Financial topics

[Higgenbotham]

Moreover, with our fiat system, what is to stop...from simply printing money and using it to buy equities?

If the Fed wants to prop up the market it can just loan money cheap enough and long enough that someone thinks they can make a profit borrowing money and buying stocks. For example, if they loaned Goldman Sachs money at 2% for 30 years they could buys some gold stocks and expect to make a profit. So the Fed does not need to buy the equities themselves to prop up the market.

They may want to keep it secret or at least reduce the paper trail by keeping the operation in house. I have no idea. I'm not well connected enough to speculate on how, why, or whether it is happening at all. I do smell a rat though.

[John]

Dear Marc,

> "I'm likewise thinking that that most volatile, worrisome
> potential conflict in the world also involves China. However, I'm
> respectfully thinking that a major conflict with China would not
> happen until towards the end of the decade or maybe even a bit
> past it. While I know that there is the ascendancy of the
> hotheaded "Chinese Generation-X" that is picking up in 2012, I'm
> thinking that significantly more tension and significantly more
> military buildup on the part of China will be a likely
> prerequisite to any major global conflict involving China. But
> again, I have no crystal ball here.

> However, if some sort of "Clash of Civilizations" world war were
> to occur in 12–18 months, this would create an "out-of-whack"
> Fourth Turning and associated saecular cycle, akin to the American
> Civil War's effect on that particular Fourth Turning in America
> and its associated saecular cycle. —Best regards, Marc"

I'm not sure why you believe this, but it's not supported by theory.

What I found is that a new crisis war can begin 50-70 years after the
climax of the previous crisis war, or sometimes even later. The
greatest number of times, the next crisis war begins 58 years after
the climax of the previous crisis war. In the case of China, this
would be 1949+58=2007, so China is overdue for its next crisis war.

A crisis war is different from a non-crisis war in that it's usually
purely emotional and far less rational. The South fired on Fort
Sumter when they didn't have a prayer of beating the North. Japan
bombed Pearl Harbor when they didn't have a prayer of defeating the
U.S.

China could not today force a U.S. surrender, but that wouldn't stop
them from attacking Taiwan - which is a battle that they would win.
And I don't believe that they're going to wait too much longer to do
it.

John

[thomasglee]

Moreover, with our fiat system, what is to stop...from simply printing money and using it to buy equities?

If the Fed wants to prop up the market it can just loan money cheap enough and long enough that someone thinks they can make a profit borrowing money and buying stocks. For example, if they loaned Goldman Sachs money at 2% for 30 years they could buys some gold stocks and expect to make a profit. So the Fed does not need to buy the equities themselves to prop up the market.

That's what I've been saying for months now... when a "bank/brokerage house" can borrow at 0% interest, they've nothing to lose by throwing it into the market, running up the price of stocks, then dumping it and making 10% in just a few days (hell, hours). Just keep doing this and it keeps making the market look like everything is OK. That's why there have been such wild swings (up 300 one day, down 200 the next, etc., etc.). It's all a farce and the sheeples, for the most part, are falling for it; "oh look, the market is up! Things are turning around! Let's head to Vegas for the holidays.... I'll get that job after the new year... no worries, let's spend our savings".

[thomasglee]

A crisis war is different from a non-crisis war in that it's usually
purely emotional and far less rational. The South fired on Fort
Sumter when they didn't have a prayer of beating the North. Japan
bombed Pearl Harbor when they didn't have a prayer of defeating the
U.S.

China could not today force a U.S. surrender, but that wouldn't stop
them from attacking Taiwan - which is a battle that they would win.
And I don't believe that they're going to wait too much longer to do
it.

John

That's what I've come to learn from studying your site. China doesn't (and won't) have to act "rational". A matter-of-fact, by definition of sorts, they'll HAVE to act irrational. I also do not believe they are going to wait too much longer to do it. The death of KJI really gives China a VERY strong hold in the north now as KJU will do whatever the Chinese want, whereas, KJI still wanted to keep some semblance of anonymity and to project that the norKs were their own masters. That's all changing.

the ROK is really worried about China's recent aggressive stances. A lot of their new military programs aren't directed so much at north Korea as it is China.

Korea is pushing to revise a bilateral pact with the United States that limits the former’s ballistic missile range to 300 kilometers with a maximum payload of 500 kilograms. They seek relief that will allow them to increase the missile range from 300 to 800 kilometers and the warhead from 500 to 800 kilograms. They really want a range of 1,000 km and a payload of more than a ton. Not only would that cover all of north Korea, but it would also put Beijing within range.

I also know that the ROK and ROC are cooperating extensively on EW/ELINT programs. The military in that part of the world is full well expecting war sooner rather than later.

[John]

Thanks, Thomas, that's good information.

