What would the PP look like without fiat currency and central banks?

General Discussion on the Permanent Portfolio Strategy

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blue_ruin17
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Re: What would the PP look like without fiat currency and central banks?

Post by blue_ruin17 » Sun Aug 21, 2016 10:29 am

If gold was used as currency (and thus replaced "cash" in the HBPP), perhaps farmland would be a suitable replacement for the economic climate quadrant that gold currently covers, 'inflationary contraction'

Image

Farmland appears to do well during inflation, even if the economy is contracting. Note how both equity value and rent income for farmland rose during the 'stagflation' of the '70s. Farmland responded very similarly to gold, in other words.

Values also crashed during the Volcker 80's (just like gold).
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MachineGhost
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Sun Aug 21, 2016 1:42 pm

MediumTex wrote:I don't know the significance of viewing the government as essentially a puppet of the most powerful private sector interests, rather than as a dim-witted and heavily armed referee simply churning out dumb rules that the rest of us have to live by, but I think that the former is a more accurate description than the latter.
I'd say it is the difference between feeling empowered and disempowered. We definitely have a government of the former; the latter is more libertard and rightwing nut romanticism (unless you're living in Africa or the Middle East). I'm still waiting for an "INSIDE THE GOVERNMENT" documentary that goes around to all the agencies and pulls back the curtains on what its really like. I suspect it won't live up to the ideology hype and will be rather mundane, punctuated by the occasional deviation.

If there's one thing I've learned in life so far, its that actual reality has a way of humbling everyone's mental mysticism. Imagine how boring the news would be if 95% was about positive things and only 5% about all the negative things that currently composes 95% of the news (gotta leave room for that obligatory cute animal story!).
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Re: What would the PP look like without fiat currency and central banks?

Post by Kbg » Sun Aug 21, 2016 10:41 pm

MG,

All of your sub points totally concur. My main point from the beginning is simply in the modern economy government has the power and will always define what legal acceptable tender is. This isn't the same as saying alternate forms of money won't coexist, but they will never ever be anything but small time limited use forms of money. The moment an alt begins to impinge on the ability to control finance/taxes at a fundamental level it will get banned, restricted or co-opted.

There are hardcore Libertarian communities that have attempted to ban (voluntary) the use of US currency and form trading cooperatives as a form of protest. Two things: they are limited to what they can make and most all of them cheat because the practicality of being able to buy something besides what is made in the coop overcomes political convictions.
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Re: What would the PP look like without fiat currency and central banks?

Post by jason » Wed Aug 24, 2016 12:56 am

MediumTex wrote:
Kbg wrote:Sorry dude, my read of history indicates the guys with guns always win. If government doesn't matter why are there so many lobbyists? Any thinking person understands government defines the capitalist goal posts and field size. This has never not been true. So back to my initial comment: useless hypothetical.
I agree that it's true that the nature of government will always involve the monopolization of the use of force in society, but it seems like there are many examples of the private sector's financial and cultural elite basically capturing government through their influence, which then basically turns the government into a servant of certain private sector interests in society.

For example, I think that the financial services industry in the U.S. has captured many functions of the U.S. government through its lobbying and campaign contributions. When they chose to really flex their muscles in 2008, the degree of power they wielded became apparent. I have always thought the only reason that Bear Stearns was allowed to expire while everyone else (except Lehman Brothers) was bailed out was that the Bear Stearns CEO had repeatedly called Timothy Geithner a faggot. Sometimes even a person who is bought and paid for can act out if sufficiently provoked.

I don't know the significance of viewing the government as essentially a puppet of the most powerful private sector interests, rather than as a dim-witted and heavily armed referee simply churning out dumb rules that the rest of us have to live by, but I think that the former is a more accurate description than the latter.
It's fairly clear that the special interests are running the show and mostly controlling the government agencies. There is even a name for it - regulatory capture.
https://en.wikipedia.org/wiki/Regulatory_capture

Populist liberals like Bernie Sanders and Elizabeth Warren talk about government corruption, and how the elite are pulling the strings of government. Elizabeth Warren said this at the DNC:
"So-called experts claim America is in trouble because both political parties in Washington refuse to compromise. Gridlock!
That is just flat wrong. Washington works great for those at the top.
When giant companies wanted more tax loopholes, Washington got it done. When huge energy companies wanted to tear up our environment, Washington got it done. When enormous Wall Street banks wanted new regulatory loopholes, Washington got it done. No gridlock there!
But try to do something, anything, for working people, and you’ll have a fight on your hands."

But what I find most interesting (and ridiculous) is that their solution for fixing the corrupt government that passes corrupt laws is...[drum roll]..even more laws and bigger government. Let's keep drinking from the poisoned well! The Libertarians have it right on this - Ron Paul said there are two ways to fix Washington. One is to only elect honest politicians who aren't influenced by money and corruption - that hasn't worked out too well. The other way is to make government as small as possible to minimize the power of the elites and special interests over our laws and society.

Does anyone know a third way to fix Washington?
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Wed Aug 24, 2016 4:24 pm

jason wrote:Does anyone know a third way to fix Washington?
Circumvent it alltogether, but mainline society isn't ready for that yet. You do what you can on the individual or local level.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

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Re: What would the PP look like without fiat currency and central banks?

Post by KevinW » Sun Sep 18, 2016 1:39 am

Back on topic, if gold and cash were interchangeable then 25x4 is equivalent to 50% cash, 25% long term bonds, 25% stocks.

Note that the total bond market is mostly short term bonds. So the 50/25/25 allocation is very similar to a 75% total bond market, 25% total stock market portfolio. In other words, a conservative Boglehead portfolio.

Sometimes I like to think of the PP as a conservative 25/75 Boglehead portfolio from an alternative Libertopia dimension that is still on a gold standard. When that 25/75 portfolio steps through the portal to our fiat currency reality, it morphs into the 25x4 allocation.
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Re: What would the PP look like without fiat currency and central banks?

Post by bitcoininthevp » Tue Sep 20, 2016 3:15 pm

MachineGhost wrote:Circumvent it alltogether, but mainline society isn't ready for that yet. You do what you can on the individual or local level.
From your comments about libertarians, you are not following that belief system. But with things like this you are in the ballpark... are you anarchist?
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MachineGhost
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Re: What would the PP look like without fiat currency and central banks?

Post by MachineGhost » Tue Sep 20, 2016 3:29 pm

bitcoininthevp wrote:
MachineGhost wrote:Circumvent it alltogether, but mainline society isn't ready for that yet. You do what you can on the individual or local level.
From your comments about libertarians, you are not following that belief system. But with things like this you are in the ballpark... are you anarchist?
Yeah, I'm not big on official groupthink because it just becomes an excuse to be a social signaling joiner and stop thinking about critical nuances or effective methods to freedom. I'm an anarchist at heart, but the world is not ready for that yet either.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes

Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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