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Doug Casey: “This is Going to be One for the Record Books”
Doug Casey: “This is Going to be One for the Record Books”
Just because society experiences turmoil doesn’t mean your personal life has to. And a depression doesn’t have to be depressing. Most of the real wealth in the world will still exist—it will just change ownership.
What is a depression?
We’re now at the tail end of a very long, but in many ways a very weak and artificial, economic expansion. At the same time we’ve had one of the strongest securities bull markets in history. Both are the result of trillions of new dollars created over the last decade. Right now very few people are willing to consider the possibility of tough times—let alone The Greater Depression.
But, perverse though it may seem, this is the very best time to think about it. The U.S. economy is a house of cards, built on quicksand, with a tsunami on the way. I urge everyone to read up on the topic. For now, I’ll only briefly touch on the nature of depressions. There are at least three good definitions of the term:
- A period of time when most people’s standard of living drops significantly.
- A period of time when distortions and misallocations of capital are liquidated.
- A period of time when the business cycle climaxes.
Using the first definition, any natural disaster can cause a depression. So can living above your means for long enough. But the worst kind of depression has not just economic effects, but economic causes. That’s where definitions 2 and 3 come in.
What can cause distortions in the way the market operates, causing people to do things they’d otherwise consider unreasonable or uneconomic? Only government action, i.e., coercion. This takes the form of regulation, taxes, and currency inflation.
…click on the above link to read the rest of the article…
The Frontlines in the War on Cash
The Frontlines in the War on Cash
Let’s face it, many forces are pushing for the abolition of – or at least serious restrictions on – cash.
Many businesses hate cash, because cash transactions take longer to process, and large quantities of cash pose a security risk. If you travel by air, you’ve experienced this first-hand. “Cashless cabins” are the rule for most airlines. You must purchase every glass of wine, cheese dip, or package of mixed nuts with a credit or debit card.
In Atlanta, you can’t even buy a hot dog at a pro football or soccer game with cash. In March, the operators of Mercedes-Benz Stadium, home of the Atlanta Falcons and Atlanta United, announced it would no longer accept cash at food and beverage concession stands.
Credit card companies hate cash too. And for obvious reasons – they get a cut of every purchase through the fees they charge businesses. So it’s no surprise that in 2017, Visa announced its “Cashless Challenge” and gave $10,000 to 50 small businesses that stopped accepting cash payments.
Big brother hates cash, too. For decades, governments around the globe have engaged in a War on Cash. The original justification for this war was to fight racketeering. The War on Cash then morphed into the War on Drugs, the War on Money Laundering, and subsequently, the War on Terror.
Numerous countries have placed severe limits on how much cash you can spend at one time.
Spain and France have banned cash transactions over €1,000. If you want to spend more than that, you must use a debit card, credit card, a non-transferrable check, or pay by bank transfer. In Italy, where the cash limit is €3,000, violations are punished by confiscation of up to 40% of the amount paid. In Spain, you lose “only” 25% of your cash if you violate the rules. Similar restrictions are in place in most EU countries. Later this year, Australia will ban cash transactions larger than AU$10,000 (about US$7,500).
…click on the above link to read the rest of the article…
Brace Yourself: The Next Epic Collapse Could Be Weeks Away
Brace Yourself: The Next Epic Collapse Could Be Weeks Away
There wasn’t a group of people more wrong about the 2008 financial crisis than those at the Federal Reserve.
Mere months before the disaster hit in earnest, the nation’s highest economic and financial officials were vocal that there was nothing to worry about.
Most memorable of these are perhaps two comments from former Fed Chairman Ben Bernanke…
In January 2008, he said, “The Federal Reserve is not currently forecasting a recession.”
And later that year, in July, he said Fannie Mae and Freddie Mac – the two government-sponsored enterprises that kicked off the credit crisis a few months later – were “in no danger of failing.”
And it wasn’t just Bernanke. The same delusional sentiment was echoed by almost all the top Fed and Treasury officials… as well as those in the mainstream financial media and academia.
