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2021 Year in Review: Crisis of Authority and the Age of Narratives

January 9, 2022

2021 Year in Review: Crisis of Authority and the Age of Narratives

Every year, friend-of-the-site David Collum writes a detailed “Year in Review” synopsis full of keen perspective and plenty of wit. This year is no exception. Poignant and delightfully acerbic when necessary, considering the troubling times. As with past years, he selected Peak Prosperity as the site where it is published in full. It is longer than our usual posts, but worth the time to read in full. This is Part 1.

Introduction

Dave: You do lack self control, but I learned and laughed making my way thru this.

~ Larry Summers (@LHSummers), former Secretary of the Treasury

I’ve been trying to reach you about your car’s extended warranty. What began more than a dozen years ago as a synopsis of the year’s events in markets and finance for a few friends morphed beyond my control into a Year in Review (YIR)—an attempt to chronicle human folly and world events for the entire year. It captures key moments before they slip into the brain fog. The process of trying to write a coherent narrative helps me better understand WTF just happened and seminal moments that catch my eye.

By far my favorite end-of-year recap for the last ten years. Finished it yesterday. Once again David hasn’t disappointed. He’s on my I want to go to dinner with list.

~ Jim Pallotta (@jimpallotta13), money manager and former owner of Boston Celtics

I’m game, Jim, even if it’s just a pretzel, nachos, and a brewski. The title, “Crisis of Authority,” is a double entendre. On the one hand, previously trusted authorities that we relied on to better understand the world are long gone. Edward R. Murrow, Walter Cronkite, and Tim Russert have been replaced with Chris Cuomo, Don Lemon, and Brian Stelter. Oops. Scratch Chris Cuomo..

…click on the above link to read the rest of the article…

Weekly Commentary: 2021 Year in Review

January 3, 2022

Weekly Commentary: 2021 Year in Review

Books will be written chronicling 2021. I’ll boil an extraordinary year’s developments down to a few simple words: “Things Ran Wild”. Covid ran wild. Monetary inflation ran wild. Inflation, in general, ran completely wild. Speculation and asset inflation ran really wild. More insidiously, mal-investment and inequality turned wilder. Extreme weather ran wild. Bucking the trend, confidence in Washington policymaking ran – into a wall.

Covid running wild. With the hope for vaccines and a waning pandemic, few anticipated the tragedy of more than 475,000 Covid deaths (exceeding 2020). As the year comes to its conclusion, we are shocked by daily new cases exceeding 500,000 – and two million for the week. Globally, daily cases exceed two million.

Inflation running wild. CPI surged 6.8% y-o-y in November, the strongest consumer price inflation since June 1982. Core PCE, the Fed’s favored inflation gauge, rose above 6% for the first time since 1983. Surging food and energy prices, in particular, punish those who can least afford it.

Monetary inflation running wild. Federal Reserve Credit expanded $1.391 TN over the past year, or 19%, to a record $8.742 TN. The Fed’s balance sheet inflated an astonishing $5.015 TN, or 135%, in the 120 weeks since QE was restarted in September 2019. Federal Reserve Assets have now inflated 10-fold since the mortgage finance Bubble collapse.

M2 “money” supply inflated another $2.478 TN (12 months through November) to a record $21.437 TN – with egregious two-year growth of $6.185 TN, or 40.6%. Bank Deposits surged $1.957 TN over the past year (12.1%), with two-year growth of $4.812 TN (36%). Money Fund Assets rose another $408 billion y-o-y, or 9.5%, to $4.70 TN. The myth that QE effects remain well contained within Treasury and securities markets has been debunked.

In the seven pandemic quarters through Q3 2021, Non-Financial Debt surged $9.183 TN, or 16.8%, in history’s greatest Credit expansion.
…click on the above link to read the rest of the article…

Gold and silver prospects for 2022

December 27, 2021

Gold and silver prospects for 2022

It has been a disappointing year for profit-seeking precious metal investors, but for those few of us looking to accumulate gold and silver as the ultimate insurance against runaway inflation it has been an unexpected bonus.

After reviewing the current year to gain a perspective for 2022, this article summarises the outlook for the dollar, the euro, and their financial systems. The key issue is the interest rate outlook, and how that will impact financial markets, which are wholly unprepared for the consequences of the massive expansions of currency and credit over the last two years.

