None of the Above ([info]artis) rakstīja,
@ 2021-04-27 16:44:00

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We believe we are in the early to middle stages of a worldwide sovereign debt bubble collapse. The “bubble” which exists today is in debt and the currencies which are backed and supported by this debt. This is a very big deal and does not happen very often. In fact, no one alive today has ever seen a sovereign debt collapse of a large country.

You need to consult the history books to find one, with the last ones occurring in the 1900’s to 1930’s. Because of this, the average investor today is not prepared for what is coming.

Historically, these crises occur when sovereign debt exceeds 100% of GDP as identified by Reinhart and Rogoff in their book This Time is Different: Eight Centuries of Financial Folly. Presently, the on balance sheet US Federal Debt ($28.1 Trillion) is 130% of GDP ($21.6T). Off balance sheet liabilities (Social Security, Medicare/Medicaid) add another $100 to $200T depending upon assumptions.

This debt level could not be serviced (much less reduced or paid off) if interest rates, which are the price of money, were set by a free market. In this respect, the monetary authorities world-wide, through price fixing of interest rates, have broken the financial markets. History proves that price fixing does not work (see USSR and grain prices). The price of money is the most important price in capitalism and messing with it distorts the price of everything. Capital is not allocated efficiently. In a free market system, interest rates balance the needs of savers and borrowers.

With over-indebtedness as a backdrop, history shows us that there are only three ways for a country to deal with a situation like this.

1. Default. Debts collapse to worthlessness as entities fail. Which leads to Deflation.
2. Restructure/Revalue against some superior form of money. Reset. (see Roosevelt 1934).
3. Inflate the currency and GDP versus the Debt. (see US Post WWII).

Option 1 is possible, and perhaps in due course, option 2 could be chosen. However, in our current political structure, we believe the most likely path the US will take is option 3 (Inflation). Therefore, we believe inflation is in our future. Not just a little bit of inflation, a lot of inflation!

When an economy becomes too debt saturated things begin to break, and the government generally intervenes to prevent the natural deflationary cleansing that would occur without intervention. The government intervened in 2008 during the GFC. In March 2020 when the economy grinded to a halt (COVID was the match, but the fire had been built), the government again stepped in (with an unprecedented order of magnitude) to prevent a severe deflation and economic collapse.

(..) As far as we can see, he only has two possible tools: (i) raising interest rates; and (ii) withdrawing monetary liquidity (i.e., reverse QE). Given the levels of national debt, both of those tools would lead to a system wide collapse, in our opinion. To be fair, maybe the Fed can jawbone or threaten these tools to calm down inflation, but they are walking a very thin line. The market has demonstrated at many instances in the past three years (e.g., Q4 2018) that it cannot handle higher interest rates or less liquidity. Some have said: “you cannot taper a Ponzi”.

In our opinion, Powell was bluffing in front of Congress. He knows inflation is coming, so he warns of it. Like Rudolf von Havenstein in 1920 Germany, he is hoping he can control inflation once unleashed.

https://drive.google.com/file/d/1qQRvmHlgdJMW_KRFUL8qF9EcK3-vUT38/view


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[info]mapats
2021-04-27 19:42 (saite)
Cenas jau ir sākušas celties. Lēnām.

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[info]artis
2021-04-27 20:08 (saite)
...vēl kā!

Commodity prices over last year...
Lumber: +265%
WTI Crude: +210%
Gasoline: +182%
Brent Crude +163%
Heating Oil: +107%
Corn: +84%
Copper: +83%
Soybeans: +72%
Silver: +65%
Sugar: +59%
Cotton: +54%
Platinum: +52%
Natural Gas: +43%
Palladium: +32%
Wheat: +19%
Coffee: +13%
Gold: +3%

YTD price moves:
- Steel +58%
- Copper +25%
- Lumber +57%
- Polypropylene (resin) +47%
- Soybeans +17%
- Corn +35%

https://mobile.twitter.com/redditinvestors/status/1386792159056117760

https://mobile.twitter.com/redditinvestors/status/1386709184125751297

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[info]mapats
2021-04-27 20:14 (saite)
Ir patīkami būt gatavam.

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[info]artis
2021-04-27 20:21 (saite)
Nu cietīsim mēs visi, pat vislabāk sagatavotie. Chickens have come home to roost. Beidzot maksāsim par savu monetāro (Fiat Money) izlaidību.

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[info]mapats
2021-04-27 20:29 (saite)
Būs smagi, tas gan. Un ir liela nezināmā komponente par svarīgām lietām, kas var visu sagatavošanos nonullēt.

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