Meanwhile emerging market debtors - who have embarked on a $3.3 trillion dollar denominated debt spree in the wake of the financial crisis - saw issuance ground to a halt in the second half of the year. This provided a “telltale” sign that the financial conditions were reaching an inflection point, accompanied by large depreciations in emerging market currencies and slowing domestic growth. “It is as if two waves with different frequencies came together to form a bigger and more destructive one”, said Mr Borio.Doesn't work that way. When you mix two waves with different frequencies you typically get a more complicated wave, not a stronger wave. A much better analogy would be a tidal wave hitting the beach. While a tsunami passes through open ocean it does no harm. Ships can ride up and down as it passes. The open ocean seems "infinite" when you're in it. The beach is a hard physical limit. When the huge blob of water has to hump up over the sand, it spreads across the land and smashes things. Our non-paper digital world fools us into thinking everything is open ocean. We can draw nice straight lines going up forever! Or we can draw infinitely increasing exponentials! Yes! More! More! More! The computer doesn't argue, doesn't warn us when to stop. Floating-point arithmetic can float up and up and up with no limit. Debt of a quadrillion? No problemo. 10^15. Just a few neat symbols. Quintillion? 10^18. Still a few neat symbols. When those bonds come due, or when the bond-writers start getting seasick, the wave hits the beach. THIS IS THE STRONGEST AND BEST ARGUMENT FOR STICKING TO ANALOG MECHANISMS AND PAPER MONEY, AND FOR AVOIDING ALL DEBT. USE REAL PHYSICAL INDICATORS OF MEASUREMENTS AND VALUE. PHYSICAL MECHANISMS HAVE LIMITS, AND LET YOU KNOW WHEN YOU HIT THE LIMIT. WHEN YOU HAVE NO MORE PAPER RECTANGLES, YOU CAN'T SPEND ANY MORE. LETTING EVERYTHING RUN IN SOFTWARE LEADS TO DELUSIONAL THINKING.
Polistra was named after the original townsite of Manhattan (the one in Kansas). When I was growing up in Manhattan, I spent a lot of time exploring by foot, bike, and car. I discovered the ruins of an old mill along Wildcat Creek, and decided (inaccurately) that it was the remains of the original site of Polistra. Accurate or not, I've always liked the name, with its echoes of Poland (an under-appreciated friend of freedom) and stars. ==== The title icon is explained here. ==== Switchover: This 2007 entry marks a sharp change in worldview from neocon to pure populist. ===== The long illustrated story of Polistra's Dream is a time-travel fable, attempting to answer the dangerous revision of New Deal history propagated by Amity Shlaes. The Dream has 8 episodes, linked in a chain from the first. This entry explains the Shlaes connection.