Showing posts with label hyperinflation. Show all posts
Showing posts with label hyperinflation. Show all posts

Thursday, May 7, 2020

Deflation, Inflation, Hyperinflation, Signal to Noise Ratio, Gold, Silver, and the End of the Dollar

Everything that has happened so far was predictable.

The worldwide government response to the COVID-19 pandemic was as easy to see for cynics and skeptics as the eventual lying that would take place. First, back in January and early February, the federal government told the public that the threat to Americans from the coronavirus that was ravishing China was minimal. Gradually, that advice was replaced by travel restrictions to and from mainland China, then to and from Europe, until finally, infections and deaths from the virus began to multiply in America.

By mid-March and into the first days of Spring, the veil had been lifted and the virus was spreading rapidly across the United States, thanks to millions of international travelers on ships and airplanes that had been allowed to come and go as they pleased through the winter. Individual cases turned into clusters and clusters to severe outbreaks, especially in New York City, not surprisingly a hub for international travel.

By the time congress got around to passing emergency legislation, lockdowns and shelter-in-place recommendations were put into play by governors of the individual states. The legislation contained the usual: massive injections of currency into Wall Street (because we can't have a stock market crash), a pittance for the public, and payments to hospitals for treating patients infected with COVID-19: $13,000 for each patient admitted; $39,000 for each patient put on a ventilator.

Anybody who has been following government and Federal Reserve policy knew that the response would be to throw massive amounts of currency at the problem because that's all they know about how to handle crises.

And here we are. The government is now readying a fourth "stimulus" bill, chock full of more handouts, bailouts, and currency drops. This time, the public gets nothing. States and municipalities are going to get tons of currency to bail out their broken, drained public coffers and keep millions of teachers, cops, firemen, and paper-pushers on the job and their pensions partially funded because having the Fed backstop municipal bonds simply wasn't enough. Hospitals will get more currency. Small businesses will get another tranche of loans, pressing cynics to respond that cities get grants, while businesses have to pay it back.

All of this currency printing and government deficits won't amount to a hill of beans because the transmission mechanism for the velocity of money is broken. Cops, teachers, and firemen will get paid, but they'll be scared to take on new debt and will spend much of their money paying down credit card bills and overpriced mortgages. After another crash to lower levels, the stock market will stabilize.

The US will have deflation, widely, in big-ticket assets like stocks (market crash), bonds (rolling defaults), real estate (forbearance today leads to foreclosure tomorrow), trickling down to things like furniture (no interest for 5, 6, 7 years), cars (rebates, cash back, 0% financing), and appliances (oversupply). Food, especially meat, which is getting a bit pricey right now due to chinks in the supply chain, will not be affected much. Food was the one thing that didn't go up or down much during the Great Depression of the 1930s. It was cheap enough so that people didn't starve, though meats were generally considered close to being luxuries, so no worries there, until hyperinflation. Besides, even if you have a tiny back yard, you can grow some vegetables of your own to offset any price rises in meats. Why do you think your mother was always telling you to eat your vegetables? Sometimes there just isn't enough meat.

After six to 18 months of deflation, all the while the Fed printing dollars like maniacs and the government running massive deficits (probably over $8 trillion this fiscal year alone (through September 30), prices will seem to stabilize. By this time next year (2021), many will think the crisis has passed, mostly because that's what they'll be telling you on TV. But, it's just a lull. Inflation will return as all that currency begins to be spent into the economy. As the velocity of money ramps up, the Fed will respond by raising interest rates, but it won't matter. The game is on, with hyperinflation underway, the currency will continue losing value and eventually, there will be a massive default on dollar debt.

Forget, for for a few weeks or a few months what's happening on a day-to-day basis. It's mostly noise. The signal to noise ratio (SNR or S/N), a measure used in science and engineering that compares the level of a desired signal to the level of background noise, in today's economy, politics, and society, is very low, meaning the signal is barely transmitting the message as it is being drowned out by the noise.

