Rare Commodity

Modern economists are prone to shouting fire in a crowded theater.  The world is full of seeming incongruences. Economists puzzle over things like population growth and arable acres of farmland. They project out a linear scenario of increasing divergence, and see a catastrophe in the making.

 

Professional scaremonger Thomas Robert Malthus, one in a long line of scarcity prophets who failed to recognize the capacity of human ingenuity and free markets to solve the perceived problem of “finite resources”. The effects of demographics are the exact opposite of what the scarcity scaremongers claim: there is no overpopulation problem based on the allegedly “limited carrying capacity” of the planet (as an aside, note that most of the land area of the planet remains completely devoid of people). On the contrary, the more human beings there are, the more tacit and outright knowledge exists and the more ideas and innovation can be tapped for the benefit of all – provided a free market remains operative. Unfortunately, the free market and its “anarchy of production” as Marxists used to derisively refer to it, is precisely what the scarcity prophets ultimately attack – since their demands can only be fulfilled by applying the most vicious statist coercion. [PT]

 

Yet it is beyond individual human capacity to precisely fit each piece of the puzzle together, particularly where the shapes and numbers of pieces are continuously changing.  That is what markets are for; to make real time corrections and adjustments, which keep things from slipping too far into disorder.

Most of the time markets work remarkably well.  But occasionally, and especially where governments have commandeered a nation’s economy or its money, disaster strikes. That’s when it’s time to get out of Dodge.

Today we greet you from beyond the outer margins of civilization.  Here in Joshua Tree, in Southern California’s High Desert, we are on a quest to unearth a rare and valuable commodity.  One that is in low supply and high demand in our day to day activities. Perhaps it is in low supply and high demand in yours too.

Specifically, the rare and valuable commodity we are after is silence.  We don’t get enough of it.  We need more of it.

 

The silence of outer space, where Neptune the Mystic sails on the silent wings of noise while reflecting on the ironclad principles of probabilistic processes (we’ll let you know when he comes up with a definitive theory). [PT]

 

Without question, silence is an essential element needed to think, contemplate, and discern just what in the world is going on.  Silence is also essential for lucid conjecture.  Without silence, it is near impossible to rise above the noise and distractions, and peer out beyond the horizon to see what’s coming.

Yet silence is not all that we are after out here in the middle of nowhere.  We are also after perspective and empirical awareness.  We want to observe how it is that anything lives in these bleak and rugged conditions. We also want to understand where and where not to go when the time comes to get out of Dodge.

The wickedness we see developing just beyond the horizon has been gathering for some 80 years.  We are talking about nearly $70 trillion in combined public and private debt. This debt is supported by about $20 trillion in nominal GDP.

 

Total US credit market debt vs. nominal GDP – an ever widening gap. Eventually, something will have to give. It is not debt per se that is “bad” – it is the fact that much of it has supported overconsumption and malinvestment of capital. In other words, real wealth was diverted into unproductive channels and much capital was consumed. This is a process that will indeed turn out to have a limit. [PT]

 

Conversely, the GDP, which is an abstraction, is supported by the extraordinary levels of debt. How can the GDP support all this debt while all this debt simultaneously supports the GDP?

Over an extended period, the impossible can be made possible with greater and greater issuance of debt.  But ultimately, a giant pyramid of debt that is constructed on top of a faulty foundation of debt based collateral always comes crashing down. That’s a fact.

Hence, a complete financial meltdown and mass debt reckoning that reverberates through the economy for several decades is in order.  There is no way to stop it. So we must learn to delight in it.  Even in the harshest of conditions, there are still things to be grateful for… if you stop to count your blessings.

 

Finding Perfection In A Strange Land

Sunrise is always perfect at Joshua Tree National Park.  As the day eclipses night, and countless stars fade away, the desert landscape dances about in a state of magic.  From Cholla Cactus Garden, the sun peeks over the eastern horizon like a glowing orb.

