uclayoda87 (30.60)

A Warped View of the Financial Universe

August 18, 2009 – Comments (0) | RELATED TICKERS: GS , USA , CHINA

The Financial Universe is about to Change.

The two competing and thought provoking blogs by binve and Tastylunch lead to an uneasy realization that the value of every asset class becomes unstable when governments expand and the fiat currencies all go to zero at different rates of speed.  When we can’t even determine if we are destined for severe stagflation or deflation speaks volumes for the uncertainty that is inherent in this market.  But why is there so much confusion.  As I tried to relay in Tastylunch’s blog, this reminds me of calculus or partial differential equations, where there are multiple equations reflecting the relationship between the different asset classes.  When the fiat currencies start to approach zero as central banks expand the money supply, there may be marked distortions of the price of commodities, real estate and stocks.  As a consequence of this price uncertainty, the markets may begin to freeze up, as we have seen before.

In trying to look for a solution to this problem, I was reminded of another natural phenomena, the life and physics of solar systems.  By examining the similarities between the financial universe and the solar system, we may develop an insight to our eventual fate.  Based on the multiple binve charts, October 2009 may be a time for real change.  If the time horizon is that short, understanding the risks of our portfolios is critical in trying to avoid a repeat of 2008.

Think of the sun as a central government with the surrounding planets being the states.  Within the states are the businesses and individuals, which are the potential energy and matter within the solar system that are outside the sun.  The sun provides vital energy and cohesion to the solar system, but it is also a source of danger.

Now imagine that government debt is the gravity of the sun.  The states also have gravity, which is much smaller in magnitude, but still important to the system.

Changes have now begun to take place, in which our sun appears to be expanding to become a Great Sun (GS) or supernova.  I believe that Abraham Lincoln may have foreseen this, based on the great quote found by TMFSinchiruna in his recent blog:

"The money powers prey upon the nation in times of peace, and conspire against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, and more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and cause me to tremble for safety of my country; corporations have been enthroned, an era of corruption in High Places will follow, and the Money Power of the country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic destroyed."

-        Abraham Lincoln

As our sun expands, it begins to swallow the nearby planets and alters the structure of even the distant planets.  As the fuel of the universe, which I think of as real money, is completely consumed by the expanding sun, the gravitational force from this massively expanding debt causes the sun to collapse.  This may form a black hole or another small residual sun, the outcome is uncertain.

What was present before has now completely changed.  The residual matter of the universe then becomes organized by the new sun, or eventually consumed by the black hole.  The new sun maybe China and the new possible black hole may be anarchy.

The gravity or debt distorts all matter and energy as they approach a black hole.  Once within the event horizon, nothing leaves and space-time is destroyed, which is why I refer to this as anarchy.  If China emerges as the new sun, then the collection and organization of world commodities into a non-fiat currency will likely take place.

Unlike science fiction movies, we can’t navigate a black hole.  It is just best to avoid them and hope that the gravitation pull (government debt) does not pull us in.

People and businesses have been moving to planet that are further away from the sun, which have lower debt and taxes.  We have also seen people who had been left out in the cold, being warmed by an expanding sun.  But this is a short-term comfort, prior to their eventual destruction, with the implosion of the sun.

Conclusions:

If we knew for certain that a new sun (China) would emerge, then doing what China appears to be doing (hording commodities) would seem like the best course of action.  Up until this last week, this seemed to be a safer bet.  With the fall of the asian markets this last weekend, the October Revelation may be arriving sooner than expected.

If the sun (Federal Government) expands slowly enough, then there may be time to move yourself, your assets and your business to a low debt state or foreign country.  This could provide additional time to protect your assets.

The best solution for an expanding government, which doesn’t immediately implode is the US dollar, simply because of its liquidity.  When the marked distortions of the market eventually take place, repositioning out the US dollar to the next government-induced bubble will provide a short-term reprieve from poverty.  As the government continues to expand, poverty will become unavoidable since real government production won’t be enough to sustain the expansion.  All roads lead to this eventual collapse, unless the sun can reverse its expansion, which is prohibited by the second law of political thermodynamics – Governments always continue to expand, until they fail.

The roller coaster ride is about to start.  Those with weak stomachs or smart brains should cash out now.  The remaining Fools and their money will now begin the ride of their lives.

http://brightcove.newscientist.com/services/player/bcpid1873822884?bctid=18263954001

http://videos.howstuffworks.com/tlc/28850-solar-empire-death-of-the-sun-video.htm