A Belief System Beats No Belief System Every Time
Falsifiability tests whether you have data or null data
A boss once told me, “a belief system beats no belief system every time.” He used this line whenever a prospect would begin circular reasoning, in order to reject our sales pitch. I thought my boss was injecting his own circular reasoning in the conversation. He'd lead the prospect back to the original sales pitch and try to close them. I thought the sales pitch was crap, so I would chase the client around with this or that self-serving calculation. This would frequently fail. I didn't understand why. I thought I was being so clever and innovative. My pitch failed because I thought in dollars not emotions. I did not have a point of view, I had a product to sell. I considered my boss to be antiquated. He didn't understand the current business environment. But he would close more of my prospects than I could. He closed deals his way, because he knew the product worked the way we were instructed to sell it. I had no place for the product in my world view, so I tried to solve esoteric problems with it. I didn't believe in the product and it didn't fit into my worldview. It is only much later that I understood that a belief system requires effort to develop. It has been tested by reality. By contrast, no belief system just goes with the flow. Whatever is easiest. That's not credible. No belief system is an animal. Chases pleasure, flees pain. Animals are predictable and we use their instinct against them in order to dominate them. We have a data model we use to understand their behavior (hunting, farming, zoology, biology, etc) and we make predictions. Predictions must be falsifiable in order to be useful data models. Theoretical models incapable of making predictions are not models.
What passes at present for alternative analysis is frequently an unprincipled attempt to dominate the audience. To foist a new encrypted cult of personality onto a weary consumer. The audience becomes conditioned to look to the writer for authority and validation, rather than as a source of information. And the writer corrupts himself by accepting that transaction. Too many fake-analysts are like influencers: they reiterate and repackage something someone else already said, to no other purpose than to reinforce a selected reality. That can have merit. It's important to collate and organize one's data framework. However, too many fake-analysts exploit the ignorant reader with a 'didja know,' that masquerades as innovative thinking. Demographic association is a poor method for data sifting. Demographic analysis is why people are incorrigible when it comes to Covid, Climate Change, or the Ukraine war. Their beliefs are part of a belief system impervious to reason. In order to entice them to a better way of thinking, we have to offer a belief system that encompasses their experience. Because these demographic beliefs are mythologies and mythology is impervious to reason. To rebut we must demythologize. Mythologies can only be defeated by replacing them with a better one.
Rationalism is my preferred mythology. It is harder to hack and subvert than 'wisdom of the crowd' or 'tried and true' or any other bs method. The problem with rationalism is that it is anti-authoritarian. But then we're left with Polymarchus's riddle: prove to him that might isn't right. He's got a sword. He's got a gang. How did Socrates beat him? He gave him and his dad (Cephalus) a mythology of a perfectly just society that catered to their biases. (https://archive.org/details/allen-bloom-the-republic) Ideological Judo.
I'm interested in a predictive model/heuristic, because a good system is stronger than a good person. Worship of individuals is part of what has gotten us into this mess. People need to test their belief systems and be prepared to be wrong. But the whole influencer economy means that being wrong can 'destroy' someone's reputation and end their business as purveyor of null data. This form of intellectual cowardice seeks the profit and not the loss of putting one's beliefs on trial.
If you make too many fake predictions, you don't have a belief system, you have a silly song.
If you make too few predictions, then you don't have a belief system, you have a cult of opinion. Just as there are those who are eager to become armchair generals and military analysts, there are others who are eager to become one month... or even one year 'experts' on financial markets. Lately, some credible figures who I shall not name, have been shaming themselves by parroting dedollarization talk without having a coherent thesis, and who obviously have no experience in finance. This allows them to be misled and mislead others in turn. Shameful when intelligent people hop on a band wagon. I was on the anti-Trump bandwagon when I first interviewed Chad-X. I wanted to keep my self-righteous preamble in order to demythologize myself. Chad-X knew what was up more than I did, but I wanted to hop on the anti-Trump team for dubious reasons.