Of course, we all know how things played out…
When the housing bubble burst in 2008, the effects rippled throughout the economy, kicking off the largest financial and economic crisis since the Great Depression.
And the S&P 500 – a good proxy for the U.S. stock market – went on to fall by over 56%.
The reason I’m telling you this today is to remind you that people exhibit laughable sentiments near the peak of bull markets.
And today, we’re hearing much of the same sentiment that was displayed before the 2008 crisis.
But as you’ll see below, it’s not the only sign I’m seeing of a coming crisis…
A Contrarian Indicator
I’ve written before about why I believe we’re near the peak of the largest bubble in human history.
And as I’m about to show you, there are clear indicators of a coming crisis… in the auto sector… the housing sector… and in the economy as a whole.
…click on the above link to read the rest of the article…
“Toto, I Don’t Think We’re in Kansas Anymore”
“Toto, I Don’t Think We’re in Kansas Anymore”
Recently, an American colleague commented to me, “We no longer live in a democracy but a dictatorship disguised as a democracy.”
Is he correct? Well, a dictatorship may be defined as “a form of government in which absolute authority is exercised by a dictator.”
The US today is not be ruled by dictatorship (although, to some, it may well feel that way.)
But, if that’s the case, what form of rule does exist in the US?
At its formation, the founding fathers argued over whether the United States should be a republic or a democracy. Those founders who later formed the Federalist Party felt that it should be a democracy – rule by representatives elected by the people. Thomas Jefferson, who created the Democratic Republican Party, argued that it should be a republic – a state in which the method of governance is democracy, but the principle of governance is that the rights of the individual are paramount.
He argued that, “Democracy is nothing more than mob rule, where fifty one percent can vote away the rights of the other forty nine.”
At that time, Benjamin Franklin has been credited as saying, “Democracy is two wolves and a lamb voting on what to have for dinner.”
Very well stated.
As Americans still legally vote, and it may well be that the voting is not altogether rigged, the US could be regarded as a democracy. Of course, to be accurate, it could also be defined as a bureaucracy – rule by officialdom, and/or a plutocracy – rule by the very rich. Both of these descriptions are undeniably accurate.
…click on the above link to read the rest of the article…
Crossing Borders with Gold and Silver Coins
Crossing Borders with Gold and Silver Coins
It’s well-known that you have to make a declaration if you physically transport $10,000 or more in cash or monetary instruments in or out of the US, or almost any other country; governments collude on these things, often informally.
Gold has always been in something of a twilight zone in that regard. It’s no longer officially considered money. So it’s usually regarded as just a commodity, like copper, lead, or zinc, for these purposes. The one-ounce Canadian Maple Leaf and US Eagle both say they’re worth $50 of currency.
But I’ve had some disturbing experiences over the past couple of years crossing borders with coins. Of course, crossing any national border is potentially disturbing at any time. You might find yourself interrogated, strip searched, or detained for any reason or no reason. But I suspect what happened to me crossing a few borders in recent times could be a straw in the wind.
I’ve gradually accumulated about a dozen one-ounce silver rounds in my briefcase, some souvenirs issued by mining companies, plus others from Canada, Australia, China, and the US. But when I left Chile not long ago, the person monitoring the X-ray machine stopped me and insisted I take them out and show them to her. This had never happened before, but I wrote it off to chance. Then, when I was leaving Argentina a few weeks later, the same thing happened. What was really unusual was that the inspector looked at them, took them back to his supervisor, and then asked if I had any gold coins. I didn’t, he smiled, and I went on.
…click on the above link to read the rest of the article…
The French Revolution (The Sequel)
The French Revolution (The Sequel)
Here we have an eighteenth century depiction of two-thirds of the motto of the French Revolution – Liberté, Égalité, Fraternité, or “Liberty, Equality, Fraternity.”
It’s significant that Karl Marx was inspired by the French Revolution to form his concept of a utopian society. He envisioned a worldwide revolution in which all people everywhere would do away with the rich and everyone would then be equal. He felt that this could be achieved by peaceful means in England and America, but would require force in Germany and Russia, and a “temporary” dictatorship by the proletariat in order to create the ideal society. The utopia, he said, would from then on be self-sustaining.
