The Goldilocks Gamble on a Perfectly Imperfect Future

Finance U Public Finance U
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Originally published at: https://peakprosperity.com/the-goldilocks-gamble-on-a-perfectly-imperfect-future/

This week, Paul Kiker of Kiker Wealth Management and I discussed these crazy markets and just how much crazier it is that the people (ostensibly) in charge seem to have no care or concerns for future generations.

As men of integrity and big hearts, this makes zero sense to either Paul or me.

Look, nothing makes sense. Stocks are powering to new all-time highs under the theory that Trump’s policies will be good for stocks. But how can they be good for US and German stocks?

But then, at the same time, you’re supposed to also believe that oil is down because of concerns that the future economy might suck and be recessionary.

And then we’re supposed to also hold true that long-term sovereign bonds make sense in the 4% to 5% range even as real estate is at record levels of unaffordability in places like Australia, Canada and the US.

LOL!
Sorry Australia, you’re cooked!

But then again, of course, so is the US:

Yikes!

We sure do wish that someone in power would explain how a stock bubble, a bond bubble, and a housing bubble all resolve peacefully.

Obviously they can’t, which is why each of us must make other plans. I have yet to meet anyone as capable or as caring as Paul Kiker (and his well-curated team) to have those conversations.

Speaking of stock bubbles, every bubble shares two common elements:

  1. A good story (e.g. “Tulip Bulbs…can’t lose!”)
  2. Ample credit.

On point #2, perhaps we should all carefully consider this chart:

Yes, that’s right, stock speculators are now more than $1 trillion in debt speculating on things always and steadily going higher. If they are right, they win. If they are wrong, we all lose.

The only way all this sorts itself out without a lot of economic and financial tears is if everything goes perfectly…in an imperfect world.

Trade safe, everyone.

 

 

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For interested Canadians re our real estate market, this is a good watch. I have long been contemplating moving from high priced, woke Victoria. However, as this video shows, I could probably cash out in this expensive market and buy something outright elsewhere such as one of these cities, but it is not proving as desirable as I hoped with the significantly higher property taxes and heating costs, the latter being a big deal in Canada. There is much food for thought in these ~ 20 minutes.

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And as if there is not enough to worry about, Armstrong weighs in with predictions of more bank closures. What a surprise!

Note:

“…These are merely bank closures and not bank failures, although two smaller US banks did fail this year. People simply prefer online banking as we have made the switch from relational to transactional banking. …”

This is getting more visible all the time. Where I am, bank branches are closing, and some ATMs that were more or less full service - taking deposits, paying bills, dispensing cash - have been converted to dispensing cash only with no other functions.

Not good!

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I cashed out from Florida before the 2008 crash. Built a new home and bought others and some land with the difference. The rentals were all selected because they needed work that was keeping them un-mortagable. I put roofs, and rewired them among other things to bring them up to par, and they can sell for market value.

The property taxes are not so bad however. They were relatively cheap until they doubled a couple years ago. The rent is still keeping up. I am still doing fat better than having the money in the bank in terms of income and have great property value increases to cash out for my old age. ( >200percent on 2 and 300on another.

People are leaving large USA cities and the run down small townscities are up and coming

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Well, we did it. We cashed out, sold our house ($35K above asking!) and are now full-time RVers. We don’t have a garden (shoot!) but I do have some provisions stocked. And we are now fully mobile.

It’s like 80% dream idea and 20% resilience, but it’s the new normal for me. So while I watch and worry about all of this, I’m trying to keep the watching and worrying to a minimum… and the crazy fun RV life to the max.

Cheers!

-Dan :crossed_swords:

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Are we overpriced? Maybe, but here is another possibility: As per Grok, In Germany, from 1920-1923 the stock market went up over 1,000%, and you lost your shirt. Argentina from 2015-2019 300%. Venezuela 2018, 630%. There are plenty more examples. These markets went up in nominal terms, but due to a collapse of their currencies, they went down in real terms.

So, I ask a question that I am not sure of the answer. Is our stock market, and maybe also houses, copper, etc not a sign of an overpriced market, but rather a warning that the currency is collapsing?

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I believe this latest real estate run up is different than the one prior to 2008 crash.

