Times for Change

Debt laden empires will collapse in front of your eyes

Great Britain will not remain

Curses of colonialism, you will understand

Materialism will be blown, Spiritual seeds will be sown

Every excess will enter a self-correcting vibe

Economy will make it easy for new Leaders to rise

Jobless people with lot of energy will come

Not diverted will lead to riots and loots

Correctly directed will create a revolution

Times of revolutions with Economic demise

Governments will fall and People will rise

Rise of a golden bird, ready to fly

The Blame Game !

Who are we going to blame ?

Are we going to blame European countries for debt above their levels ?
Are we going to blame US for its monetary policy ?
Or China for its currency stance ? blame the speculators and hedge funds ?
Or ourselves for consuming more with debt, buying more houses than we will ever need ?
Or the banks, for lending us, knowing of the repercussions ?
Or the politicians, or the finance ministers ?

The Blame game is going to start soon, along with the turmoil.
Everybody has to be blamed. The too fast growth around the world, too fast changing lifestyle, too much consumption, no care for the mother nature, the debt, the monetary policy, the prosperity.

The boom is over, the banks will be no more the best sought places to work for. It will take time for everyone to accept.

Only two solutions to stop the blame game. Start a fight or blame the Gods !

The theory of Happiness

We all have skills ( not the learned ones, the unlearned ones). The ones which already exist in our subconscious mind, only for us to discover at a later point of time. But we run to acquire skills, consciously, this in general takes a lot of effort and leaves people unsatisfied even after lot of efforts.

How much ever we learn from the conscious approach, we can never beat somebody who has the same skill in their subconscious. Working in fields which does not uses your subcon skills, eventually will lead to higher amount of efforts, lesser satisfaction.

Just work with your subcon skills. Differentiating between con skills and subcon skills will be difficult, if you have lived with them too long. The best approach is ask people around you, what you are good at. Your happiness lies in your subconscious, go search for it.

Those people are very lucky whose subcon skills are just those, which are required to fill their subcon desires. In such a case, whatever be the external interface (the real world) to such minds, they will at the end eventually feel happy and content.

About a girl

Arranged marriage, a concept quite pronounced especially in India, grows everybody nervous.
Imagine this, you took years to choose what kind of a career you want, and you ended up in a wrong one. Choosing a right Life Partner, based on some 30 minutes conversation, is a tough task.

After conversation with lot of fellow friends and colleagues. I always thought, those 30 minutes, will be full of information about the girl. One must take cues from body language. One must look at her interests and hobbies, to find whether she will be compatible. One must think about the kind of questions to be asked, so that maximum about her personality, attitude, likings and disliking can be found. About her basic nature, kindness, ego, ambitions and dreams. All of it totally freaking. No one wants to get this one thing wrong, because it matters more than your career or money. This is more important than any other decision you would have taken in your lifetime.

A complex problem, with complex inputs. I always believed in simplicity being the ultimate sophistication. I asked my subconscious about a better approach to arranged marriage. Here is what came out.

"Losing the sense of time, is the most amazing thing about Love, Dope, Alcohol and Meditation.
If one analyzes the conversation so much, than a good conversation cannot take place at all. The best way is to not analyze the conversation. Do not think about what to ask. Do not predict anything from the answer. Let things flow, ask about the next random thing which pops in your mind. Remembering the conversation is also not important. At the end of the conversation, look at the time. If 2 hours have passed and it feels like 30 minutes, she is the right girl. "

Theory of Common Conciouness

I idea of Common Consciousness already exists. This is just my interpretation.

There are two parts of our brain. The conscious, and the sub-conscious. There may be more parts which we do not understand.

All our life, we live to satisfy our sub-conscious and trying to know more and more about it. Most of the time, we do not even know, why we reacted to particular situations in a particular manner. Sometimes, we demonstrate skills which we not at all posses in special situations.

All the life, the conscious tries to understand the subconscious by giving in random inputs and the subconscious produces random output. Then we try to predict the wiring inside our subconscious by understanding the output. This is how, with life, we tend to define our personality, our skills, our liking, disliking and a lot more.

According to philosophy of Osho, if you want to reach divine (my definition of divine is above the problems created by your subconscious) , you have to get over your obsessions.So, if you have a strong desire for something, do that till the extent that, the node in our subconscious which gives us pleasure in doing that thing, stops reacting to this pleasure stimulus.

Now, the common consciousness theory suggests, that when common traits going on a world level (like materialism, like world-tours, like going pubs, like rock-n-roll, like 70’s fashion crazy decade) these all come as a culture around the world. And when all the mass-sub-consciousness get totally satisfied with this pleasure, the sub-consciousness of all human minds together evolves to stop liking it. These are called trend changes for the future.