Falsifiable predictions either correlate or they don't to events. They should be buttressed with a steelman argument. https://debate.fandom.com/wiki/Steelmanning But if they are not falsifiable, then they are not predictions. And without predictions, we do not have a model. The more accurate the model, the better. Timeline and order of events that are somewhat mutually exclusive or complementary make all the difference. Poland attacking Ukraine in August and Belarus attacking Poland in Ukraine in September is quite a bit different than 'Poland and Belarus at war at some point.' In short, one must use judgment when building a model. And Kant makes the point that judgment is both phenomenal and noumenal (oh shi—I hope I'm remembering my Kant correctly...) so learning it gets you better at an instinct for judgment. So no set of axioms will satisfy an intellectually dishonest or oppositional figure. Likewise, 'feels' fails. We need this intersection of methods. Only amateur logicians think this is a 'soft' solution (https://philpapers.org/rec/HAAEAI-2). The best predictions will then fall into who, what, when, where, why, and be falsifiable: yes or no.
My models are not financial advice and my predictions are not endorsements. They are data models I've constructed and tests of theses I've developed during the course of my own research.
United States: Totalitarianism will catch up and there will be a credit event from commercial real estate this year. That will hit everything from sovereign wealth funds, to life insurers, to municipalities, corporate balance sheets... everyone. Global trade will freeze up. Whether or not the US defaults on its bonds (debt ceiling) doesn't matter as much as what happens to the owners of all that commercial paper. Will the US bail out foreign creditors along with domestic ones? Seems likely. What does Quantitative Easing do when interacting with tight money? We're about to find out. (https://insurancenewsnet.com/innarticle/1-5-trillion-commercial-real-estate-market-debt-signals-trouble-ahead).
Real estate is one of the main things the US has going for it. America is the world's office building. City governments are responsible for the damage. They will get the squeeze from the national political machine. Expect crisis and then reform in cities like San Francisco. Crisis in 2023, and politicians paying for it in 2024. Reforms from 2025-2026. Cities and states will bear the brunt of the reforms. The federal government will just go on a spending freeze and then go back to bad behavior when vigilance declines. I wrote most of this article on 4/22/2023 and was editing it when I discovered that part of this prediction has already come to pass. The National Guard is coming to SF to save our precious commercial real estate from our local politicians. https://www.msn.com/en-us/news/us/newsom-calls-in-national-guard-to-help-san-francisco-fight-fentanyl-crisis/ar-AA1acmrb
Military spending will be used to justify cutting social services for middle class people. The government will continue its trend of replacing services with expensive civil servants. The US will stay solvent-ish, as the best place to do business and live. Whenever creative destruction occurs, the socialists always cheer, “hey, the system is finally collapsing.” Because they have no faith in the system, which is why they are always surprised that it endures. America will catch a cold, and the rest of the world will catch covid.
America will keep kicking the can down the road. Inflation will fix much of the debt problem, at the expense of savers. Too bad the wealthy own most everything now, so it seems likely that they will get hoisted by their own petard. When the bubble pops, they will lose wealth and authority at the same time. This is why they do everything they can to keep the scam going. The system might be bad for ordinary Americans, but it's absolutely toxic for the rest of the world. Capitalism is war and currency is the munition. Mortgages for bad credit borrowers will be subsidized with good credit borrowers. (https://reason.com/2023/04/21/borrowers-with-high-credit-scores-penalized-under-new-federal-mortgage-fee-plan/) (https://ijr.com/new-biden-admin-plan-raises-mortgage-costs-borrowers/) Just like last time (2008) when sub-prime loans were mixed in with A paper securities, the healthy assets will be contaminated with the bad assets, in order to pump up a short term bubble (https://www.rba.gov.au/education/resources/explainers/the-global-financial-crisis.html), at the expense of long term market health.(https://www.freddiemac.com/research/insight/20181205-major-challenge-to-u.s.-housing-supply) This housing supply crunch will only get worse and wealth transference from credit worthy to unworthy borrowers will increase systemic risk... but not yet. Their gambit is that the stock market and financial markets will recover before this housing bubble blows up. By pushing financial markets to crisis, weaker financial entities will crumble first. That means China and Europe. Remember, the ruling class owns lots of real estate. They are not interested in zeroing out their favorite asset. Crisis that starts outside America means that money will flee to safety (to America), which will stave off our own crisis. We don't need to be able to outrun the bear, just the other guy running from the bear.
