Hi Chris,
Your conversation with John Rubino, is yet another dialogue between 'like minds' — and many of the doomster's and inflationist's arguments ( which are intellectually appealing to me) are well stated, and in contrast with this theme, is the latest broadcast from Jim Puplava's Financial Sense this weekend. Earlier in the year you predicted a 40% correction in the stockmarket, which is now likely to finish on an all time high, while gold will probably confirm that is range bound in a bear market, at values not far removed from average AISC's (all in sustaining costs) of gold production. Hope springs eternal in gold bug's heart. You now have made a partial admission in that you and JR have got your timing wrong (LOL)
Jim, who has been stating for 3-4 years that the market is in a new bull phase, and was an early convert to the idea that the gold market peaked in 2011, and, gold remains in a bear market , albeit with an impressive bear rally going for the last 2 weeks. Problem is for gold as JP sees it is there is no real lasting stimulus for gold, and there are better sectors for investment. He says all bull markets begin with a wall of worry, and doubt, but eventually FOMO (fear of missing out) takes hold and fund managers and retail investors capitulate , as the bond market goes into a bear phase, with the possibility of a bond market collapse.
Heres where Jim loses me. He rationalizes further stockmarket gains on PE expansion, which is plausible if interest rates remain ultra low — but will not be the case if the bond market collapses , which means higher interest rates — see why I'm confused ?
Jim is adamant that the Fed has no choice but to continue QE indefinitely, to keep the stock market and other markets 'stable' but mainly to keep interest rates low , so that the interest rate payments for government debt doesn't consume all tax revenue, if interest rates ' normalise '. Now in Australia, those who have preached and practiced " Don't Fight the Fed " have been very successful, and just today, point out that the US government debt as a proportion of GDP is falling, and remains a lot less than Japan, and is very sustainable for years to come. (yes I hear you say, what about all those unpaid entitlements and the Detroit-isation the IOUSA heartland — ah the joys of bankruptcy - only the innocent , naive and unprotected are hurt - capitalism in its most creative destructive mode ! ) .
Also, the IOUSA QE is not occurring in isolation - the Japanese, Chinese, the UK, the EU and Australia ---- all those that matter and control the world economy, which means that " Austrian Economic theories" using examples like Weimar Germany, Zimbabwe, Argentina etc just don't apply. The idea that China's economy can become independent of the IOUSA is too ridiculous for words – ditto Japan, India and Europe - the manufactured mini crisis surrounding the bugging of Angela Merkel's phone just shows how deeply entrenched and pervasive US power is , and how contemptuous they are of even their closest allies — Obama promised that it wont happen again, by which he means, the US will make sure such things are either undetected or unreported.
Now Doug Casey's endless self serving, trite Roman history lessons, need to be given just one bit of credence - the Roman empire lived beyond its means for hundreds of years before it collapsed, and the Romans didn't have a fraction of the economic, industrial or military power of the IOUSA. Simply put, the all powerful US is an uncertain, duplicitous 'friend' , and the worst of enemies.
' Allies ' are subject to economic colonialism & manipulation , as practiced by US firms, which specialise in paying no tax , not even to the US treasury, and US entities such as hedge funds can borrow QE money at near zero interest rates and buy up assets in foreign countries, fueling asset bubbles and endless currency speculation - with friends like the US who needs enemies ?
Conversely, if a country is declared " an enemy of the God's own country " then they can expect economic and military drone warfare. Intermittent inconsistencies like supporting Al Qaeda in Syria are answered by manufactured moral outrage against chemical weapons , which kill far less people than other weapon systems especially the 'bunker busters' the Israeli's use on stone throwers in Gaza, and the US uses on wedding parties in Pakistan — sorry , I digress.
Chris and JR have now admitted that they have been wrong up till now but a crisis is still coming , but it may take a decade to arrive — exactly !!! Chris has restated his favourite dictum that " he'd rather be several years early than a day late, which implies collapse will occur virtually overnight – very unlikely to happen — the 2008 collapse took over 6 - 9 months — need I say any more ?
Now we are all going to die someday, and many an atheist has a deathbed conversion, but does it make sense for a sane young person to become monastic ? Investors and savers have a similar dilemma . Are they to go to cash, store gold, guns and food, and retire to high ground, to watch all those other fools continue to make money in the stockmarket and real estate , hoping the economic tsunami will come sooner than later ? Keynes said the market can remain irrational a lot longer than most can remain solvent , and in the end we are all dead.
"My enemies enemy is my friend", and the enemy of all major powers is a world depression driven by a collapse of economic activity. Maybe this time it is different - maybe QE can go on much longer than anyone previously thought possible and that while there will be semblance's of currency wars , intermittent precious metals mania's and real estate bubbles, the system will just keep morphing from one form to the next, and the main casualties of this will be the usual victims - the poor especially in the 3rd world and the environment. There is nothing so unpredictable as the future , and not living in the moment is the greatest mistake one can make with our limited lifespan's – this doesn't mean I'm advocating mindless hedonism — like the internet, TV, most Hollywood movies or various drug fantasies be it boutique beer, wine appreciation or ritualized sacramental marijuana use.
Reluctantly I have to admit that peak oil has been pushed into the distant future, and the only restraint on endless exploitation the massive undeveloped carbon sinks like shale oil and tars sands are economic and environmental > Just a small fraction of known coal, gas and oil reserves is enough to cause the CO2 concentration in the atmosphere to go over 550ppm and then its game over for the habitability of the planet.
So, Chris , if you so believe your argument, why don't you have a robust debate with Jim Puplava and his ilk, instead of the polite , non controversial , cautious , friendly conversations that you've had in the past. Call him out, and while your at it, challenge him on why he refuses to accept the overwhelming opinion of the world's scientific community on global warming. Remind him that global warming is an insurance issue – its a very real possibility, and the consequences of being wrong are toooo catastrophic to be ignored. Besides, investing in high tech solutions will be good for jobs and the market ( the latter is likely to get his attention) and saving some for future generations is surely a very acceptable concept for a professed fellow Christian ??
The best information comes from a rigorous, in depth debate – where evidence and argument can be subject to the scientific method - validate the data , then validate interpretation of the data – all else is cant.
Cheers, GB.
