Posted on 09/30/2022 10:04:21 AM PDT by Diana in Wisconsin
As the dark years are approaching, the world is now approaching survival mode. Admittedly, if you go to a high class restaurant in New York, London or Zurich, there are no signs of misery but instead of incredible affluence.
What is happening to middle America or England has not yet reached Wall Street or the City of London where exquisite food is plenty and excellent wines are flowing.
This is of course no different to the end of eras with major excesses and decadence. It was the same at the peak of the Roman Empire 2000 years ago or in 1929 just before the Dow crashed 90%.
Main Street is already in survival mode with cost of living increases of a magnitude that ordinary people can’t afford. Energy, fuel, food, mortgage rates, rents and most things have gone up by 10-20% or more in the last year.
Everything has happened so quickly that people are in shock. But it is a fact that real MISERY has now hit ordinary people.
As Charles Dickens wrote in David Copperfield:
"Annual income twenty pounds, annual expenditure nineteen six, result happiness.
Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery."
For Main Street it is no longer a question of making ends meet but of economic survival.
The Fed and other so called “independent” central banks are doing all they can to exacerbate the crisis. The Fed’s official two tasks are stable inflation and full employment.
Stable inflation the Fed has in latter years defined as 2%. How did they arrive at that? They probably don’t know themselves since there is nothing good about 2%. Because an annual inflation rate of 2% means that prices double every 36 years which is highly undesirable.
Anyway, even with pumping up M1 Money supply by $19 trillion between 2006 and December 2021 and keeping interest rates at 0% they still don’t have a clue why inflation is going up.
Many of us were laughing at Powell and Lagarde when they called the increase in inflation transitory!
Whilst clueless central bank heads are transitory, current inflation certainly isn’t.
HYPERINFLATIONARY ROCKET
It is absolutely incredible that the heads of the Fed and ECB, the world’s biggest central banks, didn’t have the basic knowledge to fathom that unlimited free money for over 10 years is like a matchstick to light the biggest inflationary rocket in history.
Yes, it seemed to take a long time before the inflation rocket was set alight. The explanation is self-evident. There were different compartments in the rocket. Before the consumer prices were set alight, the inflation flame reached all the financial assets such as stocks, bonds and property.
Between 2009 and January 2021, the Nasdaq for example went up 16X, the S&P 7X and house prices went up 2X.
But conveniently for the Fed, this Hyperinflation in asset prices doesn’t count as inflation.
So the Fed could continue to fulfil its main purpose which is to make the rich richer. As the Fed was conceived by private bankers in Jekyll Island in 1910 for the main purpose of enriching the bankers and their friends, it is clear that this Elite group must be looked after first.
ZERO INFLATION AND ZERO INTEREST RATES
In the autumn of 2021, as the inflation flame reached consumers, the Fed, ECB and other central banks were stuck in their zero inflation and zero interest rates lethargy.
But as 2022 progressed, central banks around the world woke up to the fact that inflation is here to stay. Since the wealthy probably have diversified into real assets by this stage, it was then time for the bankers to start tightening without hurting their wealthy friends.
Globally the Fed and their fellow banks, are without exception always behind the curve. So they flooded markets worldwide with worthless printed money at zero cost for much too long.
And now they are waking up to the fact that the accelerated money printing (debt creation) since 2019 is not just inflationary but hyperinflationary. So the inflation rocket is now fully ignited and has just started its journey.
Powell, Lagarde and at least 32 other central bankers in the world have gone from lethargy to panic mode and are thus coordinating a series of rate increases globally.
MONEY PRINTING TO INFINITY
Since ordinary people in the world are now suffering substantially due to massive inflation of everyday expenses, they no longer can make ends meet.
The next move we will see in many countries is the resumption of money printing or QE. In the UK, the new Chancellor Kwarteng (finance minister), decided to give major support to businesses and individuals with lower taxes and social charges, energy subsidies etc. The total cost will be in the hundreds of billions of pounds over coming years. The already weak pound fell another 5% and rates surged. The pound is now down 24% since May 2021.
So the consequences of this give-away UK budget will be higher inflation and higher cost of living for people. This is a vicious cycle that will be followed by most nations as they enter the race to perdition.
THIS TIME IS DIFFERENT!
Stock market investors have for decades been so uber-confident of their banker friends saving them from any major losses that any fall in the market is a buying opportunity.
Thus we have a whole generation of investors that have never seen a sustained bear market as they have always been saved by central banks.
But this time is different! Take my word for it. Central banks are now on a course to deflate all asset markets. As usual they will go on for longer than anyone expects.
And eventually it becomes a vicious cycle with higher rates, higher inflation, still higher rates and more inflation until both central banks and markets panic as the world enters a depressionary hyperinflation.
It might be difficult to fathom that we can have a depression and hyperinflation simultaneously. But as asset prices collapse (remember they are not measured in the inflation numbers), prices of consumer products will surge.
And that is exactly what we are seeing the beginning of now.
Stocks are down around 25% so far, bonds are down, property markets under pressure and food, energy, fuel, mortgage rates are doubling or trebling for many borrowers.
IT AIN’T OVER UNTIL THE FAT LADY SINGS
This is the perfect storm. But remember it has only just started and as I have stated in numerous articles and interviews, this won’t be over until the fat lady sings.
When will she sing? Well, if this is the end of a very major cycle as I believe it could be, it might be a decade or longer before she sings.
We must of course remember that nothing goes straight down and there will be violent corrections that initially will make investors euphoric. But most reactions will be short lived so buying the dips could be very dangerous.
We should first see hyperinflation taking hold properly and stock and property markets go down by at least 75% and possibly 95%. Bonds won’t stop going down until rates are 20%+. Many bonds will go to ZERO as borrowers default, including many sovereign states.
The US or EU won’t call it a default. They will just create a new currency like a CBDC (Central Bank Digital Currency) and with a magic wand make all the debt they have created disappear.
But you can’t make debt disappear without consequences. If debt is written off or swept under the carpet, the value of the assets that the debt supported will also implode. And that is how the world goes from a depressionary hyperinflation to a deflationary depression. At that point, much of the financial system will default.
The above scenario is the inevitable consequence of a world that has lived above its means for a century and especially since 1971. Few people realise for example that the US has increased its debt for 90 years with just a handful of years exception.
GLOBAL DEBT $2.5 QUADRILLION
With global debt, contingent liabilities and derivatives of around $2.5 quadrillion, there are a lot of assets/liabilities which need to implode before the world can show healthy and debt free growth again.
(More at link, if you can take it!)
However:
"Remember that there will be shortages of many products including food and other essentials so keep some reserves.
Sadly the world is now entering the Dark Years as I have discussed in many articles.
But remember that after having prepared yourself, the most important things in life are family and friends. That is a support circle which will be the most critical in coming years."
We’re invested in silver, gold, and lead. Lots of lead.
Same. I’ve always recommended lead.
A girl after my own heart. :)
They will make holding gold illegal again, or institute a windfall profit tax on any sales done by individuals, which is why I think silver the safer choice.
Good article, very sound. Awfully sobering, but as I see it, true.
History has been funneled into this vortex and wealthy, powerful elites have helped these chaotic disasters along — just as surely as Ray Epps helped to funnel people down a primrose path to solitary confinement and abuse.
It would be nice to see the elites suffer major losses for a change.
If the name didn’t start with GOLD I’d read it.
Not if they can help it. Bailouts first, all the banks, wall street and insurers first and then reset to the digital currency. Let the masses suffer the loss. No one will be prosecuted for the malfeasance because they were all in on it. Remember the old days in the 1990s when the balance budget amendment was even possible? A balanced budget now would decapitate a huge portion of the federal government. That will never happen willingly.
Good point. They’ve probably written it off already as cost of doing “business” and called it all worth it for the cause: the deconstruction of everything we call sacred.
I hope the above is nowhere near accutate.
I meant legally, of course.
It was a pretty interesting article. I am glad he saved the pitch for the end.
You should read it. I can’t afford Gold at the moment and it’s not a sales pitch unless you got cash to burn in buying gold.
We have been for a bit walking into dark times.
“...which is why I think silver the safer choice.”
Agreed. :)
U R barking up the right tree. The writer has the right Rx: physical silver and gold (he feels that silver is less likely to be outlawed).
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