Thursday, August 13, 2009

History Speaks to the Future: You're Gonna Suck

I am currently reading "America's Great Depression" by Murray Rothbard. It analyzes the period from an Austrian Economics point-of-view - one where business cycles of a significant and disruptive nature are caused by interventionist monetary policy alone.

It shouldn't come as any surprise, but early on, I am already struck with how eerily - and perilously - similar the crisis and policy prescriptions are between then and now. To cast aside historical experience to make way for a "new" paradigm is something frequently done, but without legitimacy. Human nature, as pertaining to incentivization, emotional response, and self-preservation is rather constant, whether in the 1700s or 2000s.

That is the primary reason why I give high credibility to the research behind cycle theory, price waves, and general trending as it can pertain to markets or social structure.

There have been some startling predictions to come out in research reports recently from various funds, and while I may disagree with some of the details (I do not believe currency collapse will stem from hyperinflation but rather a deflationary spiral catalyzed by Treasury auction failures), I believe that escalating unemployment, social unrest, market crashes like not seen before, and a flatlining economy are very real possibilities.

Again, be wary of ignoring warnings stemming from history. Every major empire has collapsed under the weight of its own imperialism, debt, and money printing.

These are must-reads:

THE DARK YEARS ARE HERE (Hat Tip to Matterhorn Asset Management and Zero Hedge)

IDENTIFICATION OF MAJOR CHANGES OF TREND IN ADVANCE OF TRADITIONAL ANALYSIS


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