John

[Trevor]

I think Taiwan's policy is to make an invasion of their country costly enough to where China would decide it's not worth conquering. A good part of it is mountain, which is very difficult terrain to fight in, which we found out in Afghanistan. However, since they're in a crisis era, China will conquer them regardless of the cost, but that cost will be higher than they think at the moment.

When it comes to the U.S. fighting China, I'd prefer fighting them when victory is pretty certain versus when it's in serious doubt.

With the stock market and the coming collapse, I'm expecting it once Greece defaults, setting off a chain reaction. Once that happens, war won't be far off.

[thomasglee]

I think Taiwan's policy is to make an invasion of their country costly enough to where China would decide it's not worth conquering. A good part of it is mountain, which is very difficult terrain to fight in, which we found out in Afghanistan. However, since they're in a crisis era, China will conquer them regardless of the cost, but that cost will be higher than they think at the moment.

When it comes to the U.S. fighting China, I'd prefer fighting them when victory is pretty certain versus when it's in serious doubt.

With the stock market and the coming collapse, I'm expecting it once Greece defaults, setting off a chain reaction. Once that happens, war won't be far off.

Taiwan is mountainous, but all the major cities are coastal or in the flatlands. Taiwan is deploying a lot of their EW/ELINT systems in their mountains and they do have strong fortifications in the mountains, but if China controls the major cities/ports, for all intents and purposes, Taiwan will have lost the war.

As John has pointed out, China will not think/act rationally once they decide to take Taiwan.

I too would rather we fight sooner than later (only because we will then have the advantage), but with the advent of supersonic anti-ship missiles, we are falling behind very fast. The reason for our new bases in Australia is because even our own Navy knows our fleets are losing their advantage. It's all very interesting watching this develop. Just think if the masses had mass communications before WWII as we do today.

Is technology quickening or slowing the pace to war? Is technology quickening or slowing generational dynamics? Those are two questions that I suppose won't be able to be answered until history is being written AFTER the fact.

[Marc]

Dear Marc,

> "I'm likewise thinking that that most volatile, worrisome
> potential conflict in the world also involves China. However, I'm
> respectfully thinking that a major conflict with China would not
> happen until towards the end of the decade or maybe even a bit
> past it. While I know that there is the ascendancy of the
> hotheaded "Chinese Generation-X" that is picking up in 2012, I'm
> thinking that significantly more tension and significantly more
> military buildup on the part of China will be a likely
> prerequisite to any major global conflict involving China. But
> again, I have no crystal ball here.

> However, if some sort of "Clash of Civilizations" world war were
> to occur in 12–18 months, this would create an "out-of-whack"
> Fourth Turning and associated saecular cycle, akin to the American
> Civil War's effect on that particular Fourth Turning in America
> and its associated saecular cycle. —Best regards, Marc"

I'm not sure why you believe this, but it's not supported by theory.

What I found is that a new crisis war can begin 50-70 years after the
climax of the previous crisis war, or sometimes even later. The
greatest number of times, the next crisis war begins 58 years after
the climax of the previous crisis war. In the case of China, this
would be 1949+58=2007, so China is overdue for its next crisis war.

A crisis war is different from a non-crisis war in that it's usually
purely emotional and far less rational. The South fired on Fort
Sumter when they didn't have a prayer of beating the North. Japan
bombed Pearl Harbor when they didn't have a prayer of defeating the
U.S.

China could not today force a U.S. surrender, but that wouldn't stop
them from attacking Taiwan - which is a battle that they would win.
And I don't believe that they're going to wait too much longer to do
it.

John

Hi, John,

Thanks for the insights and feedback. To kindly address the concern you raise with my thoughts, I'd have to first of all say that I actually do think that my prediction (which is, again, just a prediction, not anything guaranteed) actually does basically align with your Generational Dynamics theories, at least in my humble opinion. In other words, both the United States and China are in Crisis periods, and I can really see something "brewing" in regards to Taiwan during this co-Crisis period for the US and China. However, given what seems to strike me as a willingness and amazing ability to globally kick the financial can down the road, the high levels of appeasement and restraint that are being tossed out, and that China would need to spend at least a few more years to really ramp up its naval infrastructure (and probably its air force, too) to really at least "semi-sensibly" go after Taiwan and any of its allies (despite China's anti-ship ballistic missiles, its tons of human fodder, and its increasingly hotheaded Chinese Gen-X'ers increasingly placed in leadership positions), I'm thinking that a major military blowup here is apt to come towards the end of the US-China Crisis period (akin to how the US didn't enter World War II until late in America's prior Crisis period), as opposed to an "early Fourth Turning military blowup" akin to what happened in the American Civil War.

And, if the US were to get into a total war with China and its "Axis" allies starting around, say, 2020 or even a bit later, this would mean that the next American Crisis War occurred not too much after 70 years after the end of the prior American Crisis War. This would make the next American (and Chinese) Crisis War still reasonably fit in with your projected timeline for when it all needs to happen.