In terms of decibels, to hear what's really happening in the world, the signal has to be about 60, the level of sound as conversational speech. If the noise is that of a rocket launch (180), the SNR is 0.33 and the noise drowns out the signal. When the SNR gets to above one (1), the signal can be heard. Putting that in perspective, a signal sound of a balloon popping is 125, a toilet flushing is 75, producing a SNR of 1.67. Those are appropriate today, as the balloon popping can metaphorically represent the debt bubble bursting and the toilet flushing the sound of US dollars losing value, going down the drain. That hasn't happened yet, but, as time progresses, the SNR will rise, pass 1.00 and the signal will eventually be loud and clear, one that everybody can hear. That's when inflation proceeds to hyperinflation, with prices rising faster than the Fed can print new currency.

It is at that point that you'll want to have gold, but especially, silver, because it will outperform the currency, just by standing still. Truth of the matter is that gold and silver don't really rise in price. An ounce of silver or a gram of gold is still an ounce or a gram. But the purchasing power of the currency is falling because there's more money circulating. Thus, in a very natural correspondence, gold and silver rise in value as the currency falls, which is why three 1964 dimes (90% silver) can buy more gas at the pump today, in 2020, than in 1964.

In the year 1964, the average retail price of gas in the U.S. was $0.30. So, back then, you could put a gallon of gas in your car with three 1964 (or earlier) dimes. Today, three dimes from 1964 or earlier are worth a silver melt value of about $1.10 each, so, with gas prices currently deflating to around $1.50 a gallon, you could buy more than two gallons of gas, even with silver (and gold) prices being suppressed. That's deflation. One could buy just one gallon and use the other roughly dime-and-a-half to help pay for the increased price of pork or beef. That's inflation. Inflation and deflation can and will occur - in different products or services - simultaneously.

Silver, even under the severe constraints imposed by the futures, central banks, the BIS, and other manipulators, has increased in value 1100% since 1964, an annual, non-compounded return of 16.67%. Try getting that from stocks or bonds. And silver is going higher. Much higher. The price of an ounce of silver in dollars is likely to double in the next few years, then double again, and again, as the dollar is gradually debased, losing all that's left of its purchasing power. Your 1964 dime will buy at least a gallon of gas or the equivalent in bread or beef or whatever items you wish to purchase. It will have value, as precious metals have for more than 5000 years. The dollar, and with it, the pound, yen, euro, yuan, and any other currency not backed by or tethered to a tangible asset (it doesn't have to be gold; it can be anything) will revert to its intrinsic value of ZERO, or close to it because every other country will be going through similar scenarios as the United States.

That's where this is all headed. Price deflation with currency inflation through Spring or Summer 2021, relative calm from 2021 to maybe the beginning of 2023, but likely before then, with inflation ramping up; then hyperinflation for two years before a complete monetary system reset is the only solution. It's not the length of time for these varying processes to occur that's importance, it's the sequence (deflation, calm (some inflation), inflation, hyperinflation) and the ability to spot the subtle changes that matters most.

Completely wrecking a global economy takes time. The Fed's been at it since 1913, and in 107 years have reduced the purchasing power of the dollar by about 97%. The last three percent - and the sopping up of all the malinvestment and toxic assets will take time... about three to four years.

Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.

We have been fragilizing the economy, our health, political life, education, almost everything… by suppressing randomness and volatility. Much of our modern, structured, world has been harming us with top-down policies and contraptions… which do precisely this: an insult to the antifragility of systems. This is the tragedy of modernity: As with neurotically overprotective parents, those trying to help are often hurting us the most.

-- Nasim Taleb

It would be nice if we started listening to the people who have been right rather than the people who have theories.