We look briefly at geopolitical factors and conclude that Presidents Putin and Xi have assessed President Biden and his administration to be fundamentally weak. Putin is now driving a wedge between the US and the UK on one side and the pusillanimous, disorganised EU nations on the other, using energy supplies and the massing of troops on the Ukrainian border as levers to apply pressure. Either the situation escalates to an invasion of Ukraine (unlikely) or America backs off under pressure from the EU. Meanwhile, China will continue to build its presence in the South China Sea and its global influence through its silk roads. Less appreciated is that China and Russia continue to accumulate gold and are ditching the dollar.

And finally, we look at silver, which is set to become the star performer against fiat currencies, driven by a combination of poor liquidity, ESG-driven industrial demand and investor realisation that its price has much catching up to do compared with lithium, uranium, and copper. The potential for a fiat currency collapse is thrown in for nothing.
2021 — That was the year that was

This year has been disappointing for precious metals investors. Figure 1 shows how gold and silver have performed since 31 December 2020.

…click on the above link to read the rest of the article…

The Clouds Have Cleared in 2021, and What We Are Seeing Is a Dystopian 2022

December 22, 2021

The Clouds Have Cleared in 2021, and What We Are Seeing Is a Dystopian 2022

Photo by Javier Quiroga

This year was a doozy. Right out of the gate, millionaires were sounding the alarm that the markets were looking overvalued while reducing their risk exposure.

In February we got a taste of what could be the “end game” for the U.S. dollar as we saw it lose more of its grip as global reserve currency. Of course, it won’t collapse overnight because market psychology is still propping it up (for now).

But three big major economic influences have made 2021 one to remember. This chaotic “trifecta of market turbulence” kept the media busy and retirement savers on the edge of their seats.

So without further ado, let’s dive into the first one…

The confused Fed

Back in 2019 when the repo markets started going crazy, we reported how the Fed’s “confused” response only added fuel to a fire that continued to burn into this year.

And this year, one word you might have heard coming from Powell’s mouth with nauseating frequency to describe rising inflation was “transitory.” Over and over again, Powell’s confused Fed kept downplaying inflation…

Until it was obvious to everybody that inflation wasn’t transitory any longer. When Senator Pat Toomey challenged Powell during an appearance before Congress, the Fed chairman was forced to change his tune:

Powell explained that while the word has “different meanings to different people,” the Federal Reserve “tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation.

“I think it’s — it’s probably a good time to retire that word and try to explain more clearly what we mean,” Powell added.

(We’ll discuss this in greater detail in a moment.)

…click on the above link to read the rest of the article…

Ranchers Sell Off Cattle And Farmers Idle Hundreds Of Thousands Of Acres As America’s Drought Emergency Escalates

June 12, 2021

Ranchers Sell Off Cattle And Farmers Idle Hundreds Of Thousands Of Acres As America’s Drought Emergency Escalates

In my entire lifetime, this is the worst that drought conditions have ever been in the western half of the country. During the past 20 years, the amount of territory in the West considered to be suffering from exceptional drought has never gone higher than 11 percent until now. Today, that number is sitting at 27 percent. The term “mega-drought” is being thrown around a lot these days to describe what is happening, but this isn’t just a drought. This is a true national emergency, and it is really starting to affect our food supply.

Just look at what is happening up in North Dakota. The vast majority of the state is either in the worst level of drought or the second worst level of drought, and ranchers are auctioning off their cattle by the thousands…

“Normally this time of the year, we’re probably looking at 400-600 head and a lot of times would be every other week,” said former auctioneer Ron Torgerson.

On Sunday and Monday, more than 4,200 head of cattle were sold at Rugby Livestock and Auction.

Needless to say, ranchers in North Dakota don’t want to get rid of their cattle, but the drought has pushed prices for hay and corn so high that many of them simply have no choice.

One of those that has already been forced to sell a large number of cattle is rancher David Bohl…

As the drought continues, the price of hay and corn has gone way up. It’s more expensive for ranchers to try and supplement feed than it is to sell the cattle.

Bohl has already sold 200 of his head in the last month.

…click on the above link to read the rest of the article…

Bloomberg Analysts: “Gold the Asset to Beat in 2021”

January 12, 2021

Bloomberg Analysts: “Gold the Asset to Beat in 2021”

Bloomberg: Gold to outperform S&P 500 & Bonds in 2021

This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Gold to spearhead precious metals’ outperformance in 2021, why 2020 was a very good year for national mints, and birdwatcher unearths biggest-ever hoard of Celtic gold in Britain.

