Reflections on Emotional Perceptions

by The March Hare. December 1, 2003

I am concerned that in an area where utmost rational contrarian thought is required, once again emotion appears to be holding forth and maybe even taking the day. If those that can see outside the walls only succeed in building a better box, how much was progress helped or hindered and for whom? Walls are best seen from both sides before demolition is attempted. Otherwise falling masonry injures many. Building a new box just to protect a few is still going to leave a lot of angry people outside.

I now take several attitudes as 'given', i.e. for myself they have achieved a temporal state of truth, although many of them may of course be transient. Life should be an eternal quest for truth within our fractal universe, though often painful, many times fruitless and sometimes seemingly pointless. Yet we abandon the search at our peril, lest we repeatedly fall back into the sublime comatose state where at each stage of life our currently chosen set of lies is simply swapped for a less personally disturbing pack. This could be the largest box of them all, and maybe there are no outside windows.

Sometimes I prefer to be disturbed, then my perceptions and senses are heightened. There is both practical merit and value in disturbance. All men were not born equal, but we should endeavour to treat them as if they were. Just in case the roles are reversed next time around. Pascal's choice has much merit, whatever one's chosen faith or prognosis for lifetime(s) beyond this one or not. It may not matter whether Karma is carried personally, collectively or by generations. It will still be a heavy load.

We are bounded and propelled by many emotions. Some of us know that fear and greed drive markets to extremes. Some also know that anger is probably the most important and least understood of all emotions. When used properly it leads to constructive action and beneficial change. When misused it leads to hatred and suffering. When not used at all it leads to depression.

Some also know that power corrupts, and that absolute power corrupts absolutely. And others know that revenge is best served cold. Ultimately, cold revenge for absolute corruption may lead the world to the gates of Hell. And Hell may be a place on Earth. For many people. None of them were born equal. Yet.

As a small selection of relevant and timely personal 'givens' I take:

Mass psychology is patterned and most easily viewed as Elliott Waves in market indexes.
Mood precedes markets and both precede events and economies. And Fibonacci rules ok.
Markets have proportionate bull and bear cycles, made from many smaller significant cycles.
Market participant limbic systems are also affected by planetary, solar and lunar conditions.
The underlying fractal nature of trading groups provides many shorter term opportunities.
Fiat (paper) currencies have never survived in 4000 years of history.
Paper currencies are necessary to pay for democracy, socialism and warfare.
Austrian Economics would appear to provide the only rational analysis in its field.
Severe manias occur in financial markets every 70 years or so.
The current bursting mania is the largest ever recorded. Credit and bond speculator driven roller coaster.
Historically, burst manias always retrace to below the point at which they started.
The likely wave 2 bear market rally within a much larger degree wave A of 4 is probably ending now.
Gold has always been the final arbiter of monetary destiny and not to be ignored.
The Kondratiev cycle suggests an imminent extended period of deflation, not inflation.
The Dollar Reserve Currency was a position of absolute power. It has been corrupted absolutely.
Most statistics published for public benefit are not.
Invisible absolute corruption has allowed many to enjoy an envied standard of living.
Other countries have also benefited from exported dollars. And many have suffered from them.
A developing negative mood trend will lead to more acts of fanaticism, atrocity and division.
Leaders and acts of cold revenge will inspire and inflame negative emotions and acts in return.
Thus are the cycles of chaos and entropy fed once more.
None of this will change unless we can educate coming generations. Maybe its impossible.

Sufficient background for this small box has been set. I read many articles, many good articles, on this and other sites. Yet I am concerned when I see the level of emotion in some authors visibly rising above the level of rational commentary. And then I am scared. Scared for the credibility and wisdom and direction that is urgently needed. And scared that wise heads may roll as quickly as any others once severed from their emotional frames.

We should always be careful what we wish for, lest it come true. Being paranoid doesn't mean they're not out to get you. However, paranoia may not inspire the clearest of thinking or the least emotional of reactions to one's foes. Unavoidable outcomes are usually just that. Unavoidable.

Defeating and disarming fanatics will not happen overnight. Those who have no value for human life would have been more easily disarmed by those promoting global fair weights and measures. Thus it will be a long battle, for paper funded wars will always lead to more wars. Ghandi had a point. How many generations will it take to rediscover the meaning of his life, and to realise that what children all around the world are being taught now is creating the future.

If the scenarios that we envisage come true, and most do now seem unavoidable, then we would do well to see that the world to come will be a very different place. Forgiveness and tolerance will be in short supply. I told you so will not help. Emotional reactions will rarely assist. What we expected to happen may not have possessed the probability that we perceived.

The price of gold may well rise a long way. A long, long way. However, only at it's time of choosing. Desperately wanting it to do so now because of money lost in prior burst paper manias or because those in leveraged positions of absolutely corrupted power deserve cremation does not inspire my rational judgment.

That the current wave pattern for gold in dollars is still corrective and bearish, and that the pattern for gold in several other currencies is still impulsive and bearish, does resonate with my rational judgment. That gold may well first fall in a massive credit bubble deflation seems possible. That it may well then rise a long way in an eventual currency hyper-inflation seems probable. Temporal phases in fractal spaces rarely reveal more than glimpses of themselves in advance. In chart patterns, the future also creates the past.

Hundreds of millions of Western credit bubble inspired ultimate consumers may suddenly stop consuming all the stuff they don't need with money they don't have. At higher interest rates maybe they can no longer afford their debt repayments, or have no jobs. The manufacturers of all the stuff that's no longer needed then no longer need all the stuff that now makes the CRB fly. The many millions who would like to own gold for safety may be unable to. They might be struggling to buy food, so sparkly things seem a luxury to be passed over. At high interest rates, maybe deposit accounts once again look attractive for a while. Central banks may find a new Washington agreement locked in their vaults. It would seem unlikely that a Western spending and trade deficit deflation would follow the same path as a Japanese savings and trade surplus deflation.

An impulsive wave 3 of A of 4 decline in Western paper debt may set the deflationary stage for a severe wave 2 corrective pullback in fast developing Eastern manufacturing bases. And then a new Kondratiev cycle, with corresponding powershifts. We don't know. We can't know. We can only guess. Guessing is good, and can be done well. So long as we remember we're guessing.

Beware emotion and beware certainty of opinion. If the future was knowable we wouldn't need to be here. I now know myself better than ever. I also now know that I don't know the answers to more questions than ever before. The challenges of the decades ahead will be severe. Leaders and financial and geo-political commentators around the world will need to strive each day for clear thinking and rational choice rather than reactive analysis and emotional reaction. Only then will light shine out beyond and through the darkening walls. And only then will the twin roots of forgiveness and progress begin to take hold.

Travel Well,

the March Hare

P.S. 'Something Else' was a university radio music show occasionally broadcast by a couple of weird electronic engineering students. Tim was the other one. He ended up doing medicine. I switched to psychology. You can't know.

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