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Well the dog whistle has been blown. The signal was sent. Nobody can hear it except people of wealth and influence though so few will even know that an elite club has all been called to attention. This feeding call however is scarier than most where Joe Public is concerned. It has not been heard for 90 years. Even those students of the economy who have been waiting for this moment to happen are still not quite sure its the real thing.
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But let me assure you its worse than most of us can even imagine.
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Its the dog whistle announcing that the next depression is about to get underway. Its the whistle that tells the informed that another housing collapse is impending, unemployment is going to soar and a bankruptcy cycle begin as defaults get underway. Its a clarion call that is a clear warning to begin selling off overpriced assets and moving back into cash as the world heads into its second major secular deflation of the past 100 years. These things are regular features of the market incidentally. But they are spaced so far apart that almost nobody ever catches on to the cyclical nature of the event.
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As we all know, almost everything is priced at sky high these days. Homes, bonds, stocks, art, collectibles and farmland are all at nosebleed levels. Only crypto coins have faltered thus far. The Federal Reserve has been ratcheting up interest rates in an open attempt to return them to their long term average. We will get there. It has already been discussed out loud as the terminal point where current inflation will start to whither and blow away.
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Most market watchers still dont believe the authorities really intend to take us that far. Instead they keep imagining that the worlds largest Central Bank which is behind much of the current market mayhem is on a confused course they themselves dont understand and will soon see the error of their ways and pivot back to lowering rates. I love that word pivot. It makes Central Banking sound like a sport. I can imagine those suited grey guys with badminton rackets in their hands twisting in the air on one heel before pivoting into the backhand.
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So sorry my friends. The pundits are wrong again. Because one of the richest men in the world just said the words that have not been heard in 90 some years. On November 20th, Jeff Bezos told Americans it was time to stop spending money. He told them to keep some dry powder cash on hand because tough times were coming. He warned them to postpone buying big ticket items like fridges and stoves and start squirreling away the extra money instead. Because they were going to need it when the recesssion hits next year. “Batten down the hatches” he said before adding, “take some risk off the table”.
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Wow…that is some obvious dog whistle. Not even a little bit subtle.
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Keep Cash on Hand – Jeff Bezos
https://www.business-standard.com/article/international/keep-cash-on-hand-don-t-buy-tv-fridge-this-holiday-season-jeff-bezos-122112000376_1.html
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Jeff Bezos is now the official signalman. Because he just advocated for a cessation of consumption spending in an economy that is driven 70% by consumer expenditures. And now we know without doubt that a depression is coming followed by much lower prices. Its an economy where cash will outperform all other asset classes in a world of hurt where almost everything else goes into decline. And conveniently for those with well fortified bank accounts its going to happen at a time when the US Dollar is rapidly gaining strength versus its peers. You could not find a better set of circumstances for savers and investors to find themselves.
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The thing is, this is almost exactly how the Great Depression was set off with business leaders of the day talking about belt tightening and a general retrenchment of business was deemed necessary for their own survival. Back then, few seemed to understand the importance of the consumer to the strength of the economy nor how it was linked directly to employment levels. Back then there was very little hard data on the impact of social mood on the economy and terms like “expectations” were not yet in vogue. So all the wrong actions were taken by business leaders and government and the economy slumped into a decade long malaise.
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This time around we do not have that excuse. So Bezos comments are surely deliberate and well thought out. He is telling us both what can be expected and what other wealthy people like him would like to see happen. They want assets on sale again. They want markets to fall. Warren Bufffet has seen the writing on the wall and has reportedly shored up his cash position in preparation to take advantage of the bargains that are certain to arise. Berkshire now holds 107 billion in cash for the next rainy day according to this years annual shareholders meeting.
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So take heed friends. Those of you with ears, hear it well. A crash is coming and you may also lose your job when it arrives. The signs of the decline are already all round us. Falling like leaves from a tree about to enter the next winters cold. What is coming is an economic reset and it will be seen in real time. Like I stated earlier, this is a regular feature of the markets. This reliable deflation cycle returns again and again to wipe the slate clean before the next period of growth can get underway and fresh leaves emerge. But this time its actually being announced for all to hear.
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This time it will surely be televised.