Again, that's just my educated conjecture; as history and current events aren't an exact science, you never know when the "what" is going to exactly happen — but just like those who are predicting a stock-market collapse in the near future, you can oftentimes give, as Generational Dynamics would agree, an educated "range guess" that a "gray swan" event is likely to happen, say, "in a few years or maybe up to a decade or so down the road." Any further comments, if any exist, are welcome. Thanks again for sharing your opinions and cogent insights. —Best regards, Marc

[Higgenbotham]

Any further comments, if any exist, are welcome.

Last March, Lily was saying China would probably move on Taiwan this Winter or shortly thereafter. I didn't find any of the links she posted in support of her ideas in agreement with what she posted. Some of her theories are somewhat convincing. One of my comments is reproduced below with her response. So far as I know, China's food importing requirements are minor in relation to their foreign currency reserves.

I believe that China is rapidly nearing the point where they will have to strike or lose their shot, and that the leaders of the Communisty Party *fully* understand this fact. They have in-depth plans ready to strike decisively at US naval power in possible conjunction with Iran, to invade India in possible conjunction with Pakistani elements for the purpose of distracting Chinese populace's attention from the famines and social devastation wracking the state, and to invade Vietnam with 300,000 troops and and seize all resources of water, raw materials and food.

The US economy will collapse soon, providing China with a once-in-history moment to slam a global hegemon with its pants down. The first move of their endgame is dumping dollars and US bonds to buy food. I think that their hand will be forced *this* coming winter, but I cannot see how it could be any later than the next winter after that.

I haven't read that Charles Nenner article; I'll have to go find it. But that accords with my own analysis as well, unfortunately. I think the descent into madness and blood will happen fast, like a veil passing. I desperately hope that I am wrong.

In keeping with that idea, I believe China realizes any struggle is likely to be quite protracted and complex. China, I believe, sees the US as more vulnerable economically and strategically than militarily.

This is unfortunately dead wrong. I will provide more data to back this assertion in just a sec. Draw your own conclusions, but do the research in depth and read everything skeptically. China expects and intends to prevail in a short, sharp "local war under high-technology conditions" against the United States. They have been preparing for this kind of high-end assymetrical war intensively at least since after Desert Storm, and they have raised it to an art form. China could almost certainly prevail over the US military in a matter of weeks or months, as of this very moment, now. The military balance has already tipped; but the artists of war on the other side have deftly hidden their prepared hand. What they have created is the next major world revolution in military affairs, at least comparable to that of the Nazi blitzkrieg. This tends to happen during crisis periods. During the modern era, not a saeculum seems to go by without a quite world-historically consequential revolution in military affairs. Not to say that they were responsible alone of course, but the renaissance Italian princes, Gustavus Adolphus, Fredrick the Great, Washington, Napoleon, Bismark, Sherman, Hitler, and Truman all reinvented warfare anew to strike down their opponents during a crisis generation. The same will happen this cycle, but it is the Chinese who have reinvented war and we who have fallen so dangerously behind their new understanding.

Speaking of political change, a classic technique well-known in Chinese military history is striking fiercly and suddenly at weak, indecisive, or unpopular rulers, in expectation that moral collapse at the top and consqeuent strategic paralysis will disarm them with a minimum of exertion. Obama is the classic weak imperial leader, and if the economy melts down before the 2012 election, he will lose for sure. All of the alternatives will be at least more aggressive, decisive, and consolidated than Obama, which means that his remaining rule is precisely the right time for China to strike. Then let the next team figure out what the hell to do!

Anyway, the point is, China absolutely sees the US as deeply and uniquely weak not just socially and economically, but militarily. By 2013, our historically-unprecedentedly weak leader will be replaced by one who is both more aggressive and decisive, and who has a more consolidated plutocratic power base. If China does not attack in 2012, by 2013 the impulse for the US to invade Iran will be overwhelmingly strong for many reasons. China will want to cripple us before we have a chance to maul their ally, so my money is still unfortunately on a dollar dumping move sometime next winter, followed by military strikes in Taiwan and SE Asia either immediately or (I'd guess more likely) within 2-6 months thereafter.

See, the thing is, the Chinese rulers aren't playing a careful Bobby Fischer style chess game. Think of it more like Hannibal Lector - stealthy, ruthless, manipulative, insanely savage and fast, unreasonably well-informed, precisely scientific, and pragmatically limited in focus.

[Trevor]

At least from my perspective, attacking the United States would be a big mistake for them. Still, people are quite good at deluding themselves, at least in crisis periods. Another reason we've perceived as weak is because our president's given that impression, at least from China's perspective.

In addition, their economy is collapsing and from what I've read, it's collapsing faster than ours has. Their bubble is massive and the larger it grows, the worse the crash is ultimately going to be.