After spending some holiday time reading through pragcap.com and watching a variety of videos on youtube by the sites creator Cullen Roche, I think I have finally been born again to the permanent portfolio.
If we equate the money and banking system / economy to a nuclear power plant....the analogy I would draw is that the collective people in charge of this system (politicians all the way to members of the Federal Reserve) are the equivalent of a Homer Simpson in the control room randomly pulling levers and pressing buttons with little idea as to the outcome of their actions.
Because our economic system is being driven by a collective madman whose flailing actions in the control room have the ability to wrench the economy in and out of different economic states, and because his flailing actions are entirely unpredictable...the PP is the only investment strategy that protects you no matter what random button the incompetent plant operator pushes next.
The future is unknowable for many reasons but the fact that the basics of our money and banking system are so poorly understand by many of those who are in charge of running it, coupled with political shenanigans has caused me to reach the conclusion (through much strain, stress, and effort) that intelligently allocating my assets (outside of the Permanent Portfolio) without entering into the world of speculation is completely and utterly impossible.
I have seen the light
Moderator: Global Moderator
I have seen the light
Last edited by doodle on Sat Dec 24, 2011 8:19 am, edited 1 time in total.
All of humanity's problems stem from man's inability to sit quietly in a room alone. - Blaise Pascal
Re: I have seen the light
Discovering, digesting and implementing the Permanent Portfolio is usually a long journey that tests one's own faith and personal reality. I'm not only impressed, but thrilled that you persevered and found a level of freedom that very few people enjoy.
Congrats, Doodle!
Congrats, Doodle!
Nothing I say should be construed as advice or expertise. I am only sharing opinions which may or may not be applicable in any given case.
Re: I have seen the light
Regarding all our discussions regarding the appropriateness of LT bonds and the PP in general...
We did it for doodle.
We did it for doodle.
Last edited by moda0306 on Sat Dec 24, 2011 9:54 am, edited 1 time in total.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
Re: I have seen the light
Love the analogy.
Honestly, when I hear most politicians talk they make me want to hug my 30-year Treasuries and gold at the same time. I think America could easily have decades of prosperity with some correct button pushing. However, congressmen get no training about our economic system when they get elected and their total incompetence could easily spiral us into a depression.
Honestly, when I hear most politicians talk they make me want to hug my 30-year Treasuries and gold at the same time. I think America could easily have decades of prosperity with some correct button pushing. However, congressmen get no training about our economic system when they get elected and their total incompetence could easily spiral us into a depression.
everything comes from somewhere and everything goes somewhere
Re: I have seen the light
Congratulations.
Gumby's comment about one's personal reality is appropriate. We all live in slightly different worlds of our own construction, and from an objective perspective some of these worlds work better than others. Being able to fine tune one's own personal reality in a way that actually gets satisfactory results is harder to do than it looks.
The analogy I like is that the PP turns you from one more gambler wandering around the casino into the owner of your own small casino with your own predictable house advantage.
Gumby's comment about one's personal reality is appropriate. We all live in slightly different worlds of our own construction, and from an objective perspective some of these worlds work better than others. Being able to fine tune one's own personal reality in a way that actually gets satisfactory results is harder to do than it looks.
The analogy I like is that the PP turns you from one more gambler wandering around the casino into the owner of your own small casino with your own predictable house advantage.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
A: “Not unless round is funny.”
-
Ad Orientem
- Executive Member
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Re: I have seen the light
Great post and analogy. I also like Medium Tex's analogy.
Trumpism is not a philosophy or a movement. It's a cult.
Re: I have seen the light
doodle,
Does this means you're no longer "worried" about deficits, and eventual rising rates? Or at least not to the degree you once were?
I think what you went through was basically what a lot of us have at one point, and not just with the PP, but macroeconomics and currency/debt in general. I'm willing to bet 99% of us here at one time in HS or college said to ourselves or people we knew, "we have to pay down this ridiculous debt," thinking of our national debt the same way we look at our personal finances. Whether we thought taxes or spending were the tool of choice was probably pretty diverse, but we all thought that the debt was one day going to lead us to some awful conclusion.
Yeah, we maybe knew the gov't is a little different from a household, but we didn't really absorb how much... we didn't really realize how important the "macro" in macroeconomics was, or the "sovereign fiat" in sovereign fiat currency was... we still thought there was something we could gain by collectively "taking one for the team" (our kids) and getting the debt paid down.
This is why I don't blame anyone for not quite picking up on MMT or macroeconomics. Until I fully absorbed what financial assets/liabilities really were (and I'm still working on this), I didn't really properly understand what the implications were of our private and public sector debt. All these financial assets/liabilities are is a tool to pull more production and wealth out of our people than could be otherwise done without some form of debt. Before modern money, even gold, these promises were to deliver future value for the delivery of current value, vastly increasing our economy's potential, and, therefore, the potential of every individual to put their education/skills to work as opposed to sitting on his/her hands.