-- Mike Maloney, The Hidden Secrets of Money, Episode 7, Velocity & the Money Illusion

At the Close, Wednesday, May 6, 2020:
Dow: 23,664.64, -218.45 (-0.91%)
NASDAQ: 8,854.39, +45.27 (+0.51%)
S&P 500: 2,848.42, -20.02 (-0.70%)
NYSE: 10,999.99, -135.41 (-1.22%)

Thursday, January 23, 2020

Stocks Slide As IMF Revises Global Growth Projections Lower... Again

In the Senate, the impeachment trial of President Trump is well underway, though some Senators are wondering how the House managers can keep up their opening statement for another 16 hours without being laughed out of the chamber.

Adam Schiff, Gerold Nadler and their associates dithered and danced around the same tired narrative that's been their staple for the past six months and nobody is really buying it. Perhaps that's why stocks slumped late in the day, due to overwhelming boredom.

Impeachment aside, stocks were off to a solid start on Wednesday, but failed to make much progress, with the Dow actually ending in the red after being up 124 points early in the session.

There are be a plethora of reasons to be selling stocks at this juncture, main among them valuation, but the continuing slowdown in global trade and potential for most of Europe to fall into a recession are probably the most "top of mind" as winter winds blow cold across the Northern Hemisphere.

Lowering its 2019 forecast (a little late) for the sixth straight time, the IMF dropped expectations for global growth to 2.9%, down 0.1 from it's previous 3.0% expectation. Most of the data is already in place. The IMF, like everyone else, is monitoring fourth quarter results from corporations around the world.

In what has to be regarded as somewhat on the cheeky side, the IMF also lowered its 2020 forecast, from 3.4% to 3.3%. It's ludicrous to believe that the amalgamated egoistic economists at the IMF can get any prediction right, especially one calling for improvement when the early evidence is clearly favoring decline. Within a few months, these brainiacs will be revising their crystal ball projections and tea leaf readings to something more aligned with reality.

Considering that the US, at least, is at the far end of an 11-year bull market, some slowdown would be expected and it's notable that the brain-dead at the IMF cannot fathom the declining birth rate effects of demographics in developed countries, most of which have fallen below replacement figures.

With cheerleaders like those at the IMF and the relentless money creation by the Fed, there's little wonder the rich get richer as fake predictions are afforded the most credence.

At some point, the Fed will stop printing or the dollar will hyper-inflate. At that point, the IMF can revise upward and still find itself woefully behind the curve.

At the Close, Wednesday, January 22, 2020:
Dow Jones Industrial Average: 29,186.27, -9.77 (-0.03%)
NASDAQ: 9,383.77, +12.96 (+0.14%)
S&P 500: 3,321.75, +0.96 (+0.03%)
NYSE: 14,110.24, +0.26 (+0.00%)

Friday, January 17, 2020

Confluence Of Impeachment, Virginia State Of Emergency, Peter Schweizer Book Could Damage Stocks

With stocks soaring to even higher new record highs again on Thursday, there's little doubt over the levles of irrationality and exuberance being displayed by the hoi poloi investing elite, their magic money spigot at the Fed and their marvelous algorithms which interpret all news as positive for stocks.

It is precisely in conditions such as these (the Dow Jones Industrial Average has vaulted over 29,000 with ease and is up a stunning 3,219 points since October 3rd, a 12.3% gain in just three-and-a-half months. The time period in question coincides neatly with the Federal Reserve's stoking engagement into the repo market, pumping, by some estimates, over $1.5 trillion into the hands of primary dealers and hedge funds, ramping the Fed's own balance sheet by more than $413.7 billion since the end of August.

The Fed's particular brand of irrational exuberance is at a pace reminiscent of prior bouts of QE in 2009, 2010-11, and 2012-14, even though the Fed cutely insists this is "not QE." Balderdash.

Normally, nobody gets alarmed over gigantic gains in stocks, giving their overall pleasant scent (go ahead, you know you want to sniff your currency) and beneficial purchasing power, but this severe repricing of stocks is beginning to look Weimar-like, when stocks in 1920s Weimar Germany rose by obscene percentages, but cashing in hundreds of shares could only purchase a day's worth of food due to the overarching hyperinflation of the currency.

