Right or Wrong – The Dark Side of Human Nature

Right-Wrong

I greatly appreciate the confidence saying I am newer wrong. But on an individual level, NOBODY can possibly be right all the time. This is why I try to emphasize that the numbers are the numbers and that all we can do is watch how everything unfolds. I have no personal vision of the future and what I fear I would not say publicly anyway for that is just opinion. All I can do is say this is what has happened in the past and express what the computer says – not ME. The markets are the only infallible guide if you just listen.  Like the year-end closing for the Swiss. A closing above the 9700 level simply stated the 2011 low should hold. Had we closed below that, then new lows were possible. The number define the forecast – NOT my opinion. Most people forecast on what they “think” will happen. I do not play that game. My OPINION is no better than anyone else’s.

The key to analysis and trading is you must define where you are right and where you are wrong. The key here is long-term verses short-term. One thing I observed is that trying to predict the closing of whatever tomorrow will be infinitely much more difficult than predicting years in advance. The trend is in motion. Like the Swiss Peg, yes you can fight against the trend, but the trend will always win. So where the Dow closes tomorrow really means nothing to the long-term. That is just what we call noise. There are countless variables that will determine the closing of the Dow on a daily basis. But the trend determines the course of where you are headed. It is the difference between the daily weather and the 4 seasons.

What we are going through was set in motion decades ago. We cannot stop this if we tried and human nature says we wont try anyway. It is NOT that I am never wrong. Personally, that is just not possible. I try to qualify what I “think” from the model. The markets tell us what they are doing if we step back and look at the world as a whole. However, what I try to relay is  what all the markets are showing collectively. If we get signals in all, it is hard to be wrong for this is NOT my personal OPINION. You can see the future unfold in slow-motion.

The likelihood of me being wrong about the system imploding is about ZERO. Historically, no such system has ever survived no matter what form it has taken. That is not the question. The burning question is WHEN since all systems inevitably collapse just as we all must die. Many people have touted that QE1-3 would be inflationary. That was based upon OPINION for what they were taught made sense, increase the money supply and the purchasing power should decline. However, there is NO relationship that ever withstands the test of time. That is their mistake.

Money supply relative to population growth is also important. If money supply increases by 10% and population by 20%, it will still be less money per person and deflationary. Likewise, the difference between a core economy and a peripheral is that the money of the core spreads outward into the peripheral so you cannot limit your scope to purely domestic. Republic National Bank use to send skids of $100 bills to Russia. So if you printed $20 billion in dollars but shipped them overseas, the domestic money supply would never increase. When the government replaced the $100 bill, they ran ads on flights to assure people the old bills were still valid and were not cancelled as they do elsewhere.

So the likelihood of being wrong that the monetary system will collapse is ZERO. This belief among Austrian Economic followers will prove to be correct at the end of the day. The single question is only timing.

Dow-Bonds

So it is not a question of personally being right or wrong. This is a global computer model monitoring everything. This is beyond human capability. Hopefully the light will go off in more and more people and they will see that everything is connected. The Swiss peg was necessary BECAUSE the Euro was fatally designed. The peg broke when more and more money began to flee Euroland. This is simply capital flows and nothing that requires too much analysis beyond common sense.

Hoover-Quote

 

I strongly suggest reading 1931 in Herbert Hoover’s Memoirs. What we have been watching how capital moves rushing from one place to the next was observed in ancient times and mentioned by Cicero as well as in modern times as noted by Hoover. This has nothing to do with me being right or wrong. This is not opinion – it is simple fact.

Crabs-People-Bucket

Since the majority of analysts were wrong, of course they will now take shots at me. This is human nature that reveals their integrity or lack thereof. If you cannot disprove the message, attack the messenger. This is the sad part of human nature for it is the same reason crabs cannot escape the bucket. Crabs try to climb out pulling each other down and non escape. Instead of a light going off and saying hey – maybe this guy is on to something here, they would rather ignore the message and attack the messenger.

This human jealousy is what holds society within the bucket and prevents our advancement. Hopefully we can escape the bucket at least when it tips over. Then and only then will people say – well maybe he was right. Only when I am dead will the personal attacks stop. They then do not have to compete for readers. Instead of joining forces to escape the bucket, humanity pulls itself back down enabling history to repeat.