That was was largely due to subprime loans. Alot of young people were buying homes they could not afford and alot of boomers had balloon and interest only, and adjustable rate mortgages on second and third homes for investment. It seemed like a no-brainer, juggle the extra mortgages for a few years then cash out crazy capital gains. Some even borrowed from 401k and CC to float it all until it all came crashing down.

This time I feel that there are a lot of pooled money entities buying up the houses, whether groups of investors or investment products being sold by larger institutions. Additionally many people have been buying remodeling and flipping depressed homes. This seems to be slowing as rates rise.

At the same time small downtowns in places like Spartanburg SC, Greensboro NC, Hendersonville NC, and similar communities are seeing rapid growth and lots of new apartment and condos being built in addition to subdivisions. New 4 lane belts are being built so highways can be expanded and widened without destroying the historic downtowns.
Maybe small town USA will be the 15 minute cities in America.

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As we see lots of folks, even some regular joes, have so much money theyt dont know waht to do with it. So they end up buying extra apartments and houses for rental income.
Is bitcoin/gold escape valve that if people bought those, houses wouldnt skyrocket? Boomers/old people that got used to 20% interest rates and “worked their whole life” are entitled to those high prices and youth “dont work hard enough” but overall this is huge problem. Larry Fink and stock portfolio people also have housing funds to reflect this investor sentiment. It just happens to be 50+ people have huge share of society wealth in western countries, thus boomer attitude like this is prevalent. China has same.

Im baffled how “west good” “china bad hehehe”(implying incompetence) when exact same things happen in both.

Wow, I can see how “worse than GFC/1929” stock market crash could happen. Everyone happy using 100x debt leverages.

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Nice, thats closest to ancient nomadic/hunter gatherer lifestyle in modern society. It has some merit to find new water and food sources or do like birds for warmer nicer climate with seasons.

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A bit ago, my dad said that small towns/large villages in the UK used to effectively be 15 minute cities.

People didn’t have cars but the place was designed for that - it contained everything people needed - and there was a regular bus service to the larger town down the road.

The specific village he was talking about used to have 14 shops and doctor, dentist etc. I think there is one small convenience store now and the doctor and dentist got taken over by a regional chain and relocated to the larger town. But because there has been a culture of car ownership since the 70s, the bus service has been gradually downgraded and there are now a few buses per week - not a few per day.

Those people had everything they needed and weren’t (gasp) burning gallons of fuel every day to buy milk. It wouldn’t have been unusual for some people to leave the village rarely - as had everything they needed - and the village is in a farmery area, so many tend to be happy where they are and feel little need to go to larger towns more than once a year!

So we kinda had it. But the car and the big boys made it unworkable so everyone got cars and drove into town where everything had moved to. Now they want to reverse it?

Of course, I don’t think time will be turned back in any kind of good way. The butcher and baker aren’t coming back. Only restrictions will come in.

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Ironically when I think big city life, it is roughly same as that old town life: take bus or train, ride to same office every day, ride back home in evening, take groceries along the way. Only difference is office/work site is needing bus now. Some use car but bigger cities make it difficult and expensive (parking).

Modern specialized society since farming was invented isnt going away. It was before oil and it will stay in some form. Thus lot of jobs are in spesific location like they were in medieval times. Sure some segment of people do trades, drive truck/horse buggy or do “door to door sales”. But these are minority. Also nowadays many of them just make phone calls and social media marketing, only occasional business meeting lunches (often nearby mall at that, as businesses love to congregate downtown in postage stamp sized area).
Trades people are biggest exceptions: plumber, moving van, crew hauling giant washing machine/fridge or gardening supplies and some nurses,similar professions who do house calls, along home cleaning services.
Then lot of valuable work happen at home: taking care of kids, managing household, doing bills, repair of car/bike and so on. This is often unaccounted in modern society and fancy economists, yet that is “infrastructure” that everything else relies on. Nobody can go to job without those functions working. If human time was valued according, not as “external costs” like commute, economics would be order of magnitude more accurate and honest arts, as we see money is being printed but humans are not created to adulthood or time spelled more.