Not to say that the same is or will be happening in the United States, though signs of runaway inflation are prevalent, but something may go wrong at some point that tears the social construct and eventually affects stocks and currency.

Consider that a confluence of events are about to take place between now and Tuesday, January 21. Equity and security markets will be closed over the weekend and on Monday, Martin Luther King Day, a national holiday. In the meantime, there's already a state of emergency declared in Richmond, Virginia with concern over the gun rights rally set up for Lobby Day on Monday.

On Tuesday, the impeachment trial of President Trump begins in the Senate.

Also on Tuesday, Peter Schweizer's new book, Profiles in Corruption drops. On the book's cover are the faces of Elizabeth Warren, Joe Biden, Bernie Sanders and others. Uh, Oh, it's already at #3 on Amazon's Best Sellers list.

Tuesday may be too late to get out of positions, so if there's some quiet pullback on Friday, it could be a tell.

At the Close, Thursday, January 16, 2020:
Dow Jones Industrial Average: 29,297.64, +267.44 (+0.92%)
NASDAQ: 9,357.13, +98.43 (+1.06%)
S&P 500: 3,316.81, +27.52 (+0.84%)
NYSE Composite: 14,141.78, +88.58 (+0.63%)

Tuesday, April 18, 2017

Stocks Bounce Higher After Long Weekend; Bond Yields Smashed

Apparently, there was so much pent up demand for overpriced stocks that all the major averages posted nearly one percent gains.

Surely, this has something to do with the failed North Korean missile launch on Sunday, though there might be some Russian involvement in stocks going higher.

Then again, it just might be that speculators are taking one final dive into equities before this year's official federal income tax deadline (April 18), getting all they can out of super low interest rates.

Speaking of interest rates, the officials over at the Federal Reserve must be highly perplexed, with the 10-year note resting comfortably at around 2.20% yield. Somebody's happy, but surely not the millions of retirees who pine for the days when banks paid five percent interest on savings.

Those days are long gone, but the party continues. Hyperinflation for the win?

At The Close, Monday, April 17, 2017:
Dow: 20,636.92, +183.67 (0.90%)
NASDAQ: 5,856.79, +51.64 (0.89%)
S&P 500: 2,349.01, +20.06 (0.86%)
NYSE Composite: 11,427.08 +102.55 (0.91%)

Thursday, February 11, 2016

Yellen's Congressional Testimony Fails to Inspire Confidence

As Janet Yellen testified to the House of Representatives (on Thursday, she speaks and takes questions from the Senate), stocks hung on her every, stuttering, stammering word, but eventually fell in late trading as the Fed Chair seemed a bit too concerned about recent data, stock declines and global tensions to allow congress or investors any happy talk on the now-stalled "recovery."

S&P: 1851.86, -0.35 (-0.02%)
Dow: 15914.74, -99.64 (-0.62%)
NASDAQ: 4283.59, +14.83 (+).35%)

As per this article, JP Morgan economists are now "not all that worried" about negative interest rates in the US, my response:

Of course, negative interest rates are the embodiment of absolute insanity, madness of the markets. Whats worse, perhaps, is that some commentators are touting that this will bring on hyperinflation, though none of them explain the mechanism.

Here at Money Daily, the widely-held belief is that if rates go any lower, we will have an outright deflationary depression, or, an extension of the deflationary depression which has been underway since 2008. We've been hearing about hyperinflation for years now, and, while there admittedly is some inflation, there's more deflation, especially when it comes to cash.

If the banks go NIRP and put on more capital controls (ban on cash not going to actually occur in some places), cash will surely be king, as it was in the Great Depression. Gold and silver should be worth even more, but that's not until the COMEX gets stung (still waiting on that one).

Anybody who's read "When Money Dies" by Adam Fergusson should recall that during Germany's Weimar, the farmers were barely affected until near the end when hordes of people came out from the cities and actually slaughtered animals and raided crop stores.

