The only thing nearly as enlightening as reading David Collum's epic Year In Review is listening to him and Chris Martenson riff about its highlights.
Strap in, grab some eggnog, and listen to this year's recap:
Everyone thinks the markets are now correcting. But compared to the size of the correction I think both you and I expect, this is just a drop in the bucket. This is merely the vibrating puddle in Jurassic Park. This is not the big one.
What's amazing is this recent romp, which has lasted now almost 10 years, is the only gigantic bubble that I'm aware of in which the storyline behind it is just complete garbage.
Every other bubble, like the Tech bubble -- well, tech is amazing. The 1920's bubble -- wow, we just invented electric power and cars and planes. There's always a great, great story.
This particular bubble in which we have had for 10 years is central banks are going to print money to cover our backs.
That's the stupidest Goddam plotline I can ever imagine.
Click the play button below to listen to Chris' interview with David Collum (87m:25s).
Doing analysis when you live in the twilight zone is a tough job. But everyone wants accuracy and hard dates. Always interesting and entertaining. Kudos to those who take a stab at trying to sort this all out.
I guess I am in a mode at present where I’m not taking it seriously, if you can’t laugh about it, you’ll wind up suicidal. Sure, still working at all the basics to create a better world, but things have gone so far off the deep end where do you start when talking to people?
It does feel like all the pieces are starting to shift, where both economic and social transformation are starting in earnest. If I talk to people who want to protest this or that, I tell them heck with that, BUILD LIFE BOATS
Dick was an old fashioned guy
DIck would say things like: “the American way of life is non negotiable”
Dick taught his president to say it too
Dick knew peak oil was imminent
And DIck knew Iraq had some of the last old fashioned oil - easy, sweet, and “inexpensive”
So Dick started a club: The National Energy Policy Development Group
Then DIck helped start another club: PNAC
Then something strange and horrible happened
DIck blamed it on Iraq
Then Dick built the biggest US embassy in the world
And DIck helped pass laws that made the Constitution blush
And made anyone into a terrorist
Dick even said the War on Terror would go on for a long time
And Dick was right
But what Dick didn’t realize
Was that the world was not old fashioned like him
The world was growing up, and like a teenager,
it too wanted cars, and microwaves, and lots of things with a switch that goes on and off
And it wanted oil too
So like a teenager, it stopped doing everything DIck told it to do
And when DIck got mad
It only made things worse
So DIck increased the “corporal” punishment
until the world started hitting back
and then it ran away
Long ago in a place not so far away a guy named Ptah-Hotep said “Be cheerful while you are alive.”
Interesting analysis coming from a conservative, hard sciences view of the sudo-science of economics. I hope it’s not too impertinent of me to note that when the envisioning of revolt comes up “the battle of Seattle” (20-years ago!), and LA Riots (26-yrs ago) or ANTIFA (was BLM mentioned?) roll off the lips easily while so-called “white supremecist” and neo-NAZI and homaphobic mass shootings don’t seen to registar as rebellious chaos. Not trying to read anything into the presenters arguements as this is observed elsewhere in the MSM and other cylos of miasmic intelligencia (note to self).
I’ve been reminded of something, and I don’t remember who, said that the greatest mistake the German jews made was not battling back against the NAZI and anti-semetic forces growing in Germany at the time. Thinking that establishment society would never allow it to get out of control and didn’t want to cause trouble.
“…but you got to serve someone”–B. Dylan
What could the Fed do right? If they hold the interest rates at zero, they’re blowing the bubble. If they raise the interest rates, they pop it.
I’m going to contend that (a) they may be raising the interest rates for the wrong reasons, but (b) most people here shound agree that the interest rate rise is still the best thing under the circumstances, yet (c) it is going to be extraordinarily and dangerously painful.
In light of that, I’m going to say that conspiracy theories about this are a bad idea. They can make that “dangerous” bit suicidally hazardous; or they could (at worst) cause the Fed to go back to its old ways.
We should nod sagely, note points b and c above, and hope for the best, prepare for the worst.
