Loading ...“We’re Heading Into a Great Depression,” – Donald Trump
Well he said it. Invoked it is maybe a better word. And Donald left little doubt that a Great Depression is the economic assessment for what lies ahead in the USA. Does anyone think Trump made that comment to a Rapid City South Dakota audience by accident? LOL….There are no accidents in politics. Everything is scripted. So I think you can take this one to the bank. You can read the article and Donalds comments in the attached link for yourself but this gave me chills. Partly because I know its true, and partly because its finally being acknowledged and telegraphed to the general public.
If you have been confused about what is really coming and have allowed the incessant rantings of the inflation crowd to lead you astray, then be confused no more. Or if you actually believed you might soon be able to pay off your mortgage by peeling a few big bills out of your wallet each month or pulling up to the teller with a wheelbarrow of those so-called garbage dollars, then think again. And this time…think harder.
Who do you think is running this popsicle stand anyway? Like maybe the banks would suffer the losses on loans and you would get off easy as your obligations inflated away? Don’t make me laugh! Hahahaha. Just remember who is still in charge.
Of course we will deflate. The debts won’t go away. But your asset values will.
All depressions start the same way with the same set of ingredients. They are changing demographics, rising unemployment, excessive deficits, ugly debts and finally defaults. All of them are coming and cannot be avoided much longer. When will it happen? I won’t give a prediction but I will say this….keep some reserves of cash set aside. It is the one thing EVERYONE runs out of when the SHTF and the air comes out of the bubbles. And it is the one thing that goes into absolute shortage as loans, leverage and margin are all being called at once. You cannot find enough of the stuff fast enough to patch a hole in a boat thats about to start sinking.
Would be good if it happens before the Election in the US
Depressions are measured in years Fully. They can run from one to four years typically. But the Long Depression in the US from 1873 to 1896 lasted a stunning 23 years before it lifted. This one will straddle both Bidens and Trumps term (if he is the next President).
Yes BUT Job 1 is to Get Rid of the Source of the problem once and for all
There is a compelling and much repeated narrative that has threaded its way through a million blogs and all the alternative media the past few years that the dollar is doomed and its going to dust. Sorry to say that is completely wrong. I get that the gold bug agenda wants to believe dollars are junk to sell the idea metals are the saviour but things don’t work that way. You have to understand that the world still runs on dollars and they are integral to the lending process across the globe. Millions of contracts and mortgages outside of the US are denominated in dollars. World Bank and IMF loans are denominated in dollars. The currency that gold bugs love to hate will be with us for a very long time. At the minimum it will be going strong for the duration of the contracts its quoted in regardless of a great many factors that are oft discussed about why the buck will soon drown in sorrows. Indeed, as defaults begin on a large scale the dollar will begin to rise. That in itself will baffle all those who cannot imagine how its possible a currency that is being mismanaged can possibly strengthen when its being printed up in the trillions. But the market will soak them all up and thats why they will rise in value. Personally I would own short term Treasuries for the moment for the dual benefits of the rate and the potential near term appreciation. We need to get this kooky idea out of our heads that we should be selling everything to buy metals or imagining our savings will implode in a pile of fireballs because the dollar drops near zero. Instead, run to dollars as security against what is coming. Remember, the crowd is always wrong. And these days the crowd is all fearful of inflation demons and dollars that could go up in smoke.
I could NEVER comprehend the now gone hippie Jeff Snider with all his ramblings on eurodollars. Lots of weeds, never much on big picture. I call them xenodollars (as did Isabella Kaminska at FT for a time), because they are just dollars loaned out by entities outside the Fed’s regulatory apparatus. But they are the key part of this story.
Recently there was a Geo Gammon piece about China, noting a 9% MOM drop in real estate values there. So he was highlighting potential credit turmoil in the one place (other than Japan) that has been central to global liquidity expansion over the last decade. If that 9% was not a one off, there’s a huge negative wealth effect on the way for China. Just like in 1929, when the US was the heir apparent to global hegemony, this time China got too far out ahead of its credit and debt skis. Now the question is, who learned what from GD 1.0? China (and Chinese RRE) could be the epicenter. That was Gammon’s assessment.
Thanks pedro_deleon, I just watched the video you mention and yes I agree. The eurodollar market faces tightening because of the China real estate shock which leads to a dollar shortage and eventually a higher, not lower dollar. Here is the link for anyone else if interested. But a 9% crash in real estate prices in one month!! Wow….unreal man.
https://www.youtube.com/watch?v=ZRfFzXODGPs
Georges approach is to keep the maximum firepower available for a downturn that looks inevitable. Dry powder in other words. We are just waiting for the crows to come home and roost. He likes cash and 3 month treasuries while he waits for a likely 2024 market event (that may be China driven). I approve of course. Its the same prescription I am applying to myself. What you probably don’t want is to be maxed out on leveraged products that could go against you suddenly or that might elicit and margin call. Better to play it safe. What’s the hurry?
From Boom Finance
“So far, the Peoples Bank of China has been very graduated, very incremental and very controlled. When we compare the PBOC (People’s Bank of China) policy to The Fed (US Federal Reserve), the PBOC is like a high-performance luxury saloon car gradually accelerating away when the traffic lights turn green, with a sense of always being in control, whereas The Fed is more like a pimped-up boy racer, flooring it, pedal to the metal, completely out of control. We’re more worried that the Fed is going to drive the US economy and markets off the road and crash and burn horribly. With the PBOC, we don’t see any signs of alarm. In the West the big worry remains stagflation. In China we have the opposite. Growth may be weaker but there is positive economic growth while we also have negative CPI inflation. This has never been achieved before. If this continues, it could be a lesson to other policymakers how to operate policy in a sustainable way.
Here is an interesting comparison of how China’s CB works compared to How the Fed Operates and how money is created in each Country
https://boomfinanceandeconomics.substack.com/p/boom-finance-and-economics-13th-august?utm_source=post-email-title&publication_id=1608567&post_id=135961320&isFreemail=true&utm_medium=email
The problem however is that the function of debt management and repayment is largely out of the control of the Central Banks. That is one thing they cannot contain after years of allowing the market to get totally saturated with loans taken on the cheapest of terms which s another way of saying the cost of money was mispriced such that it was inevitable one day it could not be repaid when pricing reverted back to the average. We are going to come full circle on the debt cycle soon enough. Just like always.