There's a free PDF, though this is not recommended for everyone - it's somewhat dense:

When Money Dies: The Nightmare of the Weimar …

In the meantime, farmers figure on getting started with seedlings in about three weeks here in (now, finally) snowy upstate NY. Then, investors with any sense should go long vegetable stands. If the banks want to charge money to hold cash, figure people will be more than willing to exchange it for FOOD.

The central bankers have lost their minds. Ask a farmer about storage costs for cash and you'll probably hear, after a long, sidewards stare, that he'd be happy to help you out, since he has plenty of storage for livestock, tools, equipment, produce, and his family (commonly known as a home or household).

People in a city or large town/village should be concerned. Out in the country, not an issue. Besides, this madness will only last - at best - a year. Donald Trump will be president and life will get better. We are (pun intended) banking on it.

This, from a poster called "The Continental," is apropos:

Positive interest rates cause capital to form. Negative interest rates destroy capital.

The banks are desperate to prevent the bond bubble from collapse and are extrapolating to negative interest rates. In short, it's game over for the dollar and its fiat currency brethren.

Central bank reserves were growing exponentially after 1948 up to mid 2014 whilst going vertical they suddenly stopped and plateaued. In the last year, ~$1 trillion of reserves have "disappeared" the collective balance sheets of the world. This means that cash/credit dollars are being created while counterbalancing bonds are being destroyed. This is monetization at its worst. The reserve base of the currency is slowly vanishing.

In the short run, cash dollars will become scarce and valuable. In the long run there is nothing, not even bonds, backing cash dollars and they will collapse (hyperinflate) when trillions of dollars return home looking for assets to convert to.

Buying physical gold (and silver) at any price is not only a no brainer vis-à-vis protecting capital; it is financial suicide not to buy gold.

Tuesday, January 14, 2014

Why the Hyper-Inflationists Have Been Wrong, Are Still Wrong and Will Continue to be Wrong

The hyperinflation argument is completely worn out. The proponents of such nonsense have been pitching it for five years now and the Fed continues to print, print, print.


The deflation which began in earnest in 2008 is still staring them in the face.

Look at it this way: When the Fed prints, it creates debt. That's their job and they're working overtime. On the other side of the equation are the countless numbers of homes (millions of them) that went into foreclosure or are on their way to forclosure and all the mortgages that are still being paid down. That last bunch constitutes the bulk, and that is destroying debt.

The Fed is promoting bubbles in stocks and college loans, car loans and any other loans they can find because many, many consumers and businesses are paying down debt and not incurring any more.

If the Fed keeps its foot to the pedal at $75B or $100B or more per month, it's because there's at least that much debt being eradicated at the same time, so they're trying to keep up.

Remember, in our fiat debt-based system, if there is no debt, there is no money and that's why the Fed keeps printing. And if interest rates rise too much, that's game over because then nobody could afford debt and most debtors would, facing higher rates they cannot pay, default.

The Fed has itself backed nicely into a corner. They need to keep the US dollar strong, but at the same time, they'd like inflation at 2-3%, and GDP growth at 3-4%, which they consider equilibrium.

They've managed to keep the dollar stable, even higher lately, but that plays against their inflation and growth desires.

They can't have it all and deflation is winning and will keep winning as long as people have choices and there's no wage increases. If a loaf of bread doubles in price, people will eat half a loaf. Yep, some will starve, which lowers consumption, and thus, lowers again, the price of a loaf of bread.

The Fed is totally screwed with ZIRP and QE, which, the evidence is beginning to prove out, cannot exist at the same time, lest you get a result of zero growth (which is probably what we've really had the past five years in sum when you take out all of the BS hedonics and other magnificent calculations).

They're completely screwed. If I could borrow at 0.25%, like the banks, I'd do it all day long and pay it back just as quickly. So, what does the Fed gain from that? They created cheap money, and just as fast as it was borrowed, it was repaid.