Bloomberg analysts: A $2,000 price tag will make gold the asset to beat in 2021

Among traditional assets, it would be difficult to beat gold for the title of top performer in 2020. Having hit a new all-time high of $2,070 in August, the metal has traded around its previous all-time high of $1,911 ever since. And though gold has appeared somewhat rangebound over the previous months, Bloomberg Intelligence senior commodity strategist Mike McGlone sees this as a stepping stone on the way towards an even better year.

According to McGlone, the $2,000 level that gold appears to have had difficulty recapturing is poised to become the metal’s next support, making it the asset to beat once again. “In an investment landscape increasingly dominated by how low — or negative — central banks will set base rates, along with rising debt-to-GDP and QE, we see the foundation solidifying under the price of gold. Resistance at about $2,000 an ounce in 2020 is set to transition to support in 2021,” he explained.

McGlone added rising volatility to the list of reasons why he can’t imagine gold’s price rise stopping, especially as the metal has held steadfast to its upwards-pointing 12-month moving average. In what has by now become a common scenario, McGlone expects gold to continue outperforming the record-setting S&P 500 along with sovereign bonds.

…click on the above link to read the rest of the article…

2021 – The Choppiness Ahead

January 12, 2021

2021 – The Choppiness Ahead

QUESTION #1: OK. Now what? The Democrats seem to be just vindictive and do not represent all the people. Any thoughts on the future?

QUESTION #2: Hello Martin.
You and Socrates are the only sane people/AI in a totally insane world for the time being. Thanks for that.
From a Swedish perspective, it is completely absurd what we see unfolding in Washington DC among these corrupt politicians. If Trump leaves without some security guarantees, they will probably chase him and his entire family all the way to hell with various accusations, lawsuits, and maybe even arrests. Maybe he can make an art of the deal with Pence and let him step in 24 hours before noon 20th and pardon Trump and his family against all possible accusations or maybe even make an art of the deal with Biden, for the good of the country, etc.

What do you think and what does Socrates say?

ANSWER: Trump’s biggest flaw is he does not know when to stop. Think a rally would show he had support was not necessary because he had the support and a number of Republicans were going to contest the vote despite the fact it would not win. All the conspiracy theories that Pence would just unilaterally declare Trump the winner were absurd. That was a fringe opinion at best. I stated that once the Supreme Court rejected the Texas suit it was over. The absurd statements that they were telling him how to bring the suit were obviously made up by people that do not understand the law. I do think he should step down, cut a deal with Pence, get a pardon for him and his family. The press will never allow him to come back.

…click on the above link to read the rest of the article…

If You Thought 2020 Was Bad, Watch What Happens In 2021

December 12, 2020

If You Thought 2020 Was Bad, Watch What Happens In 2021

In terms of the economy and the American social situation, 2020 is definitely one of the ugliest years on record, there’s really no way around it. That said, I get the impression that many in the public are operating under the assumption that we are about to cross over the peak of the mountain and it will be all downhill from here on. Unfortunately, this is not the case.

All eyes have been focused on the pandemic event, and the thinking is that once the pandemic is “over”, the crisis will be over and everything will go back to normal. But, as the globalists have been telling us since the outbreak began, the world “will never go back to normal again”. It’s not because of the pandemic, mind you, it’s because THEY won’t allow things to go back to normal. The “great reset”, as the World Economic Forum calls it, is meant to go on for many years. And, the globalists intend that every aspect of our lives be changed into something almost unrecognizable.

First I want to make it clear that I don’t expect the reset agenda to be successful. In fact, I think it’s going to fail miserably. The globalists have reached too far too fast and exposed themselves, and millions upon millions of people around the world and in America are not buying the pandemic narrative. But here is the problem; the pandemic is a distraction from a much greater threat, namely the economic collapse that is developing right now.

The financial downturn has been created by international banks and central banks through massive debt creation and inflationary stimulus measures. The initial spark for the wildfire took place in 2008, the economic threat has been under the noses of the public for quite some time…

…click on the above link to read the rest of the article…

2021 is Already Optimized for Failure

December 2, 2020

2021 is Already Optimized for Failure

One sure way to identify a system “optimized for failure” is if all the insiders are absolutely confident the system is “optimized for my success”.

I often discuss optimization here because it offers an insightful window into how systems become fragile and break down. When we optimize something, we’re aiming to get the most bang for our buck: maximize our efficiency, profit, productivity, etc., while minimizing our costs.

To maximize our goal, whatever it is–profits, power, whatever– we strip away redundancy and buffers because these add costs and don’t boost our desired output. They create resilience, i.e. the ability to survive disruptions, but the logic of optimization is relentless: get rid of all extraneous costs, because resilience doesn’t boost the bottom line.