Currency and lesson from the history

Once upon a time, in human history, we used Salt as a currency. People used to exchange things in terms of salt. If you want to buy something, make a salt pile near the merchant, if the merchant likes the size of the salt pile, he will exchange goods for salt. Salt was scarce, because most civilizations were flourishing near rivers, quite away from the Sea.

Some men realized that we can easily produce Salt from the Sea. So this blacksmith, this farmer, and this artist, and this doctor of the ancient times, stopped their profession and started making salt. They were very happy, and thought they are intelligent by so less work, they can get everything they wanted in their small world.

Soon, other men also realized, that it is better to produce salt rather than working. So lot many men stopped produced essential things, everybody was involved in producing salt. Ofcourse, Salt lost value.

Then we used Copper and brass minted coins. Chinese, used Silk as currency. Both ended up at similar fate.

Then came the discovery of Gold and Silver, Silver faced similar fate. But Gold, retained its value, because it was less under the crust of the earth. How much ever men were involved in producing Gold, the hardwork in producing gold was more than the hard-work in producing something which Gold can buy. So Gold never lost value, it prevailed as main currency for thousands of years.

After evolutionary lessons of salt, copper and silk, we finally settled for Gold as currency. Gold was accepted by every civilization. Forgetting the lessons from the history, look at where we are right now, Paper.

Two sides of Capitalism

There are two side on which Capitalism can collapse. One is if the Capitalist, does not want to spend his capital, because he cannot think of any productive use. This leads to recessions. Here, capitalists hoard on to cash, instead of spending it. This reduces the velocity of money leading to unemployment.

On the other hand, if the worker, does not want to work to the capital of the Capitalist. This leads to inflationary environment. This increases the velocity of money, leading to full employment but high inflation.

It is this balance, between the worker and the capitalist, that has to be managed to run the economy. However, we have seen for a lot of time, the imbalances from the side of capitalists. However, great imbalances have never been seen from the side of the worker.

Things are changing now, because everybody has started to feel rich. The problem is, if a worker thinks, he is rich enough to sustain his daily living, he will stop working. The worker, is never greedy like the Capitalist.

With more money, the greed of capitalist goes even higher. But with more money, the complacency of the worker goes higher, and the amount of work goes lower. A feeling of contentment and self-satisfaction is coming to the workers in these prosperous period. Lot of them, do not want to work anymore. Remember that, it is not gold/silver or currency that have any value, the valued thing is the hard-work of men you can buy with these currency. When these men do not want to do the hard-work, the money is worthless. Money goes from everything to nothing, when these workers are content.

If we cannot take the feeling of contentment, out from the workers, the capitalist system could collapse. The natural progress of opulence, is hindering with the nature of the worker. We will soon see, what nature wants.

Our great growth period

Starting from 2002 to 2008, the whole world showed high economic growth which was not seen ever by humanity. The governments all around the world, printed a lot of money, which lead to economic growth. Productivity increased around all economic sectors, steel and cement production increased by 3-5 folds, new infrastructure in terms of rail, roads, bridges were made. The number of cars on the roads doubled. Wages also doubled in few years time.

This money was entered through the banking system by credit expansion. Banks were lending like anything, this led to cities getting overpopulated and towns underpopulated. Lot of money printing led to rising commodity prices, real estate prices and stock prices. This was a time when speculators earned more than real hard working people. Every fifth person was speculating and every third person was a property broker in these times.

Everybody was happy to earn money, and also too see their house price inflate. Companies added extra production capacities. Most other companies speculated by buying smaller companies to increased production. This also lead to and M&A boom.

This time became a me-me-me generation for status-seekers. It was a time of new-breed of millionaire. Everybody looked intelligent in those times. Everybody had too much to make and too much to spend. Mobile phones, Internet made people believe that we are entering a new modern era which will be much better than those sci-fi movies had shown.

This was a time, when too much money was chasing too few assets. Real estate boom went on all over the world. Mortgage industry flourished. Higher home equity, and more money in the system, made people happier to worry less about the future and spend more.

Globalization got its true sense, just 20 years back when people were living and closed communities will all their relatives in the same city/village. This time people thought about World tours, living in 10 cities for a life time. One leg on Dubai, other in Singapore and third in London. Unachievable prosperity was achieved. Humanity felt proud of it. Capitalism was appreciated like never before.

It was all about Growth. Everybody business dreamed to grow 10 times. It was a time when Money was everything. Amount of optimism in everybody was unimagined. It was, as if we are going to grow forever, without ever coming back.