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Yes housing prices in Australia are absolutely ridiculous. I know people renting houses where we were able to work out what the landlord bought the place for and often you can be talking about a 2-3% yeild before costs.
Problem is I’ve been calling Australian housing over priced since I was a teenager. I’ve been early/ wrong the whole time.
There are a lot of tax incentives to encourage people to lever up and own property in Aus. And ther is almost nothing in the way of restrictions for international people to come along and buy our market. Australia is also a much smaller housing market than US and smaller than Canada also I think. We are positioned close to China who are huge buyers of our property market along with India and other Asian countries. Of late the Australian dollar has also been devaluing faster even than USD. An ounce of gold is more than $5000 AUD at the moment and the Aussie property valued in gold chart doesn’t look nearly as good as the nominal charts.
I’m sure I’ll be right one day and Australian property will come back down to earth. But from what level it will fall from I have no idea. In gold terms over the last 5 years it’s already coming down in value. So I think we are really just seeing a collapse in wages and the AUD currency. Which could continue and get worse, in which case property will continue to look even better in AUD terms.

This chart shows it pretty well:

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Source:

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Soon enough the “15 minute cities” will become garbage heaps full of crime, drugs, low rent dwellers, homeless, etc. The people that can and the people that realize this is not normal, although many seem to think it’s normal, will quickly head out of those 15 minute cities.

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If allowed!

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Im surprised , why is that? Aussie doesnt need to be “china”, that export driven model so selling oil, gold, coal, uranium is simply bonus to make wealthier, unless you have totally malicious corrupt politicians like in UK who are actively looting assets (for well developed country, that is likeliest reason to get poor, not incompetence).

Here I see same development… I cant say Im surprised coz taxpayer benefits and money transfers has propped up prices past 20 years with ZIRP times (2015-2022) where anyone with job could get second and third investment apartment. We are not, same as aussie, any central world economic hub, so housing should be only for living, not investments in national scale(I get London and NYC are those kind of hubs along Dublin but all of those now suffer entropy and consequences of that “policy”).

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I recall lots of people bashing gold as an investment because of the environmental impact of mining. I guess Bitcoin deserves it’s own bashing in a similar way.

The Commonwealth countries in particular have crazy real estate values. Much of it can be traced to money laundering from the drug cartels, which investigative journalist Sam Cooper has done much to expose. Just scan the headlines in some of the top articles he has written in the link below. The drug & organized crime money laundering has a HUGE impact on real estate prices!

With regard to the RV life, I have been considering that as well as it appeals for many reasons. One issue I cannot resolve would be a huge game changer - geofencing. While not in place yet, it may become a reality much sooner than anticipated. Digital ID and programmable digital “money”, whether a type of Stablecoin or CBDC, will enable restrictions on movements and purchases. It would not be a great situation to be in if one was unable to buy fuel for the RV, or other necessary supplies, outside of a designated zone, beyond which your payment cards will not work, or your vehicle will be disabled, somehow. It is damn concerning to even think about being restricted in this way.

I do not want to rain on anyone’s parade. I am truly happy for those who are enjoying this lifestyle at the moment. I just wonder how long the freedom to go where one wants, do as they want, lasts? I am watching the EU closely, since they are slated to roll out CBDC this October.

https://x.com/Resist_CBDC/status/1926035894215057660

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And this is one area many don’t consider. For example would be preppers and homesteaders who are concerned with so societal collapse and at the same time want a tiny home or RV. It’s hard to make a homestead in such a small space, especially with children. Combined with an acre or two of land and a nice work shed, that is another story. Many do quite nicely with that combination. Tolls, canning jars, and provisions take up substantial space.

One thing that stood out to me when I moved to NC was the lack of garages or carports on homes. Many had separate metal carports to drive under but the were not integrated into the home. Even quite large homes on large properties lack a garage. At first this seemed strange being a rural area. Over time I realized this was a mill area. People lived much as city folks. They worked and were well paid at the mills so while rural they lived a city life. As you get further from the small towns you see larger acreages and barns and outbuildings and evidence of people working on their own property at least in part to make a living.

It’s in these outer areas of the county things get interesting. You might find a furniture warehouse that specializes in recliners next to a cow barn. You might have a Miso factory or a small manufacturing business tucked in behind a few acres of trees only known because of Google maps.

A lot more folks were industrious at home, and we might some day discover alot of that work has been outsourced overseas and those folks don’t want that work any more.

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Congrats. Have you considered purchasing a plot of land in some rural location where you could hunker down and maybe cache some supplies? Maybe have a tiny house with some outbuildings? For when you are not on the road and traveling.

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Here is Sam Cooper helping expose the corruption of LA mayor Karen Bass, facilitated by CCP infiltration.

https://x.com/scoopercooper/status/1948745420370264237