Not Even Harry Browne Thought It Was Going To Be This Bad

General Discussion on the Permanent Portfolio Strategy

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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by Pointedstick » Wed Jul 10, 2013 1:18 pm

Technovelist, that seems like an eminently reasonable post to me.

Furthermore, I personally think us PP holders are doing a decent enough job of acknowledging those tail risks by holding 25% in gold. That's a heck of a lot more gold than most people, and if you do indeed view the currency collapse scenario as a tail risk and not a certainty, then it makes sense to take precautions against it but not go overboard, in case it doesn't happen in your lifetime. To me, 25% gold makes me feel like I've done a good enough job balancing the mitigation of those risks with my desire for growth and income during other conditions.
Last edited by Pointedstick on Wed Jul 10, 2013 1:20 pm, edited 1 time in total.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by MediumTex » Wed Jul 10, 2013 1:23 pm

technovelist wrote: Ok, so then this would be an acceptable post? If you say so.

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I really think if "monetary realists" didn't have such a deep reluctance to admit the tail risks they are ignoring, they would have a much easier time seeing the light.

They are literally being blinded by their inability to admit that their portfolio could be demolished by a freeze-up of the US financial system.  I mean if you've gone your whole life thinking you're essentially safe in believing that the US empire is different from every other one in history, it can be hard to look at the system as one that could collapse without warning and leave your "safe portfolio" in ruins.

Admitting Austrian economics is correct would mean that a "monetary realist's" belief in the stability of the financial system was mostly a myth.  People don't like to concede that kind of "wrongness," especially if we've held these views for a long time. 

I'm not saying there isn't some life left in the current system, but it becomes a lot more of a nuanced discussion rather than "tail risks in the current system can be safely ignored" or whatever the common wisdom is.
I think that's a perfectly reasonable position.

Please understand that recognizing that the current system is based upon a monetary realism model doesn't mean any of us is saying it's a good idea.  It's just acknowledging reality as it currently exists.

We all still hold gold for the day when and if things change to some other type of monetary arrangement.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by Gumby » Wed Jul 10, 2013 1:24 pm

technovelist wrote:I really think if "monetary realists" didn't have such a deep reluctance to admit the tail risks they are ignoring, they would have a much easier time seeing the light.

They are literally being blinded by their inability to admit that their portfolio could be demolished by a freeze-up of the US financial system.  I mean if you've gone your whole life thinking you're essentially safe in believing that the US empire is different from every other one in history, it can be hard to look at the system as one that could collapse without warning and leave your "safe portfolio" in ruins.

Admitting Austrian economics is correct would mean that a "monetary realist's" belief in the stability of the financial system was mostly a myth.  People don't like to concede that kind of "wrongness," especially if we've held these views for a long time. 

I'm not saying there isn't some life left in the current system, but it becomes a lot more of a nuanced discussion rather than "tail risks in the current system can be safely ignored" or whatever the common wisdom is.
Perfect. No hard feelings.

And I agree with you... the whole system could come crashing down if people lose faith in the government. But, then again, that's why we hold 25% gold here on this forum.

Now can we continue the conversation?
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by Gumby » Wed Jul 10, 2013 1:27 pm

MediumTex wrote:Please understand that recognizing that the current system is based upon a monetary realism model doesn't mean any of us is saying it's a good idea.  It's just acknowledging reality as it currently exists.
Exactly. Nobody here thinks that MR somehow proves that a debt-based fiat monetary system is some kind of perfection. From my perspective, it causes all sorts of problems in the long run. All MR does is describe the system as it is — flaws and all.

All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.

Ultimately, you should know that we all used to believe the same things you currently believe. The only difference is that we picked up our noses from our obsolete textbooks and explored the operational realities of our current system.
Last edited by Gumby on Wed Jul 10, 2013 1:31 pm, edited 1 time in total.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by technovelist » Wed Jul 10, 2013 1:30 pm

Gumby wrote:
MediumTex wrote:Please understand that recognizing that the current system is based upon a monetary realism model doesn't mean any of us is saying it's a good idea.  It's just acknowledging reality as it currently exists.
Exactly. Nobody here thinks that MR somehow proves that a debt-based fiat monetary system is some kind of perfection. From my perspective, it causes all sorts of problems in the long run. All MR does is describe the system as it is — flaws and all.

All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.
Certainly, as long as you can have a conversation that acknowledges that I am right about everything and that any disagreement with me is heresy.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by tennpaga » Wed Jul 10, 2013 1:32 pm

I would agree with PS that this is a fine post, and also agree with him that the PP provides adequate hedging for me across a variety of economic scenarios.

Speaking for myself, I don't believe that the U.S. empire is any different than every other in history.  It will be gone at some point.  But when?  I don't know.  With a whimper?  With a bang?  I don't know that either.

The point of contention in the current conversation is the nature of the tail risk of which you speak.  Those of us here who have looked at the mechanics of the monetary system have realized that the risks the Austrian school speaks of do not exist in a fiat regime.