It was also a time of exceptional me-me-me success stories. Absolute assholes of the world, speculated to earn millions. This was a time of success stories, everyone grew their businesses n-folds. Everybody was proud of their achievements.

But in real,

Real estate and house rents were appreciating faster than the real wages. Food prices were going off the roof, because they cannot be mass produced like mobile phones, cars or textiles. Even in textiles, cotton clothes were getting expensive because cotton cannot be mass produced, but polyester can be. Especially, the poor was not even able to afford everyday food and a 25 sqft. space to sleep, but mobile phones and nice clothes, didn't made him feel like poor anymore. Poor was also proud and happy.

The situation of educated youth was even more pathetic. In 1990, we were facing problems of employing our men, now leave men, women employment rate was also high. It was impossible for the youth to afford metro cities life, without a working spouse. The real wages though rising in currency terms were actually shrinking, now two people have to work to run a household, instead of one. And i am not talking about extra luxuries, just a normal household, with a secure neighborhood, hygiene, education for the kids, and healthcare for the rest of family. Leave cars and air conditioners. Every housewife, was trying that extra arrangement for little extra money.

Businesses and people with real hard work and no speculation didn't made much. It was always about the extra arrangement ( jugad) which made businesses running.

Everybody will realize by 2011 or 2012, that our real wages are shrinking. But if you realize, it so late, you will loose a lot.

Capitalism vs. Communism

I read some newspaper article defending Communism and saying this is the systematic collapse of Capitalism. Also, quoting the famous Marx argument that "Capitalism will produce internal tensions which will lead to its destruction".

My thought is our idea of socio-economic system is totally wrong. Let me explain.

The capitalist system, uses human greed as the building block of a system which is supposed to create prosperity for all. However, American dominance of the world tweaked the system design such that it creates prosperity for America. How much ever resources or hardworking men or capital other countries get, prosperity will always be with America. This is called American Hegemony.

Capitalism has a systematic flaw, that humanity will create so much production, and capitalism has no way to destroy excess capacity except by killing people using a war.
Communism has a systematic flaw, that humanity will not have enough motivation to create things, because benefit finally goes to the community or the society.

Whether Capitalism fails or not, but it definitely gave us a wonderful time with lots of ups and downs. I don't think that Communism was a great socio-economic system either. Communism would have failed badly and humanity could have never come close to the kind of development Capitalism could achieve.

What is the best socio-economic system, which is self sustainable, is not prone to systematic flaws ?

There comes the idea of Religion. A system above all socio-economic system, tried and tested, without systematic flaw.


When human beings feel intense heat from the sun, Capitalism suggests human beings for invention of Air Conditioners. However, Religion suggests reaching such spiritual levels in mind, that you do not feel the heat anymore. Capitalist system is materialistic, where body is cooled down when it feel the heat. Religious system are spiritualistic, by cutting of the pointer in mind which sends the sensation that body is feeling heat. I will leave it up to you to decide which one is better.

Materialism and Spiritualism are similar to idea of accessing things via value and access via pointer in C/C++ respectively. We need to fill our material desires by taking the pointer to that desire and pointing it to NULL. Instead of creating random things to fill that material desire.

Under capitalism, we have become such mother fuckers that we are fucking up our mother nature in a 6 billion people group orgy. Why do you need a dining set which defines you as a person ? Why do we need to have perfumes and watches to differentiate ourselves ? Why do you
want to roam around the world ?

We have become obsessed with these material desires to obtain such things. And after obtaining frustrated to maintain such things. After frustration, fearful of losing such things.
We have researched all the wrong things. It is time to research our minds. It is the time for the world to leave its materialism and start moving towards spirituality. This financial crisis will mark a lot of things. The crisis has just begun.

Inflation going Hyper !!

This post explains you why inflation will go Hyper.

Assume that current monetary easing leads to mild inflation in India and China. India and China, already have a high base effect of last year. A 5-10% inflation again will lead to havoc in the economy. Initially, governments will try to control inflation by monetary tightening, but their is so much amount of money already in the system that monetary tightening is not going to work (as it was not working in May, June, July when inflation finally peaked at 13%)

Bond markets are already showing signs of a bubble bust, so governments which have screwed up their finances will find it problematic to raise money, and hence will resort to printing money.
Eventually, India and China will have to intervene in the currency markets, to prop up their currencies. This will lead to inflation in US, as dollar will lose value, when these two countries intervene directly by selling dollars out of their forex reserves. US will not like it, and will probably piss-off India and China, by ordering them not to intervene in the currency markets directly.

If, India and China, are successful in the currency markets, the inflation will be exported to US. That means, inflation has gone global. Now, all global commodities will start rising. This again leads to higher inflation in India and China.

