I certainly get the sense that the Fed are frightened but I’m not sure they know which beast is howling. If they want the economy to keep chugging along they need cheap energy. What their policies appear to have done is boost asset prices. I’m not sure how that helps. Same with BoE/ECB/BoJ. It just means discretionary income gets eaten by ‘overheads’.
I believe that the only thing that comes remotely close to salvation is a complete overhaul of our debt-growth economy. For me that begins with a conversation. I’m yet to see anyone in the higher echelons of power even begin to ‘go there’. I think it works to the benefit of their private accounts that they don’t ‘go there’. I equate people like Yellen, Kuroda, Draghi and Carney to the High Priests of the Aztec Religion sacrificing the young to keep the sun rising and the sky from falling. It would seem then, just like now, people need to believe that those in power really do have the ear of the gods. And that they can thwart disaster with enough voodoo.
Perhaps, from their perspective, they just want to keep lines of credit open to enable global trade to continue. The idea being that they just want people working with no real goal other than the extension of debt-serfdom.
If this did have a macro solution I suspect it’d look something like a world-wide program to bring as much energy online as possible (I guess that’d be nuclear) through government (central bank) loans (gifts). I think it’d have to be a global initiative given both the rates of consumption and streamlining of processes required. Then we’d have to go about finding fertilisers for plant growth in the absence of natural gas (I’ve heard the Chinese also use coal to produce fertiliser but I’m unsure of the details).
I’m guessing most here don’t believe that option is viable (myself included). I think that the solution becomes localised both in terms of food production and services (i.e. medical/security/mediation/repair). If I had the platform of the Fed I’d request that people focus on developing a skill-set in keeping with our ‘new normal’. I don’t think that people believing the Fed is King Canute (and the Fed failing to correct anyone) resolves anything. But I might be wrong, it might be buying time.
All the best,
Luke
check this out, make money great again patition at https://www.mmga.org/ this is about returning gold and silver back to money.
I just looked up wells Fargo. Didn’t dig into specifics, but it had 5 stars.
It is the best explanation I have read on our dire situation and imminent collapse. It is LONG, but well worth the read:
https://medium.com/deepconnections/prevailing-gray-swans-7-september-30-…
I agree with dmger14 that the post above is exceptionally well done and has LOTS of graphs. The author explains a lot of economic forces, much of which I was able to follow because of my years here on PP.
You will recognize a bunch of the diagrams and graphs Chris, Charles and DaveF have used.
His style is clear and direct and I was able to follow it even though I have little financial training. A strong recommendation for clarity. It is long though. Poor a beer and sit in a comfortable chair.
Prevailing Gray Swans: The Clear and Present Danger
List for the Week Ending January 13, 2017
Bursting of the global sovereign bond bubble and the interconnected financial derivatives network
I’m disappointed that Peak Prosperity did not challenge Mr. Dent on the fact that physical premiums, as distinguished from the paper price, kept up quite fine during the 2008-2009 crash. That is a basic fact that should not have been left to hang in a quality interview. See: https://www.bullionstar.com/blogs/bullionstar/the-difference-in-paper-and-physical-gold-and-silver-in-times-of-crisis/
As for gold not doing well in deflation, how is that so when it was revalued up about 65% or so during the deflationary Great Depression in the U.S. during the 1930s? That is a basic fact that should not have been left to hang in a quality interview. As for gold mines, those did very well indeed then: https://www.caseyresearch.com/articles/gold-stocks-depression
Charles Nenner is a proponent of sunspot cycles … I didn’t know Dent was but I’m not a follower of Dent … especially after this interview it reinforces my conviction to ignore him … Dent does not believe that gold is money, he thinks it is only a commodity … and declaring Trump is certifiably crazy and uncontrollably impulsive confirms to me that Dent is brainwashed by The Matrix of Main Stream Media … I question his reasoning now …there are other better economists/cyclists to follow … Chris being one … Michael Pento … Dr Paul Craig Roberts … David Stockman … Nenner …
So rather than asking what’s money and what’s not, to understand what Dent believes, we have to think the same way he does. He looks at what happens in the past, and from that, he extrapolates the future. At least some of the time anyway. [I don’t agree with him that gold is an inflation hedge, for instance, although I do agree it tends to rally with the overall commodity index]
Anyhow. We can ask the question, “what acted as a safe haven during the 2008 market crash?” The answer is, it depends on the timeframe and from what point you take your observation.