Businesses are also self-funding, with stock buybacks and their own debt issuance, which, if you've read the Creature from Jekyll Island, the bankers hate, because corporate stock and debt is like having your own currency, and the banks make nothing off that.

The deflation will continue as long as interest rates remain low, like a 10-year under 3.5%, which is likely to remain that way for at least another year or two or three.

So, enjoy the deflation. Buy land, ammo, guns, vehicles, any reliable alternative energy source (wind, solar, deep cycle batteries, etc.), non-GMO seeds and opt out of the debt system. As long as the deflationary regime remains intact, you'll be fine. When it ends, you'll be prepared to survive without money.


Stocks did a serious about-face on Tuesday, based upon... hmmm, maybe the bogus retail sales data for December, which showed modest increases only by revising November sales down.

That's how it works in the present regime of making it up as the economy rolls along. While most retailers reported dismal holiday sales, we're supposed to believe the government's claim that everything was rosy in December. When the store, and later, entire malls, begin closing down, then what will they say? Go ahead, guess. They'll probably blame the weathre or threat of terrorist attacks or some other nonsense.

Also boosting stocks was, maybe, fourth quarter results from JP Morgan (JPM) and Wells-Fargo (WFC), two of the nation's mega-banks, which are supposedly flush with cash and making money hand over fist, even though their filings are so opaque and farcical, nobody really believes them at all, except those brokers and traders who make money by selling stocks to retail investors.

The banks aren't as unhealthy as they were in 2008, but, by no means are they the cash-cows we're led to believe.

Deflation, over-supply and an aging demographic will continue to erode the economy. And that ACA (Obamacare) isn't helping, either.

DOW 16,373.86, +115.92 (+0.71%)
NASDAQ 4,183.02, +69.71 (+1.69%)
S&P 1,838.88, +19.68 (+1.08%)
10-Yr Note 98.95, -0.15 (-0.15%) Yield: 2.87%
NASDAQ Volume 1.88 Bil
NYSE Volume 3.33 Bil
Combined NYSE & NASDAQ Advance - Decline: 4132-1568
Combined NYSE & NASDAQ New highs - New lows: 255-35
WTI crude oil: 92.59, +0.79
Gold: 1,245.40, -5.70
Silver: 20.28, 0.103
Corn: 431.50, -3.00

Monday, February 28, 2011

Headlong Into Hyper-inflation

After last week's mini-correction - which is probably the worst decline we'll see for a while - stocks and the Fed are back on track, pumping newly-created POMO dollars into the system for the banking crooks to parlay into stocks. Up, up and away!

According to the Fed's published schedule of monetary injections, today was slated for $6-8 billion in outright coupon purchases. In other words, the Fed is buying back bonds from the Primary Dealers which were purchased just a few weeks ago, presumably at a loss, a small loss, but, nevertheless, a loss, so that the banks will remain willing participants to the Zimbabwe-ification of the US financial system.

These continued injections have become so commonplace that nobody bothers to report on them or even think about them. For those unfamiliar with the process, let's recap:

Step 1: The US Treasury issues bonds in certain amounts and maturities.

Step 2: Primary Dealers (AKA Too Big To Fail (TBTF) banks) buy the bonds.

Step 3: The Federal Reserve buys the bonds from the TBTF banks.

This is the simple process by which our currency is devalued every day and how the banks are shoring up their horrifically-insolvent balance sheets. While the Fed takes a loss of say, half a billion a day, the banks record the transaction as a profit. Viola! The banks are once again sound. The only problem is that the Fed is holding huge amounts of government debt.

Now, if you've been following carefully, you might question the process. Why bother? Why not just give the banks the money directly from the Federal Reserve, since they have the ability to just create money out of thin air?

Ah, what about the government's obligations? They must issue debt, so the game must continue. The auctions, however, conducted in secrecy, electronically, so that only a few people - ostensibly Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner - know who's buying what and for how much.