This trade-off–trading resilience for optimization–looks brilliant when everything goes according to plan. But when events veer outside the narrow parameters of the optimized system, the system breaks down: supply chains break, safety procedures fail, and so on.

Even more consequentially, optimization strips away anti-fragility, Nassim Taleb’s term for the ability to not just survive disruptions but emerge stronger and more adaptable.

What happens when inflexible, sclerotic systems optimized to benefit self-serving insiders encounter chaotic turbulence or conditions outside the expected parameters? They collapse because the system is optimized for failure. Put another way: when a system is optimized to benefit insiders at the expense of resilience and anti-fragility, it is effectively optimized to fail because life is not programmable to a steady-state, predictable stability.

2021 is already optimized for failure in key ways:

1. The mRNA vaccines have not been properly tested to answer essential questions such as: can a vaccinated individual retain enough of the virus to infect an unvaccinated individual?

…click on the above link to read the rest of the article…

The Coming Financial Crisis of 2021

October 19, 2020

The Coming Financial Crisis of 2021

Economist Steve Keen issues new warning

Economist Steve Keen predicts that even if the covid-19 health crisis subsides next year, a brewing financial crisis on par with the 2008 Great Recession is in the making.

He sees the pandemic as having delivered an “unprecedented shock” to the global economy, and the response from authorities as nothing less than a “catastrophe”.

With tens of millions of households having lost their income this year, personal savings becoming exhausted, government support programs on their way to drying up, and lots more company layoffs/bankruptcies/closures ahead — Steve expects a punishing recession to arrive in full force in 2021.

And on a larger scale, he sees modern neoclassical economics — which ignores the importance of natural resources and the health of our ecosystems — as completely unsuited for the reality in which we live today. He warns that if we don’t adapt a more informed approach to managing the global economy, we will only continue to make the mess we’re in worse:

Gerald Celeste–$2000 Gold Coming and Brace For the Greatest Depression Ever Seen By Early 2021

March 11, 2020

GERALD CELENTE – $2000 GOLD COMING AND BRACE FOR THE GREATEST DEPRESSION EVER SEEN BY EARLY 2021

Gerald Celente, Founder of the Trends Research Institute, shares one of his boldest forecast with SBTV – expect $2,000 gold price as early as end-2020 and prepare for the onset of the greatest depression the world has ever seen by early 2021. Get as strong as you can physically, emotionally and spiritually to survive the coming crisis.

Discussed in this interview:
02:32 Top trend for 2020: New world disorder
08:01 Closing of gold window in 1971
14:33 The endgame of the dishonest money system
15:48 Beneficiaries of the monetary methadone
19:12 The great gold robbery of 1933
22:06 Gold bull run
27:12 The first shots of World War III has been fired
32:26 Prepare now to survive the coming depression

Italy – the Coming Revolution & Euro Crisis for 2021?

July 31, 2018

Italy – the Coming Revolution & Euro Crisis for 2021?

QUESTION: Mr. Armstrong, you obviously have a database on Italy that is without comparison. Nobody else even had a chart on the Italian lira you recently published on the blog. I know you are well aware of the revolutions in Italy and the history. I was wondering do you have any forecast for the next revolution? It seems that the five-star movement may perhaps be the beginning. Any hint about the future?

VDM

ANSWER: Well to give you a target year where it can begin will be 2021. The Five-Star Movement is indeed the prelude. However, the attempt to stay in the Eurozone will be the undoing of Italy. The most threatening issue in Italy that will lead to revolution is most likely an attempt to raise inheritance taxes as being suggested by Brussels.

Culturally, Italy has the lowest inheritance tax in all of Europe. The German inheritance tax rates range from 17% to 50%, depending on your relationship to the decedent. In Italy, the Italian Inheritance Tax (Imposta sulle Successioni) is applied to all the assets worldwide belonging to the deceased if the person is a resident of Italy ONLY. If the person lives outside of Italy, then the tax is applied ONLY to assets in Italy. Where everyone else has generally inheritance taxes of 15% or higher for the immediate family, Italy that rate is just 4%. Here is the breakdown:

4% to be paid for transfers to the surviving spouse and children, with an exemption of Euro 1,000,000 for each beneficiary
6% to be paid for transfers to brother and sisters of the deceased, with an exemption of Euro 100,000 for each beneficiary
6% to be paid for transfers to relatives within the fourth degree of relationship to the Deceased, and other relatives on the spouse side up to the third degree (no exempt amount is available)
8% to be paid for transfers to any other (unrelated) parties.

…click on the above link to read the rest of the article…

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