The two charts below are “index” calculations; I set the price of each item to be 100 at the start of 2008. Then, I display them on the chart with the last day being (roughly) the SPX low for 2008 - October 20. On that day, USD is up 10%, gold is down 8%, and silver is off a big 37%. The move down for gold in 2008 involved a huge amount of deleveraging; there was a massive liquidation of paper gold at COMEX, and this certainly drove price lower. In a financial crisis, leveraged paper gets liquidated, and any item whose price is tied to the paper drops. I think this is quite likely to happen in any future financial crisis. Paper will get thrown right out the window, and that will take down the related prices. Likewise, all assets will be sold in order to meet margin calls. The only thing immune to this effect is currency in which the money was borrowed: demand for currency during a time of deleveraging will rise.
So after the deleveraging was over, at the 2009 SPX low, we see USD +17%, gold at +10%, and even poor silver had come back, down only -14%. SPX was off -50%. Ouch. Crude was off -55%.
Interestingly the low point for gold (down about -19%) was about two weeks before the Fed announced the initial QE program. Low was Nov 13 @ 705, and QE was announced Nov 25.
Is gold a safe haven? During 2008, it really wasn’t. We can blame paper, or manipulation, or whatever, but my sense is, if there is another panic like 2008, gold will probably drop in price, especially if the buck rallies 10% the way it did last time.
If we assume that the Fed will execute some reflationary policy in response to a market collapse, and assuming that doesn’t cause the buck to sink precipitously, then at that point, its probably a reasonable time to buy gold. But given history, I’d expect a 20% drawdown in the price of gold during a market crash, just based on what happened in 2008. That doesn’t suggest gold 450; seems more like gold $950 or $1000. Silver, on the other hand, could drop down to $10. But, good luck buying physical silver for $10; if it did drop that low, I’d back up the truck on PSLV because I do not think I would be able to buy eagles at that price - I suspect they’d all be bought out.
Premiums at Shanghai would probably also scream higher.
Poor oil would probably drop into the 20s. Again.
If Au went to $450 - I would buy the $h*t out of it. So would everyone else holding cash and so it won’t happen.
Rector
Darn it, Dave, I was about to pen a data-free rant, and there you go again, introducing hard data! 
One thing John Hussman said at Mish’s conference in Sonoma a few year ago has stuck with me, and it’s relevant to this discussion: every share of stock and every bond is owned by somebody (or some entity) all the way down the slippery slope. When a panicky speculator with a margin call sells an asset, somebody buys it.
So who/what entity will be buying that doesn’t have a margin call or any fear of further declines? A central bank, of course. As John Rubino discussed in his recent podcast with Chris, central bank buying of stocks, bonds, quatloos, bat guano futures, etc. has a certain aroma of inevitability, given that central banks have experimented for 8 years with creating trillions and using that free money to buy bonds. In their view, the QE experiment was successful: meltdown avoided, illusion of “prosperity” maintained.
So why wouldn’t central banks become the marginal buyer of last resort?
The “fix” from central planners’ POV is to heat the water the frog is enjoying slowly–in other words, bleed the system of losses incrementally so nobody gets upset enough to pursue social /political upheaval.
Currency devaluation is a great way to channel the losses into the system as a whole.
IMO Dave’s analysis of 2008 supports my thesis that gold and the USD can both gain purchasing power in crisis. The debt denominated in USD exceeds the sum of USD created, hence demand for USD rises in liquidation phases.
I have made the case here for bitcoin and cryptocurrencies as beneficiaries of a loss of faith in the system. Dave has made the case for a crash in bitcoin once the Chinese institute capital controls on it, I see any Chinese action as a temporary going-on-sale opportunity, as I see institutional ownership of BTC as inevitable.
As the rules change, it’s hard to beat tangible productive assets like farms, orchards, housing, tools, small enterprises etc. The rules governing these assets are harder to change than those governing “money”.