It is as if you are telling me not to go sailing because I'll fall off the end of the earth if I go out in the water too far.  I think this is nonsense.  However, this is not to say that I think my ship is unsinkable, and that the sea does not hold other dangers for me, or that the crew on my ship will always support me during my journey.
Last edited by tennpaga on Wed Jul 10, 2013 1:35 pm, edited 1 time in total.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by Gumby » Wed Jul 10, 2013 1:33 pm

technovelist wrote:
All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.
Certainly, as soon as you acknowledge that the Flying Spaghetti Monster is the one true god.
Well, if you want to be narrow-minded and not explore how our debt-based fiat monetary system really works, that's your prerogative. Your loss.

Personally, if it were my money, I'd want to explore all of the contrarian scenarios to make sure I wasn't doing something totally stupid (like listening to inflationists who have been wrong for decades).
Last edited by Gumby on Wed Jul 10, 2013 1:35 pm, edited 1 time in total.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by Xan » Wed Jul 10, 2013 1:38 pm

technovelist wrote:Certainly, as long as you can have a conversation that acknowledges that I am right about everything and that any disagreement with me is heresy.
There certainly was a major change in the nature of money in 1972, when gold officially became decoupled from the dollar.  We went from a federal government that couldn't create money out of thin air to one that could.

If a school of monetary thought didn't undergo a major change right along with it, then it's pretty obvious that school is not going to have predictive power under the new regime.

That isn't at all saying that they were wrong about anything.  The principles and consequences could all be absolutely correct.  It's just that they now describe a different universe from the one that we now occupy.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by technovelist » Wed Jul 10, 2013 1:40 pm

Gumby wrote:
technovelist wrote:
All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.
Certainly, as soon as you acknowledge that the Flying Spaghetti Monster is the one true god.
Well, if you want to be narrow-minded and not explore how our debt-based fiat monetary system really works, that's your prerogative. Your loss.

Personally, if it were my money, I'd want to explore all of the contrarian scenarios to make sure I wasn't doing something totally stupid (like listening to inflationists who have been wrong for decades).
Belief in the Flying Spaghetti Monster is a contrarian view as well. That doesn't make it correct or sensible. After reading all the posts about "monetary realism", I have exactly the same respect for it as I do for the FSM.

And as for inflationists having been wrong for decades, the reason I could retire early was because of a gold-heavy portfolio that STILL is outperforming the PP in the long term (15 years) after the recent unpleasantness. So if that is wrong, I don't want to be right.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by MediumTex » Wed Jul 10, 2013 1:41 pm

technovelist wrote:
Gumby wrote:
MediumTex wrote:Please understand that recognizing that the current system is based upon a monetary realism model doesn't mean any of us is saying it's a good idea.  It's just acknowledging reality as it currently exists.
Exactly. Nobody here thinks that MR somehow proves that a debt-based fiat monetary system is some kind of perfection. From my perspective, it causes all sorts of problems in the long run. All MR does is describe the system as it is — flaws and all.

All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.
Certainly, as long as you can have a conversation that acknowledges that I am right about everything and that any disagreement with me is heresy.
I assume that's a joke.

Seriously, though, what about the explanation that is being provided about how the current system works do you disagree with?

For example, we may both agree that Britney Spears' music is crappy (with the obvious exception of "Baby One More Time":)) ), but that doesn't mean that conclusions regarding the musical structure of her songs should be dismissed as nonsense.  The product itself may be nonsense, but it still has an internal structure and logic, whether you like it or not.
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by technovelist » Wed Jul 10, 2013 1:45 pm

MediumTex wrote:
technovelist wrote:
Gumby wrote: Exactly. Nobody here thinks that MR somehow proves that a debt-based fiat monetary system is some kind of perfection. From my perspective, it causes all sorts of problems in the long run. All MR does is describe the system as it is — flaws and all.

All we are saying is that Austrian economics is using an obsolete framework that doesn't apply to an autonomous debt-based fiat currency issuer. Surely you can have a conversation about that, tech.
Certainly, as long as you can have a conversation that acknowledges that I am right about everything and that any disagreement with me is heresy.
I assume that's a joke.

Seriously, though, what about the explanation that is being provided about how the current system works do you disagree with?

For example, we may both agree that Britney Spears' music is crappy (with the obvious exception of "Baby One More Time":)) ), but that doesn't mean that conclusions regarding the musical structure of her songs should be dismissed as nonsense.  The product itself may be nonsense, but it still has an internal structure and logic, whether you like it or not.
No, it is not a joke, but a reductio ad absurdum. Continuing a conversation that requires one to agree to a proposition that one finds absurd is nonsensical. Why would anyone do that?
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Re: Not Even Harry Browne Thought It Was Going To Be This Bad

Post by MediumTex » Wed Jul 10, 2013 1:46 pm

technovelist wrote: After reading all the posts about "monetary realism", I have exactly the same respect for it as I do for the FSM.
But in what ways does monetary realism fail to correctly identify the current monetary arrangement in the U.S.?

I would say that MR differs from FSM in that FSM doesn't provide me with a coherent explanation for the current nature of any aspects of reality, while MR does.

Do you agree with my distinction between MR and FSM?
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