If, India and China, are unsucessful in the currency markets, they will hyperinflate. That means, half of the world population is facing high inflation. This will make things even more worse, because it will definitely lead to a massive social unrest and a war.

I know, you did not got it all, but atleast keep 1 year of food stored at your home. Live life the old way, when people used to buy 500 kg of wheat/rice at the time of harvesting season and consume it for whole year. Also, now people have guest room, childrens room, living room, dining room but they have forgotten the significance of store room. Have a store room at your home.

Understand that we are not that modern, appreciate the old ways, for they have seen more than you to make something a part of the culture. To understand what exactly is going to happen, just imagine a 1-year curfew is taking place, and how should you be prepared. Things will get worse from as early as 2010. You still have good 9 months to think, watch, but once you are sure, take action. Watch commodity prices at your grocery store or a commodity market website, and make your own inflation index. Buy equities and gold, they will be safe and liquid heavens to preserve your wealth against rampant inflation. Buying realestate will also be good, but ill-liquidity will be a problem.

China and the US

In an earlier post, Rise and Fall of US, i talked about how other countries will ask for their money back which will lead to busting of the consumption boom. Today, China did that in an indirect manner, China Urges New Money Reserve to Replace Dollar.

Earlier also Iraq asked for money back in 2003, but they were forced to live with the current system again. But this time it is the Roaring Tiger of the World. I just want to see, how US will suppress China's voice.

As Keynesian economic theory suggests, War is a good way to get out of worst economic crisis.
If we have a war which looks like an highly improbable scenario right now. The war front is little bit clear except for the role of India and Japan.

AXIS : China, Russia, Pakistan.
ALLIES : US, Britain, France, Australia, Germany, Italy, Canada.

Seventies Show

The seventies, in US, along with it brought high inflation, gas shortages, fresh food shortages. The economic growth, after the 1973 oil shock slowed down. Inflation started. Comparing life from 70's will be good enough case to study, if you think next 10 years will be a high inflation period. This was just a mild inflation, interest just jumped up to 22.5%. If you however believe in the severe Wienmar German sort of inflation, you should refer to the earlier post The American Hyperinflation.

Here is a little description of seventies.

1. Lot of people started growing vegetables in their backyards. The Beach Boys stopped singing about cars and started singing about vegetables. The unfortunate thing for now is, now people live in flats and have no backyards. So, be prepared to stop eating fresh vegetables/ fruits. You will not be able to afford it. But, you can get the beach boys song "Vegetables" to remind you of the good times.

2. Bigger the city, bigger the problems. The social unrest, fresh-food shortages were more seen in bigger cities rather than small town. Small towns closer to agricultural lands had less social unrest. Agrarian villages were in best shape.

3. Gas was not available easily. Most gas stations only served to regular customers. Cars suddenly lost their coolness, were not important at that time. Bigger the car, more people hated it. So, in current times, it will be SUVs and hummers which will be out of the picture. If things get very worse, cars will some luxury, which we will get at an amusement park for $2 a ride.

4. Restaurants turned a luxury normal people could not afford. The scenario was grow your own food, cook it yourself, eat it and sleep. Or become a hippie and smoke pot and rock-n-roll. No wonder, most of the population chose the latter.

5. Fashion changed every fortnight. People were awesomely crazy in those times, everything weird was cool.

6. People liked to listen to Osho talking about how great the word fuck is. But they did not wanted to listen to any motivational talks. It was a life which had no tomorrow, just have enough resources to live till the end of the night. When Socio-economic boom is prevalent is a great time to start your own company, but Socio-economic problems are prevalent in the economy, is a great time to start your own religion. Believe me, having your own religion is much better than having your own enterprise.

7. That was the time when the rule was, Money does not always rules.

Wealth Preservation

This is ideal example of wealth preservation, above all common beliefs.

Suppose you are an astronomer, and you get to know that a massive meteorite will strike Earth, which would destroy half of our population. You know, that you cannot help the world, but right now you have 10 million dollar to help yourself. What do you think will be best and worst thing to buy with your money, assuming that you will live at the end of the massacre ?

Post your comments, and i will tell you, at the end of it what is the ideal thing to do.
Keep the format of your comment as,

Best : Food, Gold, Keep the rest of cash.
Worst : Equities, Realestate.

Stupid Assumptions

Here are a lot of our common beliefs with reasons that they are wrong.