Anybody else having this problem? Am I going to step over the dead burnt bodies of my neighbors with gold in my pockets to pick up his on the market for pennies on the dollar? Isn’t financialization, a commodified view of “natural resources”, which are indeed the living systems that sustain us, the problem? Flipping between articles that have everybody pondering the collapse of civilization and detailed charts of commodity prices has my head spinning.
treebeard-
Anybody else having this problem? Am I going to step over the dead burnt bodies of my neighbors with gold in my pockets to pick up his on the market for pennies on the dollar?
Rector-
Yes, I suspect we’d all back up the truck for $450 gold.
Unless, of course, all our bank accounts were frozen, or bailed in, and the only purchasing power we had were the crisp green FRNs we’d managed to squirrel away.
And at that point, we might be more concerned with buying food than thinking about picking up gold bars on the cheap.
…One consideration is that brokerage accounts are not FDIC insured. Of course, brokerage accounts are at much lower risk but if they do go bust there will be no payout. Then again, in the sort of economic situation where mass insurance payouts occur, inflation could be so out of control as to render the money worthless…(sigh- protecting wealth is stressful)
It’s funny listening to Chris interview Harry Dent. They’re such opposites! Dent gets super worked up and passionate in his stream of consciousness, and then Chris chimes in with calm, reasoned analysis!
One point Dent made resonated with me about the importance of having cash: that in a deflationary crash nobody will lend you money, so you need your cash to hand. Just as it was in 2008 - 2009
With zero interest being paid, and the risk of deposits being frozen, why have any significant amount of money in a bank (other than funds to pay bills) ?
While I’m as pessimistic as anyone about the financial future (economic and ecological as well), is there a better true life example of “the boy who cried wolf” than Harry Dent?
I’m sympathetic to the charges of wolf-crying, but also to the people who focus on very long term mega trends like Dent. They are wrong for quite a while, until they are right. Demographics really is destiny, but I suspect the central bank games have held off the disaster for longer than he expected.
Unfortunately, I don’t have access to his formulae, or I’d for sure plug them in and see what they said. Its a fascinating subject for me because it makes logical sense, and like the tide, it seems like it will win, irresistably in the end. Kind of like gravity. Or EROEI. Or private debt.
I know also that crime tends to follow demographics patterns; the fall in crime we’ve had over the past 20 years hasn’t been about better policing, its been demographic driven. Older people just don’t commit crimes at the same rate the younger people do.
Likewise, once the “radical islam” nations stop having the average age be 18-20, there will (probably) be a lot fewer suicide bombers.
All that said - when he says things are going to happen this year, I think he is a trifle more enthusiastic than his data would (probably) permit him to be. I’m guessing that he can’t possibly know the month (or even the year) when the force of the 46-year megatrend will eventually overwhelm the shorter term cycles and all that money printing.
We all know the debt bubble will eventually have to pop. But I’m not … brave/silly enough to say that its going to happen this year. After all, there is the effect of all the international drama, such as an EU breakup, or a Chinese banking crisis, which probably would overwhelm the demographic trends.
Can I just say - I found this to be a great podcast. So much information packed in there that gave me some nice confirmation bias in some areas but also challenged my thoughts in other areas. Love it when the thought process gets challenged and really makes me think through things.
Isn’t what it is all about? With such a small percentage of the population in the market, you don’t have to do a lot of favors to keep the apple cart upright, with the rest of the population living on a diet of fabrications. How are “market forces” going to assert themselves. Is that still the mechanism that is going to correct all this, even though I keep hearing that we don’t have free markets?
Like in our political discourse, that range of acceptable opinions keeps shrinking. As absurd as the explanations get (ie the Russians stole the elections), no complaints, life goes on as usual. Suppose all these pension funds “fail” and people retire with pennies on the dollar and the ranks of the impoverished continue to swell. But in our blame the victim society, will anything happen? Current between 1 in 4 or five children in this country lives with food insecurity. Is anybody out in the streets over this.
Government statistics are now all fabrications, no revolution caused there. Suppose debt quietly starts disappearing off the fed balance sheet, they’ll invent some mechanism, would the “markets” respond. What everybody thought was impossible has happened, years ago.
If we keep waiting for the “markets” to respond, we will have a very long wait. When “they” lose control of the narrative and people actually get off their couches, now that will be something to watch.