	Generational Dynamics
	Forecasting America's Destiny ... and the World's

\| HOME \| WEB LOG \| COUNTRY WIKI \| COMMENT \| FORUM \| DOWNLOADS \| ABOUT \|

Generational Dynamics Web Log for 25-Mar-2010
New York City premiere of Generation Zero documentary movie

Web Log - March, 2010

New York City premiere of Generation Zero documentary movie

On Tuesday evening, I finally got to see the new documentary movie "Generation Zero," in which I appear as commentator, and there were some things that surprised me.

The main thing was personal. I was surprised by how much I appear in the film -- and how brilliant Steve Bannon was in making me look good. The movie really is based on the theory developed on this web site, and its my commentary throughout the movie that ties everything together. It was really a thrill for me to see it. Steve has really accomplished something that I've failed to accomplish in 8 years on this web site -- he's presented generational theory in a way that makes it clear to everyone in the general public what's happening.

Another thing that surprised me is how much the movie saddened me. I write about the coming financial crisis all the time, so you'd think that seeing it in a movie wouldn't have much effect on me. But as a self-protective measure, I can usually build a mental wall between myself and what I'm writing about, as if I were writing about things happening on another planet. But seeing this movie broke through that wall, and really made me feel the impact of what's coming.

This is a very powerful movie, and even brought home to me how catastrophic the financial crisis is, and how it's headed for total collapse. If you want to understand what's coming, so that you can prepare yourself and your family for it, then you and your kids should see this movie when it comes to movie theatres in a couple of weeks. On the other hand, if you want to ignore what's coming, I understand that prices on a 65" flat screen HDTV have come down to only a couple of thousand dollars! Go for it!!!

Hyperinflation versus deflation

I do have to point out some differences with the movie's final conclusions.

If you're going to make a movie with a chance of gaining any sort of popularity, then it has to have an ending that provides the audience with a semblance of hope that they can go on living their lives as before, and someone else (the President, the Congress) will do something to make everything ok.

I've never taken that pose on this web site. I've always had the view that I want to present what's really coming, so that people will be able to use the time to prepare themselves and their families for it. However, I'm also aware that this is is unpopular with a lot of people. Just a few days ago, for example, a woman in Portugal wrote to me, "It also seems like you are stuck on a sort of hamster wheel, John, with a striking lack of balance. ... I challenge you to get out and smell the roses!!" I guess I've lost her as a reader, but then, I never really had her, did I?

But the producers of Generation Zero do hope to have some commercial success with the movie, and that requires some kind of "hopeful" ending. I'll comment on two aspects of the movie's ending.

First, what do we do to solve the problem? The movie shows a big "Stop" sign, and the voice-over says, "Just stop spending!" Well, the government CAN'T stop spending. This is the whole generational aspect of what's going on today. You have hundreds of millions of people (billions worldwide) who are committed to this spending path, and the momentum cannot be stopped. The world's financial system is like a boat floating faster and faster toward the waterfall, and nothing can stop it. How long it will take to get there, and what will trigger the collapse, cannot be predicted, but collapse cannot be stopped.

The second aspect is the answer to the question, What happens on the other side? What happens when the boat goes over the waterfall? What will the world look like?

The movie correctly points out that the the amount of money (US dollars) in circulation has tripled over the last couple of years. But from there it goes on to compare the American situation to that of the famous Weimar Republic situation of 1922, showing pictures of people pushing wheelbarrows of money to buy a loaf of bread.

The situation today is COMPLETELY DIFFERENT from the Weimar republic situation, and there is NO CHANCE WHATSOEVER that those scenes will be repeated. (See my article on "The bubble that broke the world.")

The dominating feature of today's financial crisis is the hundreds of trillions of dollars in credit derivatives, especially credit default swaps (CDSs), in investment portfolios around the world. A couple of trillion dollars of money from the Fed is like a teaspoon of water compared to the ocean. These CDSs are aggregated in such a way that when the right kind of default event occurs, there will be a chain reaction of non-payment that will cause panic and the collapse of huge amounts of wealth.

Most people don't realize what a sickness these CDSs represent. A CDS is essentially an insurance policy that pays off when some company goes bankrupt or otherwise defaults on its bonds. What really amazes me is that the CDS buyers and sellers need have no relationship to the bonds being insured. You're not allowed to do that with life insurance or fire insurance, but this happens all the time with "bond default" insurance.

Suppose that your name is "Jack Jones." It's as if I and my next door neighbor decide to make a bet on whether you, Jack Jones, are going to die in the next year. If you live, I get a thousand dollars. If you die, my next door neighbor gets a million dollars. It's really a sickness.

Now suppose that millions of other investors get the same idea, so that if you, Jack Jones, die in the next year, then tens of trillions of dollars will have to be paid by sellers to buyers. You can see where this is going. Some of those sellers will be unable to pay off that insurance, and they will go bankrupt. Those bankruptcies will cause other insurance payouts to come due, causing further bankruptcies.

That means that hundreds of trillions of dollars are going to disappear from the financial system, causing a massive deflation that will not be affected at all by the Fed "printing money."

That's why I keep telling people to save cash. If you have a house, then store cash in a hiding place in your basement. Otherwise, put it into an FDIC-insured bank, but be prepared to withdraw it at a moment's notice.

There are people who claim that the financial crisis has already occurred, and it's over. I hear this ridiculous claim on CNBC and Bloomberg TV every day. But no one can watch the Generational Zero movie without realizing that the crisis is not over, and there's far worse yet to come. Or, go for that 65" flat-screen HDTV instead. It's your choice.

(Comments: For reader comments, questions and discussion, see the Generation Zero - The Inconceivable Truth thread of the Generational Dynamics forum.) (25-Mar-2010) Permanent Link
Receive daily World View columns by e-mail
Donate to Generational Dynamics via PayPal

Web Log Pages

Current Web Log

Generational Dynamics Web Log for 25-Mar-2010 New York City premiere of Generation Zero documentary movie

Hyperinflation versus deflation

Web Log Pages

Generational Dynamics Web Log for 25-Mar-2010
New York City premiere of Generation Zero documentary movie