Economics · Society

The Engineered Boom/Bust Cycle and You

I assume that most of you follow the news, but the news obviously do not tell the full story, so I would like to highlight a very important aspect about the monetary system: engineered boom and bust cycles. You are getting told that those just happen, for absolutely no reason at all, and if there are explanations provided, they remain on the surface level. You will hear something about greed but there is nothing to worry, goy, because the system is sound overall. I still have not come across articles critical of mainstream banking in mainstream news, and none even discussed money supply in a meaningful way beyond some bullshit about a “liquidity crisis”. It also is not the case that Silicon Valley Bank or Credit Suisse collapsed because of some woke morons. These people only hastened the decline.

There is as famous quote erroneously attributed to Thomas Jefferson, which cannot be repeated often enough:

If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

This is basically a summary of our economic history. It starts by banks expanding the monetary supply. Suddenly, credit is cheap. People get incentivized to buy cars or big houses, and companies get ridiculously cheap funding. The most recent example is the tech boom where we got to a point where people who barely managed to turn on a computer got a six-figure job as front-end developers after a five-week “bootcamp”, provided they used the right set of pronouns. Of course this was unsustainable, and large number of those people have found themselves without a job in recent months. We have not yet seen the end of the current contraction, though. A lot of companies use business models that only work in an environment with very low interest rates, and now that this has changed, they are losing a lot of money. You can look into the fintech sector if this is a topic that interests you.

Of course, all those banks just operate kind of arbitrarily, like some kind of hive-mind. It is an anti-elven canard that banking is run by elves, and even if it were, it is probably just a response to all the elven hatred those people have experienced all throughout their lives. Be it as it may, the end result is still that a flooding of money, followed by a sharp contraction will lead to people and companies having to default. In consequence, assets can be bought up for pennies on the dollar.

As I am schizophrenic, in a good way, I avoid debt at all costs. My belief is that the system is set up to incentivize you to go into debt, and it wants you to not repay it so that you can be driven into personal bankruptcy. You may lose everything you have, even though months or a year ago you thought that you have made it. This phenomenon is unfolding in front of my very eyes in the region I live. Due to cheap money, there was a housing boom. Of course, building a house is still very expensive so only people solidly in the middle-class, and above, would do that. Now that mortgage rates have jumped up from 0.5% to 4% or more, some people are frantically trying to sell their house because they cannot afford their mortgage anymore. There are even people trying to sell half-finished houses, i.e. they were unable to secure a loan for the remainder of the construction, so now they are trapped. Presumably, they were led to believe that they can get more cheap money whenever they needed it.

Debt as leverage can be helpful in some circumstances. For instance, if you have assets you do not want to sell, you can use them as security. However, you are still screwed if your assets cannot cover the loan. All it takes is your fancy tech job to go away overnight. Next, the bank will come in, and take the house. This is a really messed up system. Well, you are supposed to own nothing and be happy. Klaus Schwab says so.

I think that the best way to ride those engineered boom and bust cycles is to participate in the stock market. Do not make any risky bets, and make sure that you do not endanger your livelihood in any way. This will not help much if the government decides to ban cryptocurrencies and force you into using their own government shit coin, but for the time being, this is probably the best you can do with your paper money. However, a much saner approach would be to get a bit of property, make sure you are financially secure, and ignore all this bullshit. This is what I have been working towards, i.e. getting a small house with a bit of land so that I can grow my own food and perhaps have a chicken coop. This only works for as long as the government does not put up temporary housing for a thousand African doctors and engineers, or sends a train with highly toxic chemicals your way.

18 thoughts on “The Engineered Boom/Bust Cycle and You

  1. Aaron,
    Any recommendation on books/websites on economics and the financial institution/banking system etc. you recommend?

    1. I think a good and very brief introduction is How an Economy Grows and Why It Crashes by Peter and Andrew Schiff. I wrote a review a few years ago but never posted it. I will have a look at the draft and perhaps I will post it within the next few days. For a more thorough coverage of key economic topics, I would recommend Murray Rothbard’s works. He has written a lot of books and articles, and many of them are available for free online via the Mises Institute.

    2. Peter Schiff is laughed about in the finance circles. He has been talking about the collapse of the United States all his life – I’m still waiting.

    3. Do you have any actual arguments or does your entire world view consist of regurgitated mainstream talking points? Besides, if you think that the USA are not in decline, you need to take is easy with whatever it is you are smoking.

    4. Aaron,

      I see you’ve gone from being a dating expert(which you are! Thank you for that!) to a finance expert(which you’re not!) Schiff has been so negative his entire life that he has the nick name Dr. Doom. He just blah blah blahs a bunch of end of the world finance stuff – just like most NON-mainstream media says. The US economy has its ups and downs and yet it’s still moving higher – still the envy of the world. There is no country in the world that can take on the US. Russia proved itself to be a complete ass-clown and China is a paper tiger that is heavily dependent on imports. These are giant, geopolitical trends that are not changing in 5,10, or even 20 years.

