is a relationship between the capital investment, debt load, remaining debt capacity, AND the discovery, forgetting, and learning curves of humans that is measurable in all walks of human life: we are new people about every three to four years: the time it takes to cognitively rehabituate so that we no longer bear the cognitive load of group adaptation to changing conditions. So there is a fairly fixed rate of adaptation that is a relationship between the degree of capital required for any sector.
7 – The business cycle exists and the austrians are right that they continuously extend if interfered with. This plot (trajectory) is relatively obvious.
8 – Consumers are literally running out of accumulated entertainment capital to consume. They have been for some time. Much of the expansion of the 90s and 2000’s was expansion of homes to keep the economy generating demand, and use of technology to enable increases in the consumption of entertainment. That inventory is exhausted.
9 – The technological curve of monetary policy appears to have been exhausted, and the next choice is not settled in policy as to whether to use direct redistribution to consumers (me, galbraith, mmt folks), or to let the government spend it instead (every left economist there is.)
10 – The technological curve of the transistor’s influence is almost exhausted, as was electricity’s, steam, and water power before it.
11 – organizing people by markets requires marginal differences in capital and the human capital reserves to make use of them. Those reserves are just about exhausted.
12 – low hanging fruit of hydrocarbons exploitation has been exhausted; movement of labor has been exhausted; the clerical automation is close to exhausted, and the financialization has led to fragility dependent on hyperconsumption, but consumption of what? We are no longer, and have not for many many years, been enabling underused european human capital, but importing consumers by financing credit in exchange for drastic declines in human capital as is evidenced in the data.
13 – There is, as I understand it, a relatively long curve between the current technological basis of civilizations, and the next predictable curve which is artificial intelligence, end of oil dependence, and genetic modification. I cannot yet imagine how the economy will organize to produce the same kind of multiples we have been producing since 1830 by the movement of labor from less productive to more, when we will now be in the position of moving labor into less and less productive ends. This means that the bottom has returned to dead weight, and the central problem going forward
14 – The way I predicted the economy when I was in my 30s and 40’s was studying the relationship between technological opportunities that could be seized by consumers and industry, right down to what was on the shelves in big box stores. And then predicting the life cycle those offerings. (I mean, how much better can a video game get?) The reason is that we have spent the past 200 years moving people into the middle class (meaning living in, able to consume in, and to own property, in the market economy.) But what do people have left to consume that is a marginal im provement? NOTHING BUT AESTHETICS AND STATUS SEEKING IDENTITY. Which is precisely what we are seeing. Urbanites using fashion because consumption of middle class goods is no longer status provisioning.
All of these things can be predicted on a series of overlapping curves on a timeline with ‘loose’ accuracy. Once you consider all of those curves at the same time the interplay of dependency becomes fairly obvious, and you can ‘feel’ how the sentiment will evolve. By 2006 I had that set of curves in my head. Which is why I was within 30 days of 2008. (but wrong on china). And I’ve been right about the cycle so far. Trump was a wild card and now i suspect that actions against him will produce movement that accelerates the cycles.
Now am I all that special? no. There was a fairly well known niche movement in the 90’s and 2000s (contrarianism) that was tracking these cycles, and making predictions. I am not really sure why, given that those were correct and that the austrians were correct, why this isn’t still under discussion other than the overwhelming embarrassment of the economic community, and its movement from broad to near predictions, and the current worldwide civil war between globalists and nationalists has taken attention from prediction of long waves, to simply winning the near term battle.