 

Cholla Cactus Garden in the Joshua Tree National Park [PT]

Photo credit: Axel

 

The sky’s colors dramatically sequence from purple, to pink, to orange, and then yellow.  The brightening sky also awakens the winds, which propel the color glinting clouds across the expansive sky like a twisting kaleidoscope.  Our words cannot properly describe it.  Our eyes could not hold onto it.

Alas, the enchantment is fleeting.  Soon the colors dwindle and the potent desert sun takes over.  Before long it feels like you’re walking through a gigantic oven.

Here at the confluence of the high Mojave Desert and the low Colorado Desert, the landscape functions with a rugged imperfection.  Massive boulders and outcrops, sharp and rocky mountains, dry low-lying cactus, abandoned gold mining prospector pits, and expansive desert valleys characterize the setting.

Fringe-toed lizards use their webbed feet to dart across the loose blow sand.  Ground squirrels rise up on their hind legs like homo erectus and stare at you with a frozen gaze.  This, indeed, is a really strange land.

 

In case you were wondering: meet the fringe-toed lizard Uma Inornata (unadorned Uma).

Photo via reptilefact.com

 

Getting Out of Dodge

The namesake Joshua Tree dots the landscape and has an appeal that grows over time.  At first look, a Joshua Tree appears to be some sort of deformed mutant.  Is it a cactus or is it a tree?

As far as we’re concerned, the answer doesn’t matter.  Each Joshua Tree has been warped and twisted about by the hot desert winds in its own unique and sometimes eccentric character.  What to make of it?

Mormon pioneers, upon first observing the curious trees, thought they saw the likeness of Joshua of the bible; the extended limbs appeared to them as Joshua with his upraised arms.  They named the trees accordingly.

The Cahuilla Indians, who somehow inhabited the area long before westerners ever passed through, used Joshua Tree fibers to make sandals and nets. Branches were used to make quail traps.  The spirits of dead men tell these tales through the petroglyphs etched on the rock formations.  To our untrained eye this rock art appears to be the scribbles of a 3-year old.

 

A bunch of Joshua trees in the process of surrendering. Their ancestors may have immigrated from France (sorry, we couldn’t resist…). [PT]

Photo credit: NPS/Larry McAfee

 

Apparently, the secret to the Cahuilla Indians’ survival in these hard conditions was their ingenuity.  Where most people saw a barren desert, the Cahuilla saw a land of plenty.  According to Archaeologist Charlotte Hunter, 121 plant species have been identified as having been used for food, medicine, or as raw materials for making objects.

As a practical area to go to when getting out of Dodge, Joshua Tree is not a long-term option. Only the craggiest of desert rats can survive out here for an extended period. Nonetheless, there is an abundance of silence out here.  If you are in need of this precious commodity, this locale is worth the visit.

 

Traditional Cahuilla desert dwellings and portraits of Cahuilla people [PT]

 

Chart by: St. Louis Fed

 

