A major Australian company lost a lot of money because its CFO had hedged the A$ based upon the fundamentals expecting it to decline as the trade deficit widened. The board ordered him to meet with me (Martin Armstrong). You can imagine his goal was to try desperately to prove me wrong. Anything I said he replied that could be coincidence. It was frustrating. So I asked him what was his background. He became embarrassed. He replied nuclear physics assuming I would then attack him for lacking a business/finance degree. I said great! Let’s look at the markets from the perspective of the laws of thermodynamics. His eyes sparked. His mouth dropped. He looked at me and said – OMG, there has to be a cycle! I said that’s right. Cycles and understanding this was how all energy moves is the key to grasping the conception of the world around us in every aspect. Perpetual motion in any system is not possible – hence Marxism and Keynesianism must fail for you cannot remove the cycle from the economy. You cannot create perpetual economic growth without recessions any more than either the Democrats or Republicans can perpetually control Congress.
Posted on: Fri, 07 Jun 2013 11:30:59 +0000
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