Russia: I have already made falsifiable predictions, including arms production estimates. I have predicted that Russia will begin its major offensive against Ukraine on May Day (May 1) or Victory Day (May 9), and I made that prediction March 22. Out of 46 possible days, 32 have passed. Many others expected an April offensive, which I dismissed as impossible because of November conscripts. If the offensive is past May 16, then the value of my prediction drops a lot, to worthless if past May 23.
Shoigu has said that arms production will go up 8 fold in 2023. Since I predicted production should go up 4 fold, this can be accurate if ship production and strategic arms production stays stable and sees no budget outlay increase. If Shoigu includes the refurbished weapons systems, then I think my prediction is decently accurate. I actually ventured to calculate actual numbers and risked being wrong. I consider that far superior to the 'wait and see' crowd that's afraid of being wrong. In any case, Russia also has a tendency to lie by an order of magnitude: arms production could be going up 8 fold or economies of scale could be at play. That will either be true or not true.
TABLE 7 (March 22, 2023)
2021 to 2023 arms production extrapolation:
6500+ new and upgraded weapon and hardware systems to 26,000+
624 tanks and other fighting vehicles to 2496.
143 aircraft and helicopters to 572
4 coastal missile systems to 16
8 ships to 32
17 boats to 68
13 spacecraft to 52
1 submarine to 4
213 Kh-101
381 Iskander
3.201 million 152mm rounds
Looks like spacecraft, ship production, boats, and coastal missile systems are probably not quadrupling. If there are no more systems to refurbish and new systems need to be built, that could certainly get us to eightfold arms production for key land systems. An additional 300,000 fighting men would need to be equipped with sufficient ammunition to fight at a high tempo. That could explain Prigozhin's complaints of Wagner being 'starved' of ammunition in Bakhmut last month.
Russia is conscripting a new round of soldiers, because this next round will not be as well trained as the current round of reserves. This next round will be greener and need 12 months of training. The round that will be called up in November will likely be better quality conscripts and they will only need 6 months to be ready. My reasoning for this is that Russia will not hit its arms production stride until later this year. It cannot handle more manpower because it simply does not have enough arms to give them to fight at the tempo Russian warfighting doctrine requires. If they do not win by the war's second anniversary, they will be prepared to do a big push with fresh troops that have trained for 12 months and 6 months respectively and being ready to mobilize by May 2024. https://tass.com/defense/1554075 Russia has been using about 200k soldiers on the front line at any one time, so even if they have a bigger pool to draw from, it seems unlikely they're going to keep more than 500k on the front line at any one time. This follows the production timeline. 2.5 times as many troops, going on the offensive will need 3 times as much ammunition, so they will need to increase total production 7.5 times.
I could see Russia taking southern Ukraine to Odessa by the end of the year. A massive offensive will crush the main body of Ukrainian forces. Conquest will be easier once it is apparent that the Ukrainian military has been decisively defeated. Kharkiv, Dnipro, Zaporizhzhya, and Kiev could be bypassed to destroy Polish forces in Western Ukraine. Besieging these cities and depriving them of trade could do more than millions of artillery shells can. It requires manpower to pull off.
China: The Yuan has weakened since April 8 when I wrote Ruble Vs Yuan.
Not because I'm a currency speculator (I'm not and this is NOT financial advice), but because the Chinese government printed money and the markets responded. It had to do it and that was what we predicted. China benefited from peace and is hurt by war.
You don't print money when you're strong. Dollar debt should get more unmanageable. China will try to broker a peace that includes Europe, in order to get European finance to prop up China. China will not start a war in Taiwan—that is the path to complete ruin. But the Euro is too weak, despite Macron's fantasies. China will try to get all the privileges it can get, before the music stops.
Chinese trade with Europe and the US is declining and that should hit is credit markets and exchange rate. Any credit event in the US will harm Chinese markets.
https://www.ceicdata.com/en/indicator/china/trade-balance
That looks like a not so bad trade balance if one ignores that Germany is exporting less to China.
https://tradingeconomics.com/germany/exports-to-china
China is exporting less than it did pre-Ukraine war: https://tradingeconomics.com/china/exports
China's imports have also gone down. Since China never imported unless it absolutely had to, this is evidence of declining capital good imports. https://tradingeconomics.com/china/imports
I expect China to have a credit crisis this year, triggered by a US credit crisis. Flight to safety will be good for British and US banks, which will put more pressure on the Yuan... but I thought it was going to replace the dollar? This is not going to be a repeat of 2008 where Chinese QE comes to the rescue. China is choking on all the trash from its last round of QE.