Agree Michael that popping the bubble is “the right thing” for them to do. Because they’ve already done the “wrong thing”, by blowing up the bubble through liquidity injection since 2008. And, yes, it’s going to be extraordinarily and dangerously painful. Look at what “painful” could most likely mean. Imagine if there was no bailout in 2008, there would have been a freeze-up in liquidity in the global banking system. That would create an instant Depression for the entire globe. A heart attack in which blood (money) stopped flowing. Money stopping flowing would stop food distribution, food production, medical services - everything. The same as in the Great Depression, except then the US was an agrarian economy. Not a global economy. So if/when the markets crash AND there is another “mistake” like Lehman Brothers - which is much more likely now with the unregulated derivatives rampant in the system - then a bailout will be necessary again. Or the same consquences will occur - stoppage of money flowing in the economy, with resultant social impacts.
So how could a bailout occur? The Fed rescue again? Unlikely, since the trust is already broken. Interest rate cuts, QE to infinity would have no effect because the dollar will have lost trust, after the trillions already created out of thin air. Money is a trust agreement. So the only bailout that would be acceptable would be one from a global source. The International Monetary Fund (IMF)'s Special Drawing Rights (SDR) account. SDR is a basket of 5 currencies (US$, Euro, British pound, yen and Chinese yuan). The Chinese yuan would likely becoe partially gold-backed at that point to further lend credibility to the SDR.
Following an IMF bailout (of all the global markets which would likely crash simultanous with the US market), the SDR then becomes the de facto global reserve currency. Voila! Those that control the IMF, now control the currency that controls the world. First step in creating a global elite that controls the world.
Do you have any other scenario in mind which would make sense, Michael?
A more likely scenario would be “bail ins”, in which the banks simply seize the money of their depositors and use THAT for their payments (and bonuses).
But at that point, the rage at the outright theft would be huge, and violence would occur. In some areas, like France, the rulers might be overthrown and killed. In some areas, like Rio de Janeiro or Caracas, it might be open season on the poor, no bag limit.
Whoops, that’s already happening.
We don’t know what will happen, but what is already happening is likely to continue.
I don’t know what will happen in the US, either. But it isn’t likely to be anything new. Maybe suicides and drug addiction will rise. In Russia they’ll do vodka and heroin.
We’ll see.
I’ve read about “bail-in”‘s, but it seems unlikely that the quantities of money needed could possibly come from depositors’ money. Just think about the nature of fractional reserve banking, and imagine that the “blow-up” of derivatives that is going to be the most likely trigger along with a market crash (and a bond market crash as well as housing market crash) - and it seems like the bail out money is going to be on the order of the trillions that have already been pushed into the system. Not the piddling amount held by bank depositors. Of course that money will be used as well…
Following an IMF bailout with the SDR, and a replacement of the SDR as the new global reserve currency, the impact on countries would be a re-evaluation of their currencies relative to the new SDR currency, over the following couple of years. The US, with its masive spending deficit would lose purchasing power of its dollar - high inflation/stagflation and would require much greater austerity in its budget. (Unlike when its debt is held worldwide as it is now with the US$ as the global reserve currency.) Then the loss in social programs, food stamps, etc. would not be received well by the population… The US wouldn’t be able to pay for its military either, so perhaps there would be an SDR funded “global peace-keeping” force. Sound like a New World Order yet? China’s currency would likely be highly valued next to the SDR global reserve currency, because it has a producing economy.
These are the events that I might imagine as a followup scenario…
I has occurred to me, after reading many of the comments in response to Dave collum’s prognostications, that the economy is not one large, multi-variable linear equation, subject to an easy answer. What does strike me, however, is that in all the perplexing factors associated with this subject, we somehow fail to realize what a productive asset is. A few contributors have noted and questioned whether real estate is an asset or liability. Ultimately, IMHO, monetary transactions boil down to a fiduciary function between two parties. Are the subjects of inflation/deflation, interest rates, velocity of money, GDP, etc., just diversions from the discussion of how people relate to one another for the benefit or detriment of society at large?
Christmas has come and gone and the NewYear is looming on the horizon. Given the current challenges and strife we see around the planet, I am less sanguine on its eventual outcome. It is popularly suggested that the following was played on the deck of the Titanic before it succumbed to the deep waters of the North Atlantic. Perhaps it is the theme song of 2019: