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Economic Collapse Ahead – Monty Pelerin’s World : Monty Pelerin’s World


Economic Collapse Ahead – Monty Pelerin’s World : Monty Pelerin’s World.

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An inevitable economic collapse has been warned about since this website began over four years ago. This forecast never pretended to be able to predict its timing.

Over its existence, the website has dealt with many topics non-economic. Let me remind readers of the three key economic points that have been consistent since its beginning:

  • There is no recovery nor can there be a recovery without a massive economic reset, a collapse.
  • Government interventions over the last several decades have put us into this position.
  • Government is now trapped and, like a wounded animal, will do anything to survive including harming the economy and those dependent on it.

The bias that we all carry is that assuming people who agree with us are smart. That is an indirect form of reinforcement and self-aggrandizement that can be dangerous. It is a cousin of Mark Twain’s warning that it is what you know that ain’t true that is most damaging. At the risk of committing this error, I recommend an article by Captain Hook who expresses sentiments in line with my own. Here are some excerpts which are perilously close to what I have expressed:

  • inflationprinting-moneyWe are getting close to the day of reckoning this fiat currency economy suicide mission the Fed(s) has engineered for us. So you better get ready, because they will not ring a bell at the top of the stock market to warn the party is over –

  • … the end of the line in QE debt monetization related economic growth is almost here – with diminishing returns in money printing and central bank balance sheet growth re-accelerating. And while it’s true central authorities can still increase QE to offset diminishing returns, and in fact have stated they intend to do just that in Europe and Japan early next year … the effects of all this money printing will be negligible. And before it’s all over don’t be surprised to see QE in the States moving from $1 Trillion per year (where we are now) to $1 Trillion per month, and to infinity essentially. [ I think a collapse will occur before they get close to Captain Hook’s monthly projection.]

  • …  it will never stop until the system blows-up…

  • Add to this picture a new and naive Fed chair, with visions of sugar cookies in her head, and one does need wonder how US Treasury yields remain sanguine in coming years. Because once confidence is lost a negative spiral can grip macro-conditions quickly given the hollow nature of the much talked about ‘economic recovery’…

  • … it’s not just the bubble in Treasuries one should be worried about, which up until this point has been no trouble at all with the QE backstop. There are also stocks and real estate to worry about as well, where you know a problem exists when the speculators are speculating on the degree of speculation. Because there’s no free lunch despite what lying bureaucrats would like you to believe, given

  • … this lunacy can obviously continue for longer than anybody with a whisper of common sense could conceive. The sad part of this entire mess is the crazier it gets, the more anxiety is created, the more people will hold back, the more the Fed will have to print money, the more stocks will go up – until we reach the point of ‘heart attack’ for the over-drugged junkie. Then, the bond market is going to blow up, and it’s all over.

  • We are caught in a liquidity trap that demands the Fed monetize some 70% of all net bond supply; meaning rates would be considerably higher if they were not doing so. So, don’t fall for any of the BS ‘taper talk’. This is just Kabuki Theater for fools because key debt markets are becoming increasingly stressed.

  • … the Fed(s) have no choice but to keep accelerating the craziness, which will become a problem for the bond market once rigging efforts on the part of the bureaucracy’s price managers begin to fail noticeably. You will know this is the case when they can’t keep credit markets supported anymore, which will tip diminishing returns into freefall. (i.e. and in turn re-accelerate the need for more money printing as things spiral out of control.)

  • … don’t be fooled by taper talk, which has the effect of catching offside short sellers when weak data points come out, causing a short squeeze. (i.e. that’s what happened last week post the Fed minutes release.) What market participants don’t realize yet is such talk is just expectation management on the part of the Fed so that people are not surprised when it happens…

  • Who needs gold when the ‘traditional’ stock market is going up – right – especially when Da Boyz are making copious amounts of fiat currency underwriting the tech fads of the day. And with stocks still under-owned on some measuresQE set to spread to Europe (and increase in Japan), and the average hedge fund managerstruggling to play catch up, which means stocks are likely going much higher, gold could remain in the doghouse for some time yet, well into next year.

  • Gold will of course be the place to be in the end, when all the Ponzi finance has collapsed… Better buy some gold so you can eat when inflation goes through the roof bailing out this ship of fools.

I disagree somewhat on the margins with a few of the comments presented above, but this disagreement is minor and could be seen as nitpicking. In general, the statements presented are very much in line with my thinking.

As always, the critical question is how long the economic fraud can continue.

 


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