As we now know, his utopia was a bit naïve, as revolutionary leaders, once exposed to the heady thrill of achieving power, are extremely reluctant to then give it up. They tend to become far more autocratic and ruthless than their predecessors and, rejecting socialist abnegation for themselves, ultimately become the next aristocracy.
It’s a pity that Mr. Marx didn’t see this coming. It was certainly evident during the French revolution, as is seen in the contemporary banner above, with its prominently featured skull and crossbones. (In case the observer didn’t get the point, the artist further accentuated his composition with the addition of two guillotines.)
Had Mr. Marx been paying attention to the actual results of the revolution, he might have noticed that the “Liberty” was never intended to be liberty for all, merely for some. (The others were meant to offer up their heads to the cause.)
…click on the above link to read the rest of the article…
This Is How the “Everything Bubble” Will End
This Is How the “Everything Bubble” Will End
I think there’s a very high chance of a stock market crash of historic proportions before the end of Trump’s first term.
That’s because the Federal Reserve’s current rate-hiking cycle, which started in 2015, is set to pop “the everything bubble.”
I’ll explain how this could all play out in a moment. But first, you need to know how the Fed creates the boom-bust cycle…
To start, the Fed encourages malinvestment by suppressing interest rates lower than their natural levels. This leads companies to invest in plants, equipment, and other capital assets that only appear profitable because borrowing money is cheap.
This, in turn, leads to misallocated capital – and eventually, economic loss when interest rates rise, making previously economic investments uneconomic.
Think of this dynamic like a variable rate mortgage. Artificially low interest rates encourage individual home buyers to take out mortgages. If interest rates stay low, they can make the payments and maintain the illusion of solvency.
But once interest rates rise, the mortgage interest payments adjust higher, making them less and less affordable until, eventually, the borrower defaults.
In short, bubbles are inflated when easy money from low interest rates floods into a certain asset.
Rate hikes do the opposite. They suck money out of the economy and pop the bubbles created from low rates.
It Almost Always Ends in a Crisis
Almost every Fed rate-hiking cycle ends in a crisis. Sometimes it starts abroad, but it always filters back to U.S. markets.
Specifically, 16 of the last 19 times the Fed started a series of interest rate hikes, some sort of crisis that tanked the stock market followed. That’s around 84% of the time.
You can see some of the more prominent examples in the chart below.
…click on the above link to read the rest of the article…
Police State in Slo-Mo
Police State in Slo-Mo
For many years, I’ve forecasted that the US will evolve into a police state; that it will begin slowly; then as more and more freedoms are removed, the creation of the police state will accelerate.
We’re now seeing that acceleration, as more and more Americans are detained, questioned, and having their property confiscated than ever before.
As an example, in 2016, some 20,000 travellers in and out of the US were stopped, often at random. Typically, their baggage was searched, their documents photocopied, access codes to their electronic devices demanded and their files copied. In most cases, no explanation was given, but they were advised that if the search was refused, they would be detained indefinitely.
The following year, in 2017, the numbers of people detained rose by 50%, to 30,000.
It’s important to note that the travellers were not threatened with arrest, which suggests that the authorities were working on the basis that the Patriot Act of 2001 allows all of the above activities—without cause being given, without a warrant being obtained, without access to a phone call or legal representation being allowed, and that the individuals in question may be detained, indefinitely.
This, of course, is in direct violation of the Fourth Amendment to the Constitution, which states that people have the right “to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.”
However, when people travel, they are particularly vulnerable, so the travellers in question are extremely unlikely to refuse. They understand that, “indefinitely” means, “until a Supreme Court ruling is passed, overturning the Patriot Act as unconstitutional.” If it hasn’t happened yet and isn’t under consideration, it’s safe to say that the level of police state allowed under the Patriot Act is permanent.
…click on the above link to read the rest of the article…
