Volatility Rears Its Head Again - The San Andreas Fault's Mysterious Tremors
Increasing volatility has been and remains one of our main themes. Over the past few years we have highlighted a few sources of volatility with beached whales, the current swine flu and bird flu mutations, seismic phenomena and unusual volcanic electrical storms. Over the last handful of years we have seen substantial earthquakes in China, Iran, Italy, Pakistan, Russia, Central America and the South Pacific tsunami. Now it appears the San Andreas fault is showing signs of coming to life as well.
I believe there is plausible evidence to conclude volatility of all types are interrelated and that we are, in fact, in a major cycle of volatility. In other words the economic volatility we have been witnessing over the last decade or so is closely related to the natural phenomena above. (The explosive upward move in economic volatility from the late 90s onward followed by its downward movement starting in late 2006.) There is no way for me to prove this beyond doubt because humanity's grasp of our world is substantially too simplistic. But I have spent quite a bit of time studying the topic and have some well-formed theories.
The debt bubbles we now see are simply symptomatic as opposed to a root cause of building economic calamities we see around the globe. The banking system is identified as the cause of this crisis but it's quite evident to me that were it not a debt bubble, economic volatility would manifest itself in other equally destructive outcomes. Economic volatility did not start with modern banking structures as is often supposed by those citing fractional reserve banking as unstable. (Eventually they clearly are.) But before we had modern banking systems able to blow major bubbles, we still experienced periods of substantial volatility, economic collapse and substantial depressions often lasting centuries. In other words, the argument that were it not for the Federal Reserve, we would no longer experience the business cycle or economic calamities relies on the very poor argument confusing correlation with causation.
Cycles of economic volatility are a constant regardless of our modern banking system. (Which, by the way, I clearly believe needs reformed.)
As I have said before, at some point in time we might delve into this esoteric and bizarre topic in more detail. But for now, I just want to document the San Andreas fault's unusual activity as part of our discussions and highlights of volatility.
I believe there is plausible evidence to conclude volatility of all types are interrelated and that we are, in fact, in a major cycle of volatility. In other words the economic volatility we have been witnessing over the last decade or so is closely related to the natural phenomena above. (The explosive upward move in economic volatility from the late 90s onward followed by its downward movement starting in late 2006.) There is no way for me to prove this beyond doubt because humanity's grasp of our world is substantially too simplistic. But I have spent quite a bit of time studying the topic and have some well-formed theories.
The debt bubbles we now see are simply symptomatic as opposed to a root cause of building economic calamities we see around the globe. The banking system is identified as the cause of this crisis but it's quite evident to me that were it not a debt bubble, economic volatility would manifest itself in other equally destructive outcomes. Economic volatility did not start with modern banking structures as is often supposed by those citing fractional reserve banking as unstable. (Eventually they clearly are.) But before we had modern banking systems able to blow major bubbles, we still experienced periods of substantial volatility, economic collapse and substantial depressions often lasting centuries. In other words, the argument that were it not for the Federal Reserve, we would no longer experience the business cycle or economic calamities relies on the very poor argument confusing correlation with causation.
Cycles of economic volatility are a constant regardless of our modern banking system. (Which, by the way, I clearly believe needs reformed.)
As I have said before, at some point in time we might delve into this esoteric and bizarre topic in more detail. But for now, I just want to document the San Andreas fault's unusual activity as part of our discussions and highlights of volatility.
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