That's a problem, for obvious reasons, and explains, in part, why some people are beginning to think that the entire economy of the United States has already sunk and is being kept afloat by a massive fraud, perpetrated by the Federal Reserve, Treasury Department and the nation's six to eight largest banks (with assistance from European Central banks who are doing pretty much the same thing).

Nobody is buying US government debt. Nobody could be that stupid. The Fed is buying it all, monetizing the debt, smashing down interest rates and destroying the currency. The tiny little secret nobody wishes to speak of is that the rest of the world had better play along or their currencies will be flushed straight into the toilet along with billions of Ben Bernanke Bucks.

Yes, the Federal Reserve is buying all Treasuries issued, cooking their own books and helping out the banks, because, if they don't do it, we'll just have to liquidate those TBTF institutions and Jamie Dimon (our next Treasury Secretary) and his wealthy friends wouldn't like that. Besides, the Fed and the banks and the politicians they control would no longer be able to sway the American public every which way, as they choose.

Think about it. The Chinese stopped buying our debt at least a year ago. They are trying to unload it as fast as they can without causing a panic. Japan is also no longer interested. Reportedly, the UK has been buying scads of the stuff, but they're even more broke than we are, so that's a gigantic canard.

The Fed is buying all, or nearly all, of US debt issuance. We are a self-dealing, Ponzi-fied, Zimbabwe on steroids. There's no doubt about it and there's also no way out. The Fed cannot stop creating money because it just gets more and more worthless every day. It's being spent as quickly as they can put it into circulation, forcing prices higher and higher, inflating everything on the planet - including stocks - in a very devious, vicious cycle all caused by the bankers who imploded the world's economy back in 2008 when they couldn't figure out a way to cover all their bets without all of them failing.

That is when Hank Paulson, then Treasury Secretary, with Ben Bernanke as his willing accomplice, figuratively held a gun to the heads of the President, George W. Bush, and the leaders of congress and demanded $700 billion dollars with no strings attached. It was the crime of the century, committed in broad daylight, in front of hundreds of millions of people worldwide.

Ever since then, all we've gotten for our time and money is a song and dance, orchestrated to keep us all in line and dong the "recovery boogie." It's such an absolute charade, a sham and a complete lie that a lot - and I do mean a lot - of people are coming to the conclusion that it's not working, that we're stuck in this no-jobs, no-growth, high-inflation limbo until the the bar finally falls to earth.

The big holders of mortgage-backed securities are suing the banks with regularity. They want their money back for all the bad securities issued by the banks, backed by mortgages which were written with no other purpose than to have the homeowner default.

Insurance companies suing banks, with the Fed printing money as fast as they possibly can and prices rising globally because of it results in an unsustainable situation. It's already bad, and quickly getting worse. The rest of what suffices for news these days is just for show.

Think about it. In Wisconsin, they're trying to fill a $3 billion void in their budget. Why, the Fed issues twice that amount through their Treasury purchases EVERY DAY! Oil hitting $100 a barrel? All caused by uncontrolled speculation and outright thievery. There's a glut of oil out there and what the big energy companies are really worried about is people rationing their use of gas, taking fewer trips and buying less. with so many people out of work, they have little driving to do, and the oil companies are just trying to remain as richly profitable as they've always been by CHARGING MORE TO FEWER CUSTOMERS.

QE2, the Fed's gambit to restore economic prosperity by issuing more paper money, is slated to end by June. After that, it's anybody's guess, but the path of least resistance - and most sense, from an OMG mentality - would be to continue printing more. There's no economy, tax revenues have fallen off a cliff, and the Fed, because they've chosen to keep insolvent banks operating instead of closing them down, is powerless to do anything but what they've been doing for 2 1/2 years: print, print, print, and when you're done printing, print some more. Hello hyperinflation, followed by an acute depression, the worst ever seen. See you in Hades, Mr. Bernanke, because that's precisely where you and your policies are sending everyone else.