  2. Have you read the Black Swan or other books by Nassim Nicholas Taleb? He is about as popular as a non-mainstream author can be. He shares your opinion on debts, and the unsoundness of the system. He also promotes learning from experience as opposed to excessive theorizing. I think you are gonna like him.

    1. I have read Taleb’s books and there is little in it I disagree with. If anything, I think he is a bit too full of himself, and his language is a bit too flowery at times.

    2. Hmm, maybe I’ll actually check him out then, Aaron. I’ve been interested in his ideas, but read a couple of articles by him and found his way of writing somewhat off-putting.

      I wouldn’t call him non-mainstream, by the way. I’d say he’s quite mainstream at this point. 🙂

  3. Do you think it’s best to rent until you can buy a house in cash? Or do you think it’s ok to get a reasonable mortgage?

    The biggest problem I have with home ownership is the down payment. The liquid savings you have basically dissappear into an illiquid asset. To get down payment level savings takes years of working and saving, to see it all disappear from your bank account is tough. Then again, there is the risk of inflation of the currency. It’s a tough call.

    1. I think this depends a lot on where you live. In some countries, renters do not enjoy a lot of protection. For instance, if you have a private rental contract in Sweden, as opposed to one with a governmental housing company, you will only get a contract for six to twelve months at a time. Thus, if you want to stay somewhere for longer, it may make sense to buy a place. On a side note, I think the housing market in Sweden is completely out of whack and heavily works against foreign professionals, so much so that I strongly advise against moving there.

      If your mortgage is reasonable and you think you will stay at some place for a decade or more, then I don’t see any issues with it. However, in the recent past, a lot of people took out mortgages at a very low interest rate that they could barely afford. Normally, interest rates are only locked in for five to ten years, and when extending, some people will find themselves unable to secure financing.

      You can put your savings into inflationary assets like stocks. Thus, in the long run you should see your savings keep up with inflation.

    2. Over the long term mortgage rate is usually lower than rent therefore it can be definitely worth it to go in debt. Much more so if you are inclined to do home improvement to increase the value of your property.

      That said, key challenge lies in making sure you are not overpaying the house. If you find a good deal then it would make sense to take a mortgage and buy it as you’ll be in a good position to rent out the house or sell it to pay back the mortgage in case you have to move again. Some builders finance downpayment by selling residential units in advance. You can sometimes get a good deal that way.

      It is a tough investment decision and it can be hard to estimate the true value of a house and its resale/renting potential without the help of a realtor that has been working in that geographical area for some time.

    3. Even that realtor is of no help when Daddy Government puts up a big Section 8 block right next to your lovingly restored 19th-century house. There is simply a lot of risk in owning real estate, which is also why I think that your best bet is getting a house in a sparsely populated area. But even this only works until Uncle Sam sends a train full of toxic chemicals your way and blows it up.

      Also, a proper comparison between renting and buying has to consider investing your savings, i.e. your mortage, property tax, etc. likely exceed what you would pay for rent. Now assume you put the downpayment into stocks and keep investing regularly. Transaction fees are also an issue. In Germany, this means that 10% of the sales price is irretrievably lost. In that kind of environment, it normally only makes sense to buy a house when you know that you want to settle somewhere.

    4. Stock market could be a good alternative as SP500 has been on a constant upward trend for over a decade. However around the time of US housing bubble and early 2000s recession you would have had a hard time financing rent off of stock investments because there were long upturns and downturns with very little overall growth. In some cases you would have to wait for over a decade to start seeing positive ROI.

      In any case, at the very least it is a good benchmark for evaluating mortgage rates.

  4. “Aaron,

    I see you’ve gone from being a dating expert(which you are! Thank you for that!) to a finance expert(which you’re not!) Schiff has been so negative his entire life that he has the nick name Dr. Doom. He just blah blah blahs a bunch of end of the world finance stuff – just like most NON-mainstream media says. The US economy has its ups and downs and yet it’s still moving higher – still the envy of the world. There is no country in the world that can take on the US. Russia proved itself to be a complete ass-clown and China is a paper tiger that is heavily dependent on imports. These are giant, geopolitical trends that are not changing in 5,10, or even 20 years.”


    Found the cuck!!!

    USA is #1, maybe in 1950, not today!!!

    Enjoy your fast food and fat trashy whamminz!!!

    Then when you have a heart attack, expat to a real country to get real health care!!!

    1. In principle, I think it is sound to have a bit of gold and silver. However, how do you want to store it? I do not trust ETFs that supposedly give you ownership to gold that is stored somewhere. If you can store precious metals safely, I would get a few bars of silver and some Krugerrand or maple leaf gold coins.

    2. I collected a couple gold coins and some silver bars probably before 2012 some time. They’re still sitting in a safe. The way people were talking about it back then I would expect the shit to be worth multiples more now than it was then. Hell, in theory it might even technically supposed to be by now, but I think I’m still taking a loss on that initial investment over 10 years laters after all the fees and stuff.

    3. Investment in gold sounds nice in theory but from practical standpoint selling it doesn’t seem to be straightforward. Shops in my vicinity offer a buy price that is well below market value. Better offers can be found online but I’m unsure how larger transactions can be conducted in this way. There is also the issue that some states charge sales tax.

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