Wrong Assumption 1 : Price is about quality of the product.
Take this fundamental law, price is always about supply and demand and has nothing to do with the quality of a product. Price (Salary) of a man does not depends on his intelligence. Price of a product not on its quality.
In 1800-1900's, Elephants were used as a mode to travel. Then came the Car, it was a luxury, it had speed, it had the power, it carried a high price tag also. Today, in 2000's Elephant is expensive than a car. The elephant is slow, has less power, smells bad, does not have an air-conditioner in it, still it is more expensive than a car. This is just because there are more cars and less elephants. Rare coin, however ugly will have more value than a not-so-rare coin.
Always keep rare things with you, don't keep what is ample.

In 1900s, big landlords and farmers, were rich guys. Then came the period where industrialists were rich. Then rock-n-roll guys were in the hall-of-fame. Then again industrialists. Then the technology champs. Then the Oil Barron's. Then the Wall-Street guys. Then ...

Wrong Assumption 2 : Equities cannot rally without a rally in corporate bonds.
A wrong argument is, if the price of corporate bond is falling, it indicates debt-holders do not trust corporate, so equities cannot rally until the trust is back.
However, if there is high inflation, corporate bonds will continue to loose value, however equities will be rallying. The trust has nothing to do with it.

Wrong Assumption 3 : Price of an underlying asset has nothing to do with money supply.
Price is more about money supply rather than supply-demand of the asset itself. If governments increases money supply, the price of the asset has to rise.

Wrong Assumption 5 : I am safe to keep my money in a 8% FD/bond/ NSC certificates.
The inflation that our government reports is never close to reality. The inflation number reported is the inflation for labor class. The average inflation for the Indian middle class in last 5 years, was well above 15%. The average inflation for a Indian upper-middle class in last 5 years was above 20%. Price of everything doubled in last 5 years. Whether it was a pair of jeans, the rice-wheat you eat, shampoo, doctors fee, medicines, condoms, edible oil, a car, a bike. Take anything you wanted to buy from your money and look at the price change between 2003 and now. So effective if you invested in NSC certificates, you made a overall purchasing-power terms loss. This was because, money supply was increased, so everything increased in price, except for your bonds.

Wrong Assumption 4 : People always burn hands in equities, commodities but they are still in it.
Take any five year horizon, assets will outperform cash or bonds. Even if you take peak and trough points in a 10 year period, assets will outperform cash or bonds. Don't worry about the daily euphoria, about everyday price changes, about market crashes, in a longer time period it will always be better to be in well-diversified equities/commodities/realestate rather than cash or bonds.

People live with their wrong assumptions, until they realize they are severly wrong. I want you to think rationally, and change your wrong assumption before you go severly wrong.

Brutal Markets

Disclaimer : All the data and facts are taken from random websites and might be wrong.

The worst economic crash in human history, is not the Great Depression. But, the crash of 1340. The crash after which Black Death followed. Here are some interpretations of what happened.

1200-1340 was like a golden age for man. The economic boom which existed during those times was big. Silk, Cotton clothing were discovered. Shipping industry boomed and trade around the world started. That was the time, when the principles of free trade and free markets flourished. The world got globalized, Silk Route became famous. Civilizations interacted. Trade flourished.

Venice was like the trading hub of those times, the equivalent of New York or London. Fortunes were made at Rialto in Venice, the Wall Street equivalent of history. Whole bullion trade was globalized from Venice.
Gold was the currency primarily in India and China. Silver was the currency in most of Europe.

The inherent behavior of currency is, since it is the sole thing to keep, it is always overvalued.
Although, taking positions against overvaluation of a currency is a stupid thing to do, but it is always overvalued. Since, Silver bought everything in Europe, it was overvalued in Europe.
Gold bought everything in India and China, gold was overvalued in those countries.

Venetians discovered this great trade, and brought gold to Europe and sent Silver to India.
Mongols also looted Gold from India and China, and sent it to Venice. Venice, changed the currency standards in some European dynasties from Silver to Gold.

This led to oversupply of Gold in Europe. This oversupply lead to loss in value of Gold in Europe. But, how do you define Gold lost value, since it was their currency. Gold loosing value means, everything else increased in price including all important food items. Prices continuously rose from 1290-1340 relative to Gold and Silver in all of Europe, India and China. High inflation period started, because Europeans took too much Gold in their system, without increasing the productive output. This looted wealth, did not created prosperity in Europe but caused high inflation.

People started dying from Hunger. Rodents obviously spread on dead bodies, leading to a plaque called Black Death. Horrifying Black Death spread all over, killing 33% of the European population.

This thirst for Gold, eventually led to destruction of whole Europe. Remember that Wealth should never be accumulated, it should be distributed. But Mongols, wanted the Gold from everywhere. If you accumulate, all the gold in the world, you will not end rich, because gold will loose its value.