Hi TD, <<synthetic money>> I have, since second year in college, had always been a HP-12C-carrying financial nerd, interested in all stuff financial and most affairs technological. The 1990s was a god-sent era where the two came together, embraced, and pleasured each other. They may ultimately bust the other.
I think we are still in the early period of the ruination of economies and states, of financial supra-system and technological sub-systems. This is the vague outline of the monster I fear:
(a) The DNA of the world economic system is fundamentally of the value-enhancing capitalist strain. The system is oxygenated by the increasingly common commonality of USD. The system is supported by ballot-wielding electorates and gun-toting rulers, both requiring feeding from the artery through which the USD courses. There is nothing wrong or right about the system, as it is simply a given, and just is. It works naturally, leveraging greed and fear, balancing the good and bad, clearing the losses from the winnings, and nothing else did as well;
(b) The system, if left to its own natural accord, works in fairly predictable fashion, along the lines of a sine wave, most of the time, and the slope of a cosine curve, the rest of the time; and
(c) The system, when impacted by human intervention, is sometimes thrown into a fizzy, as its feedback loop receives audio data and attempt to send out video signals; but
(d) The system, when force-jammed by super-human Greensputin machination, lowering discount rate, amplifying the feed-back signal through new-fangled mortgage banks, short circuiting the traditional banking system, ignoring the trends in the free-market place, focusing on the application of fiat through said mortgage banks, and force-feeding of debt through fiscal dictates, puts the world economic system, unified, upon one DNA, in danger never before possible, since the beginning of time; and
(e) I fear the system will either blow up, or suffer a cleansing too traumatic to bear by most, as strong companies become weak due to decreasing final demand, dictated by demographics, personal balance sheet realities, and employment-scape, and as weak companies die, because of financial culling of the herd by, according to Bill Gross, hedge funds, and according to my thinking, global investor electorates.
(f) The final crime in this desperate drama can be the complete severing of the feed-back loop, as was the case in Argentina, explicitly, or in the case of Japan, implicitly, accompanied by officialdom interventions on a scale never before seen, led by leaders whose incompetence never imagined.
Income-producing well-located, and thus valued real estate is one way to protect some of one’s wealth, and durable commodities another. Of course, even better, durable commodities secretly stashed on the premises of income-producing real estate, even better, as in a synthetic gold mother-load, artificial silver vein, and man-made platinum mine.
[EDIT: Long paragraph alert] At some crazy point along the equation of time and insane moment in the history of fiat dictate, it would be perfectly reasonable to rationally borrow paper money, buy well-located income producing property, secure Aztec gold metal and New Age platinum ore, bury both in same real estate, creating a synthetic mine topped off by a traditional property, value the combination on the basis of traditional cash flow and implied synthetic long term call option of the combined real and fungible physical properties, stuff some rights into a Bermuda company and other licenses into a Cayman Island corporation, issue a bunch of traded derivative products, leverage up once more, and do same once again, and then simply wait for the final kaboom in the market place of paper, giving the signal to retire to the Bahamas.
Chugs, Jay
P.S. Here is a synthetic bank that supposedly benefits from a continuing steep yield curve, if continuing:
siliconinvestor.com
media.corporate-ir.net
Pages 31-45 describes how they make money.
I have been watching friends averaging up on this one for the past 6 months. Paper on top of more paper. |