Enter a fiat money system (yes, skipping over gold), and you simply have a promise to repay confetti that the government makes valuable through legislative fiat. This is all to pull more real value out of the economy than could otherwise be realized, as people would likely otherwise be sitting, waiting for others to be confident enough to purchase widgets, or savvy enough to bartar with the widget maker, as opposed to using common currency or debt.
To you and me, this can put a strain on our future... aka, debt we take on now can limit our ability to enjoy our lives in the future, as we have to somehow pull money from somewhere else in the economy to pay it back... as long as the gov't maintains this legislative fiat. To the gov't, it doesn't, because the "+" value to bond-holders and the "-" value to bond-owers is not some natural function, but one that is decided by gov't, the very entity that we were just worrying about. Right now, due to us exporting the "+" value side of financial assets/liabilities, we are starving for them in the US, and have to many "-" value financial obligations... obligations we can't control the value of, as individuals.
Does this means you're no longer "worried" about deficits, and eventual rising rates? Or at least not to the degree you once were?
I think what you went through was basically what a lot of us have at one point, and not just with the PP, but macroeconomics and currency/debt in general. I'm willing to bet 99% of us here at one time in HS or college said to ourselves or people we knew, "we have to pay down this ridiculous debt," thinking of our national debt the same way we look at our personal finances. Whether we thought taxes or spending were the tool of choice was probably pretty diverse, but we all thought that the debt was one day going to lead us to some awful conclusion.
Yeah, we maybe knew the gov't is a little different from a household, but we didn't really absorb how much... we didn't really realize how important the "macro" in macroeconomics was, or the "sovereign fiat" in sovereign fiat currency was... we still thought there was something we could gain by collectively "taking one for the team" (our kids) and getting the debt paid down.
This is why I don't blame anyone for not quite picking up on MMT or macroeconomics. Until I fully absorbed what financial assets/liabilities really were (and I'm still working on this), I didn't really properly understand what the implications were of our private and public sector debt. All these financial assets/liabilities are is a tool to pull more production and wealth out of our people than could be otherwise done without some form of debt. Before modern money, even gold, these promises were to deliver future value for the delivery of current value, vastly increasing our economy's potential, and, therefore, the potential of every individual to put their education/skills to work as opposed to sitting on his/her hands.
Enter a fiat money system (yes, skipping over gold), and you simply have a promise to repay confetti that the government makes valuable through legislative fiat. This is all to pull more real value out of the economy than could otherwise be realized, as people would likely otherwise be sitting, waiting for others to be confident enough to purchase widgets, or savvy enough to bartar with the widget maker, as opposed to using common currency or debt.
To you and me, this can put a strain on our future... aka, debt we take on now can limit our ability to enjoy our lives in the future, as we have to somehow pull money from somewhere else in the economy to pay it back... as long as the gov't maintains this legislative fiat. To the gov't, it doesn't, because the "+" value to bond-holders and the "-" value to bond-owers is not some natural function, but one that is decided by gov't, the very entity that we were just worrying about. Right now, due to us exporting the "+" value side of financial assets/liabilities, we are starving for them in the US, and have to many "-" value financial obligations... obligations we can't control the value of, as individuals.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
- Thomas Paine
- Thomas Paine
-
MachineGhost
- Executive Member
- Posts: 10054
- Joined: Sat Nov 12, 2011 9:31 am
Re: I have seen the light
The wonderful, wonderful, wonderful, wonderful, wonderful Wizard of Oz! 
http://en.wikipedia.org/wiki/Political_ ... zard_of_Oz
MG
http://en.wikipedia.org/wiki/Political_ ... zard_of_Oz
MG
wonderful,doodle wrote: After spending some holiday time reading through pragcap.com and watching a variety of videos on youtube by the sites creator Cullen Roche, I think I have finally been born again to the permanent portfolio.
If we equate the money and banking system / economy to a nuclear power plant....the analogy I would draw is that the collective people in charge of this system (politicians all the way to members of the Federal Reserve) are the equivalent of a Homer Simpson in the control room randomly pulling levers and pressing buttons with little idea as to the outcome of their actions.
Because our economic system is being driven by a collective madman whose flailing actions in the control room have the ability to wrench the economy in and out of different economic states, and because his flailing actions are entirely unpredictable...the PP is the only investment strategy that protects you no matter what random button the incompetent plant operator pushes next.
The future is unknowable for many reasons but the fact that the basics of our money and banking system are so poorly understand by many of those who are in charge of running it, coupled with political shenanigans has caused me to reach the conclusion (through much strain, stress, and effort) that intelligently allocating my assets (outside of the Permanent Portfolio) without entering into the world of speculation is completely and utterly impossible.
"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!
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!