Avoid The Pain

Its a basic human instinct attempting to avoid pain. And its the reason we are in so much trouble now, because when it comes to managing economies, the longer you put off necessary pain, the worse the result in the end. This is the primary distinction defining the difference between Keynesian andAustrian economics. The former, which is also known as interventionist economics, promotes ever-increasing and active central (state) policy responses (think fiscal and monetary) in the management of an economy to thwart the natural course; and, the latter, in its purist form, invites nature, and more specifically, the natural state of man as a rational decision maker (methodological individualism), to bring about equilibrium in markets, setting prices based on actual demand and supply conditions.

So again, the profound difference between the two, from a price discovery perspective, is ever-increasing interventionist policy will distort prices away from the natural path, while leaving markets alone, as promoted in Austrian economics, would in a perfect world, allow markets to arrive at equilibrium, which in theory would in turn allow man to exist with nature in harmony. Heres the rub however, leaving markets alone does not allow for bureaucracys to thrive, which is why the Keynesian model has become the cornerstone of the modern day economy (the Anglo American Western Debt Based / Colonization Model), our fait based economies gone wild in an interventionist orgy, which on the surface may appear practical to the unaware and naive, but in the end will be lethal as economies (and prices) are thrown back into the natural sphere.

This then, is the premise behind the truism short-term pain for long term gain, which is derived from a true understanding of how nature works either with or against man (as a collective), and why this understanding is the basis of Austrian economics. Because again, when we put off pain, we become spoiled (along with corrupt and greedy), and forget Mother Natures lessons, where the blowback becomes more profound the longer imbalances are allowed to exist. Which brings us to the situation as it is today, where we have the most profound bubble economies in history that are still growing larger with necessary expansion of credit / debt cycles (or face implosion), along with asset bubbles that are set to burst at some point.

Of course ifone has been following our work you would know the equity bubbles still have a ways to go because the money printing (monetary policy) is still accelerating on a global basis, which will make the fallout (think economic depression) correspondingly profound. Because again, by avoiding the pain today, we will eventually experience far worse ramifications longer term when prices readjust back to equilibrium, as they always do. This is naturally the argument against allowing Keynesians to become too powerful in any market economy, because you in fact cease to have a market economy as these idiots impose an improperly engineered construct on people, eventually bringing down the system (as they are systematically disenfranchised from the graft and can no longer make the interest payments).

What you are seeing in Ferguson is just the beginning of this process revolution that will intensify as process unfolds and the mob strikes back at the establishment. But the money printing is still supporting the rich as the insane asset bubbles continue to grow ever larger, until one day something happens the powers that be cannot control. Timing is obviously a big question in this regard, but we are looking at two windows for bubble tops right now, with stocks running into some trouble in March, if only temporarily, and then bonds in October of next year according to Martin Armstrongs Economic Confidence Model (ECM). And this next episode in the pain department is really going to be something, because we have become experts at extending cycles way past any sense of good measure, well into the theater of absurd, The Twilight Zone, or any other imagery one cares to throw at this subject matter.

In assigning the proper terminology and mindset to what is coming then, what we are looking at is the much daunted Grand Supercycle event in terms of the US stock market, where a lasting turn now appears likely sometime between October of next year (concurrent with a top in bonds) and 2017-2018, where as Martin Armstrong envisions, starting in October of 2015 (the next ECM turn date), capital will flee government and go anywhere else its perceived as safe (out of government control), which will not only include stocks, but commodities too, including precious metals. Whats more, and again, according to Armstrong, if capital from around the world joins in this orgy, the Dow could reach up to 25,000 (and higher) before its all over. And sure enough, in viewing Figure 2 below, the technical picture supports such a view. More on this below.

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Avoid The Pain