Primer on the state of Global Financial Stupidity (Part 1)

Posted On: Tuesday - January 24th 2017 8:06AM MST
In Topics: 
  Global Financial Stupidity

With the exception of this post a few days back about student loans, PeakStupidity has not yet seriously broached the topic of Global Financial Stupidity - the problems with the present day economic system, fiat money, global debt, etc. There's no time like this morning.

In the last 2 paragraphs of our "about" page on the top left, called What is Peek Stoopiditee? we introduce our theory that the reason the stupidity of the world will peak out and plummet fairly soon is not due to an internal property of the stupidity itself, but due to another feature of the present day, the inevitability of a major financial crash.

As written before on this site, PeakStupidity will not attempt to be a 2nd Zerohedge. However, I read it and link to it very often, and so the ideas on this topic will be more of a conglomeration or summary of 5 years of that website and the commenters thereon. The financial posts on zerohedge (used to be ~ 3/4 of the posts, now more like ~1/3) use much terminology that would be better known by people in the finance industry. That makes me think that the "Tylers" either work or formerly worked in the finance industry that they so denigrate, and it seems like some of the longer-term and previous commenters also were in that business.

OK, enough intro, here's the deal: The American people, westerners and peoples of the developed world in general, and the governments that lead rule ruin these peoples, are in debt such as never been seen before in recorded history. In addition, the socialist governments of most of the world's people have financial promises that are expected, but will not be delivered. In other words, the terms are going to expire soon, and there will be no means to pay what's owed, and the practice of borrowing more to pay off older debt will fail.

Let's just fixate for a little bit here on the US, and in particular, just US Feral Government debt. Most of us have heard the numbers over the years (yes, we know, just big numbers, it hasn't come to a head before, so what's to worry about). Currently, US gov't debt owed to holders of Treasury Bonds and Bills equals a nice round number - $20,000,000,000,000 and some pocket change (we've all got some old couches around, so don't worry about the change ;-} That number in words is 20 Trillion dollars, but I believe looking at the number of digits is important. Truly, it's hard to make sense of this figure in terms of importance unless we do some easy arithmetic.

Let's figure out of 330,000,000 (Three hundred and thirty million) Americans, you may come up with 150,000,000 "households", to be generous (yes, that's only just over 2 per, but there are lots of single people) that file taxes. However, to put it in terms of households with decent enough incomes to actually PAY money, meaning refund is less than withholding or variations thereof, versus those who get money out of the actual taxpayers pockets, we may have 100,000,000 cases. We are being generous here too. It may be less than 100 million, but, again, we like round numbers. Divide the money owed (20 trillion) by the number households that pay anything (100 million), we get $200,000 dollars owed per household that currently pays SOMETHING.

(Please don't get picky with our numbers here, cause this is just a 1/2 order-of-magnitude estimation here, OK?)

In order to keep our posts of reasonable length, we will continue this later today, promise. Just keep that $200,000 figure in your head for now, and think about what that represents.

Wednesday - March 27th 2019 5:12PM MST

I think you are good now, as I replied to a more recent comment, Mr. Dtbb. Yeah, navigation here is not all it's cracked up to be! That's why software work is in order.
Saturday - March 23rd 2019 7:16PM MST
Sorry. I am stuck on this page somehow. Hope sending message solves problem.
Wednesday - January 25th 2017 7:21PM MST
Frank, I had a nice long reply to your comment, agreeing with most of course. I hit one wrong key on my keyboard and lost it all.

I will write more in reply, but it will have to be later on. I'll rewrite this part - the preppers say "better to be 5 years early than a day late"

Wednesday - January 25th 2017 8:48AM MST
"As written before on this site, PeakStupidity will not attempt to be a 2nd Zerohedge. However, I read it and link to it very often, and so the ideas on this topic will be more of a conglomeration or summary of 5 years of that website and the commenters thereon. "

I realize you are not making a concrete prediction like "On January 31st of 2018 the Gates of Financial Armageddon will open!"

The thing is timing. To most people (these days) until something like this happens, well it's impossible and won't happen. Humans tend to think tomorrow will be just like today, and yesterday. Nothing dramatic happened then, right?

To at least drop Nassim Talleb's name (I say that because I'm not sure what I am about to say is EXACTLY what he has to say - and he says lots).

Anyway humans tend to discount "black swan" events. Plus they are bad with anything requiring abstract reasoning (even engineers and the like). After all they get away with it most of the time, right?

Until this happens, you just have to live with the fact that about 90% of the people you mention things like this do are going to nod, and smile, and mentally assign you to the box where they put all the tinfoil hat people.

“The market can stay irrational longer than you can stay solvent.”

That is a famous saying by Keynes. Whether you hate his guts or not, he did say a lot of things that actually were true (and he was a successful finacial speculator in his own right, which I'd estimate 99% of economists are not).

Look you saw the same stuff I did about the housing crisis circa 2005 or so. Read the same articles doing the same sort of math you are doing.

Only thing is stuff sailed on like always for a couple of years - till it crashed.

Anyway my take is this situation is like an explosion in an empty grain silo. There's flammable dust in the air, but after the fact it is impossible to say what random event happened on a sunny day (just like the day before) that caused it to blow. Of course people will 10 years later, and heck sometimes there is even a lightning strike somewhere, or someone lighting a cigarette in the vicinity (Soros?) that you can fix all the blame on.
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