Dow 12,226.34, +95.89 (0.79%)
NASDAQ 2,782.27, +1.22 (0.04%)
S&P 500 1,327.22, +7.34 (0.56%)
NYSE Composite 8,438.55, +60.51 (0.72%)

Advancing issues outpaced decliners, 4051-2535. NASDAQ new highs: 144; new lows: 21. NYSE new highs: 258; new lows: 15. Volume was back down in the doldrums again, so everything is back to normal.

NASDAQ Volume 2,057,503,500
NYSE Volume 4,593,278,500

Oil prices fell again today, down 91 cents, to $96.97, but the damage has been done. Regular unleaded gas is now at a national average of $3.37 per gallon. Seven states are already over $3.45. Want to see a recession created almost overnight. Push ol to $115 a barrel and gas to a national average of $3.75 and see what happens. The protests in Wisconsin will look more like a picnic compared to the mass outrage that induces. Already, people are reconsidering their choices of paying $75-150 a week to get to and from a job that pays them less than $400 a week, taking home $300-340. For many, it's just not worth it any more.

Meanwhile, gold bugs and silver surfers are loving the chaos. Gold was up again today, but only by 60 cents, to $1,409.90. It was as high as $1,416 in earlier trading. Gold is now being pressured downward, or at least held down, for two reasons. First, the banker's know that everyone watches gold as a proxy to fiat currencies, so they are suppressing demand. Second, the very same banks want to hoard it, because they know everyone is right. The global economy is as close to complete meltdown as it was in the fall of 2008.

Silver got all the gains today, up 91 cents (same as the drop in oil, coincidentally), to $33.80. We're unsure whether or not that's a new 30-year high; we only know that $50 per ounce is the number that stopped the Hunt brothers back in 1979-80. When the bubble they created finally burst, Nelson Bunker Hunt, who purportedly lost more than a billion dollars in one day, said, "a billion dollars isn't what it used to be."

And, so, those immortal words, while the Fed pumps billions into an eventual oblivion, ring more true than ever, today.

Thursday, December 9, 2010

Do Not Watch at Your Own Risk

For those who think Nouriel Roubini (AKA Dr. Doom) is a little too pessimistic, the interview - linked at the end of this post - with John Williams ( might be a bit much to bear. But, it is highly recommended that anyone with a time horizon of more than six to twelve months view the interview in its entirety (almost nine minutes) and heed well what Mr. Williams says about the future of the United States, hyperinflation, Fed policies and being prepared.

Mr. Williams' site,, has general commentary on the state of the economy, though more detailed analysis is by subscription only. It's rare to see Williams live, this being one of the few interviews available, but he's a down-to-earth economist who examines the US economy with the bent of a CPA, using GAAP instead of the fuzzy numbers the government likes to throw around.

Just the kind of stuff one needs to hear before venturing out to the mall for Christmas shopping, but, essential viewing if one wishes to survive until, say, 2012.

First a quick recap of the markets:

Dow 11,370.06, -2.42 (0.02%)
NASDAQ 2,616.67, +7.51 (0.29%)
S&P 500 1,233.00, +4.72 (0.38%)
NYSE Composite 7,782.14, +31.82 (0.41%)
NASDAQ Volume 1,948,935,500
NYSE Volume 4,994,395,500

Obviously, not much to get excited about today, though House democrats did vote no in a caucus on accepting the President's "tax compromise" worked out with Republicans earlier in the week. It's a bit of a snag, especially since the Bush tax cuts expire at year's end and most of the cretins in congress would like to skip out of town in less than two weeks.

Advancing issues beat decliners, 3697-2758. NASDAQ New Highs: 182; Lows: 21; NYSE New Highs: 152; Lows: 28. Volume was poor, especially on the NYSE.

Oil put up a 9 cent gain, to $88.37. Gold recovered some lost ground, gaining $5.70, to $1387.00 on last print, as did silver, up 40 cents, to $28.76.

That's about it. Markets are dull as traders wind down positions at year's end, allowing more time to view the excellent video below.

Click here for John Williams interview.