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December 6, 2018 | Why the Market Volatility? Let’s Talk!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Today at the clubhouse some investors wanted me to address the issue of market volatility. Why is the market up some 500 points one day and down a similar number the next? Why this volatility in our digital markets? Let’s talk on this issue for this missive.


Are you aware of this concept called ‘mental abstractions’ as our money units? Were you aware that the dollar, yen, euro, etc. are all merely ‘mental abstractions’? What is a ‘mental abstraction’? Our dollar ($1.00) is now ‘tied’ to nothing physical. Our dollar ($1.00) is now merely a ‘name’ and a ‘number’. What is a ‘name’ and a ‘number’?


I call a dollar ($1) a mental abstraction as it derives from the human mind and has no ‘outer’ existence. Does a ‘name’ and a ‘number’ have physical substance? I don’t think so! What is happening today in our markets is that we trade ‘value’ via mere ‘mental abstractions’. All our global currencies are ‘tied’ to nothing (like gold) and this means that we trade mere accounting units (also called ‘mental abstractions’ as our money).


Trading mere accounting units (numbers circulating within cyberspace) creates this volatility which we witness daily in our digital markets. Most media and most financial pundits are materialists in their philosophy. These so-called experts tend to view ‘numbers’ as physical phenomena. They THINK a dollar ($1.00) is a physical unit of matter. But is this reality or fantasy? Why this thinking within economics?


I would suggest that trading mere ‘mental abstractions’ as our money units is equivalent to trading subjective ideas. Subjective ideas (like this concept called ‘value’) lend themselves towards volatility when confidence wanes in our markets. What is the ‘value’ of a product, asset, equity, bond, or a digital currency unit? Is it stable over time? I don’t think so! Subjective ‘mental abstractions’ can not be stable over time.


Today’s volatile markets trade these ‘mental abstractions’ as our money (mere ‘numbers’). All valuations are done with these subjective currency units. This makes ‘value’ subjective and trading activity subjective. Our financial system is essentially a HUGE mental abstraction. The entire edifice is subjective, inner, and metaphysical. This is ONE key reason why we now experience daily digital volatility in our markets.


To resolve this volatile situation we would need to ‘tie’ our currency unit (including all currency units) to some material item which investors perceive as having stable ‘value’. Historically, this ‘tie’ was to gold and/or silver. Gold and silver are material commodities which have no metaphysical characteristics. President Nixon removed the dollar from this ‘tie’ back in 1971. The result of this decision created our current situation where we trade with mere accounting units (and/or ‘mental abstractions’) as our money.


Few comprehend what is happening in today’s markets as few economists think realistically. My PhD economist friend, at the clubhouse, thinks that ‘numbers’ are units of matter/energy. He can not discern what is happening today as his THINKING is not sound. This same lack of sound THINKING permeates our entire financial system. I have been teaching on this for 50 years. Few can discern the dualism within economics.


Dualism means that we live (in economics) within TWO realms of reality. The realm of the mind (which is subjective and metaphysical) and the realm of matter/energy (that which I observe with my mind). An accounting unit (like $1.00) lives within my inner subjective self (my mind). I call this unit a ‘mental abstraction’. Money (to work with some stability) needs to be ‘tied’ to some material item of matter.


Today, we live with digital money, digital valuations, and all these money units are now units of consciousness. They have NO outer existence. They are nothing and they are located nowhere (within our material universe). Bankers create these units of nothing from their thinking (their mind). Is this subjective or what? We live with banker money which gets created ‘out-of-nothing’ and which lives within their inner consciousness.


Volatility is assured given the NATURE of our financial system. Nothing will change until investors WAKE-UP to the above realities. Economists need to wake-up. Bankers need to wake-up. Consumers need to wake-up. Waking up means thinking differently. Recognize reality as being DUAL. Gold is the foundation of economic Capitalism. The closing of the gold window (1971) created today’s ‘mental abstractions’ (our digital money units).


The world monetary system will need to change radically at some point. Investors, pundits, bankers, and consumers will need to WAKE-UP to reality. We live in TWO realms. Realm #1 is the human mind (a spiritual realm) and Realm #2 is that which we observe with our mind (matter/energy). I call this Dualism. What philosophy do you live with, trade with, and value with? Are you a MATERIALIST?


I am:

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December 6th, 2018

Posted In: Kingdom Economics

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