Lots of people have an emotional connection to China beating up the big USA bully. Too bad. Read some Chinese history. They're the damned bully. I mean, as soon as they discovered that Korean civilization was completely different from Chinese civilization (https://en.wikipedia.org/wiki/Goguryeo_controversies), they started claiming that Korea is really China (https://www.scmp.com/magazines/post-magazine/short-reads/article/2092957/was-korea-ever-part-china-why-history-alone-cant). You want to roll with people like that? Be my guest, dummy. But I won't cry when you find out who you got in bed with.
Europe: Borrowing costs are going up and the Euro is strengthening, but that can only last so long. Fundamentals don't look good for Europe. Electricity prices have been held down with financial engineering. (https://tradingeconomics.com/germany/electricity-price) German spot electricity prices are lower than they were before the Ukraine war started, but its energy precursors are in more trade danger than ever (gas and oil). That's a sign of manipulation. When supply is cut and demand drops faster, that's a sign of a recession.
Europe's economy has crashed, but instead of subjecting its failure to scrutiny, the financial markets are just not updating its macroeconomic data. They report it piecemeal. If you add it up yourself for France (https://tradingeconomics.com/france/gdp-constant-prices) you get a figure ($2.596 trillion) far below the official one of $2.957 trillion (https://tradingeconomics.com/france/gdp). For Germany, you get $3.577 trillion (https://tradingeconomics.com/germany/gdp-constant-prices) instead of the fanciful $4.259 trillion (https://tradingeconomics.com/germany/gdp) one used. This is true of Spain, Netherlands, and Italy. Zero Covid nuked the European economy, the riots in France (https://www.reuters.com/world/europe/french-protesters-invade-euronext-building-anger-over-pension-law-2023-04-20/) are being hidden in the news, nobody talks about how the French Generals have said they will take over the French government before they let non-ethnic French take over security services and that ethnic French AGREE with this. (https://www.dailymail.co.uk/news/article-9529841/Majority-French-voters-AGREE-military-chiefs-threaten.html) (https://www.thetimes.co.uk/article/french-generals-face-punishment-for-coup-threat-bcck20rv2) They were willing to tolerate anything because they wanted to do the French version of just wanting to grill. https://knowyourmeme.com/memes/i-just-wanna-grill-for-gods-sake But now that the government has reneged on yet another promise, this is the beginning of the end.
I expect some type of combined crisis in Europe in August connected to the battlefield success of the Russian military in Ukraine and the market meltdown which will harm Europe more than the US. Physics is closing in on Europe and its idealism can only last so much longer. At some point gas prices will have to go up and once that happens, higher electricity prices are baked-in. Energy traders really seem to believe that business will go back to normal once the war ends. As Europe deindustrializes and deals with Islamic invaders, will high LVMH value make up for it? War is a contagious idea. Once it happens nearby, the taboo is broken. War contagion will spread because The Borg cannot stop direct action violence because they subvert the norms of decency and depend on civilized society being too civilized to stop them.
The Borg exploits decency with slow, poisonous attacks that do not trigger defensive countermeasures.
Europe will fail to mobilize an effective military response to Russia. Poland will probably move into Western Ukraine overtly, before Russia gets there. Russia will then need to determine whether it will fight Poland in Western Ukraine or concede the land-grab. I think Russia will fight Poland in Ukraine. This will happen at the same time support for the war in the US wanes. After all, the US is getting to (s)election season, and presidential candidates don't want to talk that inconvenient and vulgar Russia war talk. This is because Poland has impeccable timing as a matter of historical course. ;) Quite likely Belarus gets involved in a way that throws NATO off and confuses the strategic calculus. One thing is for certain: Europe will crumble in the face of direct military confrontation with Russia. Direct military confrontation with Russia will be used as a pretext to 'clean house,' in Europe.
If I'm proved wrong, some reader is going to rub my nose in it. But when other prognosticators are proved nothing, because they made no predictions, will nothing be said to them? The whole point here is to build a durable worldview that can explain the unpredictable in a way that needs no recourse to expertise. We have to learn to think for ourselves and distrust authorities. Authorities lack belief systems, because they are in it for the cult of themselves... and a belief system beats no belief system every time.
