The Lawrence Chan Blog

Bernard Lietaer is the person whose post-graduate thesis at MIT back in 1971 formed the basis of the modern floating currency system. He is the author of the book The Future of Money (out of print) which detailed the potential problems of the system we have in place right now way back in 2001. His understanding of money puts him in the forefront to provide a potential solution to our current ongoing worldwide financial crisis.

Notice the structural financing problem of the small and medium-sized companies explained in the video. This is the main reason the middle class of United States and all around the world being crushed.

Since the structural issues will never be taken care of, the current financial system will not be able to recover. What happened in several countries over the past few years can and will happen to the other countries when their citizens are cornered. Not a nice scene to picture.

But I am not sure if the governments around the world are willing to compromise and start accepting complementary currencies before it is too late. After all, once the compromise has started, the power of the governments and big financial institutions will diminish. Based on our current experience, even if the necessary changes finally take place, it is likely to be too little too late.

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Due to unforeseen circumstances, I can no longer follow my regular schedule.

My best guess is that I will continue to post whenever I get the time. I do check emails twice a day just that I will not be able to reply to them quickly.

For now, this new toy and its accessories will keep me busy tonight.

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Monthly update on market internals.

The current snapshot of S&P 500 3-Day Advance Issues, Tick16 Short Term + Long Term as of 2013 September 22 close.

Reading

1. Long Term Tick16 (yellow line) tagging neutral zone from below

2. Short Term Tick16 (red line) back up at overbought zone forming two divergence tops against S&P new high. One spans 10 days and the other spans 3 days.

3. 3-Day Advance issues (green line) dropped down to neutral zone after divergence top against S&P new high

Inference

a. #1 is neutral

b. #2 points to short term top in the making

c. #3 a short term top will be in place if 3-Day Advance can go negative. A bounce off neutral zone can be a very powerful buy signal so there will be a big fight to control the outcome

Review

Inference from last update worked out well:

– S&P formed short term bottom right at the beginning of the following week

– rally from the short term bottom did not make it to 50% as it dropped lower first

The long term outlook mentioned that where S&P will be heading depends on the 3-Day Advance formation. By end of August / early September we’ve got the divergence bottom in place resulting in one strong rally.

Long Term Outlook

The other long term breadth data I have also points to major divergence against this S&P new high. Historically there are 2 ways to resolve such divergence. First is a quick deep sell off of 10% or more. Second is a 5% sideway move with extreme volatility.

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One of the better video online explaining how our financial system works. Definitely better than any nonsense from classic economic theories.

You can find the draft paper from http://www.economicprinciples.org/

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Dr. Jem Bendell’s take on our financial system back in 2011.

As he mentioned in the video, the movement to ditch the money created by the bankers has started. It is something that cannot be reversed as government officials continue to work with the bankers instead of the people who elected them. When more and more people reduce the direct impact of money on their lives, the equivalent monetary activities will disappear and the multiplying effect will reverse.

As these movements gather more support over time, it is reasonable to expect the current financial industry will be wiped out from our future for good. Well, wipe out is a very scary term, so let’s say the financial industry will be reduced to insignificance in a not so distance future.

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