Chart and image captions by PT

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • America Goes Full Imbecile
      Credit has a wicked way of magnifying a person’s defects.  Even the most cautious man, with unlimited credit, can make mistakes that in retrospect seem absurd.  But an average man, with unlimited credit, is preeminently disposed to going full imbecile.   Let us not forget about this important skill...  [PT]   Several weeks ago we came across a woeful tale of Mike Meru.  Somehow, this special fellow, while of apparent sound mine and worthy intent, racked up...
  • Retail Capitulation – Precious Metals Supply and Demand
      Small Crowds, Shrinking Premiums The prices of gold and silver rose five bucks and 37 cents respectively last week. Is this the blast off to da moon for the silver rocket of halcyon days, in other words 2010-2011?   Various gold bars. Coin and bar premiums have been shrinking steadily (as have coin sales of the US Mint by the way), a sign that retail investors have lost interest in gold. There are even more signs of this actually, and this loss of interest stands in stark...
  • Credit Spreads: Polly is Twitching Again - in Europe
      Junk Bond Spread Breakout The famous dead parrot is coming back to life... in an unexpected place. With its QE operations, which included inter alia corporate bonds, the ECB has managed to suppress credit spreads in Europe to truly ludicrous levels. From there, the effect propagated through arbitrage to other developed markets. And yes, this does “support the economy” - mainly by triggering an avalanche of capital malinvestment and creating the associated boom conditions, while...
  • Gold Divergences Emerge
      Bad Hair Day Produces Positive Divergences On Friday the ongoing trade dispute between the US and China was apparently escalated by a notch to the next level, at least verbally. The Trump administration announced a list of tariffs that are supposed to come into force in three week's time and China clicked back by announcing retaliatory action. In effect, the US government said: take that China, we will now really hurt our own consumers!  - and China's mandarins replied: just you wait, we...
  • Industrial Commodities vs. Gold - Precious Metals Supply and Demand
      Oil is Different Last week, we showed a graph of rising open interest in crude oil futures. From this, we inferred — incorrectly as it turns out — that the basis must be rising. Why else, we asked, would market makers carry more and more oil?   Crude oil acts differently from gold – and so do all other industrial commodities. What makes them different is that the supply of industrial commodities held in storage as a rule suffices to satisfy industrial demand only for a...
  • Chasing the Wind
      Futility with Purpose Plebeians generally ignore the tact of their economic central planners.  They care more that their meatloaf is hot and their suds are cold, than about any plans being hatched in the capital city.  Nonetheless, the central planners know an angry mob, with torches and pitchforks, are only a few empty bellies away.  Hence, they must always stay on point.   Watch for those pitchfork bearers – they can get real nasty and then heads often roll quite literally....
  • Lift-Off Not (Yet) - Precious Metals Supply and Demand
      Wrong-Way Event Last week we said something that turned out to be prescient:   This is not an environment for a Lift Off Event.   An unfortunate technical mishap interrupted the latest moon-flight of the gold rocket. Fear not true believers, a few positive tracks were left behind. [PT]   The price of gold didn’t move much Mon-Thu last week, though the price of silver did seem to be blasting off. Then on Friday, it reversed hard. We will provide a forensic...
  • Merger Mania and the Kings of Debt
      Another Early Warning Siren Goes Off Our friend Jonathan Tepper of research house Variant Perception (check out their blog to see some of their excellent work) recently pointed out to us that the volume of mergers and acquisitions has increased rather noticeably lately. Some color on this was provided in an article published by Reuters in late May, “Global M&A hits record $2 trillion in the year to date”, which inter alia contained the following chart illustrating the...
  • Cryptocurrency Technicals – Navigating the Bear Market
      A Purely Technical Market Long time readers may recall that we regard Bitcoin and other liquid big cap cryptocurrencies as secondary media of exchange from a monetary theory perspective for the time being. The wave of speculative demand that has propelled them to astonishing heights was triggered by market participants realizing that they have the potential to become money. The process of achieving more widespread adoption of these currencies as a means of payment and establishing...
  • The Fed's “Inflation Target” is Impoverishing American Workers
      Redefined Terms and Absurd Targets At one time, the Federal Reserve's sole mandate was to maintain stable prices and to “fight inflation.”  To the Fed, the financial press, and most everyone else “inflation” means rising prices instead of its original and true definition as an increase in the money supply.  Rising prices are a consequence – a very painful consequence – of money printing.   Fed Chair Jerome Powell apparently does not see the pernicious effects...
  • A Walk on the Wild Side
      A Walk on the Wild Side   “Never play cards with a man called Doc.  Never eat at a place called Mom’s.  Never sleep with a woman whose troubles are worse than your own.” – Nelson Algren, A Walk on the Wild Side   Fresh Fruit or Rotting Vegetables? A subtle gas seems to always be vented into the atmosphere at the sunset of an extended bull market.  As the light fades, an odor that’s indiscernible from that of fresh fruit or rotting vegetables wafts down...

Support Acting Man

Item Guides

j9TJzzN

The Review Insider

Dog Blow

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com