October 15, 2014~ Bill Holter
I can almost promise you when the dust is clearing you will hear "who could've seen it coming" everywhere you turn in the mainstream. You will hear the financial pundits say it, you will hear many titans of industry say it and you will certainly hear the politicians and regulators say it. The politicians and regulators will be running around with signs on their foreheads that say "don't look at me" while babbling "who could've seen it coming?"
Before going any further, I do want to tell you there have been many who have seen it coming and have voiced their opinions verbally and in print. Obviously, if you are reading this then you know I am included in this group who have been shouted down and labeled as "one of the crazies." If you think about it, "us crazies" were the only ones who saw 2008 and the financial crisis coming. We were the only ones who foretold "why" it was coming and have said all along that the "fixes" would not work. Were we laughed at and ridiculed in late 2006 and throughout 2007? Yes, of course we were but I don't remember the "fervor of our branding" as whackos as strong as it is now. Maybe because the vast majority at the time were also long and recommending gold which was pushing new highs at the time. Now, $1,230 gold which is some $400 higher than it was back then has "fallen" $700 from its highs so "we" must be even MORE wrong now? If you cannot understand that increased physical demand should result in higher prices and when it does not ...there must be a logical (nefarious) reason for it, then you surely must know "why" the stock market has reached its levels. Heck, even Bloomberg has reported on "it." "It" being the "Plunge Protection Team" which many of us talked about well over 10 years ago only to be followed by blank stares, the rolling of eyes, snickers, and the whispers of "conspiratorial crazy."
In any case, I figured I would write out a few thoughts now so when you do hear "who could've seen it coming" you can tell them "you" did! If you ask anyone on the street today whether or not the U.S. government is broke, you will get an 80-90% answer of yes, the government is broke (even John Boehner publicly said, "We are broke"). Everyone knows this but yet expect life to go on and not change compared to the old days when we weren't broke? Of course, dollars are issued (not really) and backed by this bankrupt government yet this 80-90% who believe the government is broke think that their issued dollars have value and are not affected by the bankruptcy of the issuer?
Then, we have the banking and financial systems. These are regulated, backed (FDIC and SIPC) by government agencies and supported by the Fed and Treasury, it should be "safe" to put your worthless currency into an overleveraged institution backed by a bankrupt government ...right? It should also be safe to put your money into the bond market where all bonds are priced off of a benchmark of bonds issued by the bankrupt entity ...right? And the stock market? This should be safe because the Plunge Protection Team has your back, the Fed will never raise interest rates, tighten credit or reduce their balance sheet ...right?
As a side not, if even Bloomberg admits to the PPT supporting the stock market and the Bank of Japan publicly admits they are the biggest owner of Japanese equities, then what other markets might the central banks be "playing in?" Yes I know, you are thinking the gold and silver markets ...but please don't go there because of the crazy looks you will get and who in their right mind wants to be labeled a "crazy?"
So we live in a land where the government has promised more than it can ever provide because the underlying economy isn't big enough, has too many sucking off the public and not enough worker bees. The economy doesn't "make anything" anymore anyway but don't let that bother you. 15% of the population is in a "bread line" but since this is 2014, it's no longer politically correct to actually "stand" in a line...and in public no less! Besides, those people were dopes back in the 1930's, standing in line is actually work. We now have more recipients than we have donors ...who could've seen it coming?
Finance is now over 30% of the economy and manufacturing 10% or thereabouts ...farming even less, who could've seen it coming? Derivatives are now about 20 times the size of the global economy and 10 times the size of the equity and debt markets, who could've seen it coming. Mom and Dad both work today and some even more than one job, I'm only 54 years old and really cannot remember ANY of my friend's Moms working except for the school nurse, has something changed? $1.2 trillion of student debt outstanding with an average graduate owing $30,000 ...which cannot be wiped clean in an honest bankruptcy? 50 percent or more of our population living from check to check with no savings at all? Nearly 15 years where 95% of the population's standard of living has decreased because "nonexistent" inflation has grown faster than their paychecks?
I've only scratched the surface of the financials above and did not even get into social or public issues. I didn't even get into racial issues either but ask yourself if we are now "more harmonious" between races, religions or even "nationalities" than we were back in the old days ...when we weren't broke? As for social and moral issues, I really shouldn't go there but let me ask a question or two. If an individual has poor morals, should they be trusted at their word? Should an entire country? I think this has been a common question and on a global basis recently.
Of course, we also have the largest military by leaps and bounds past the rest of the world combined. Ask the average person if we have used our military wisely, fairly and justly? Can a bankrupt treasury really afford the largest military in the world? The average person can get the answer to this one correct also.
I could keep on going and going with examples but I won't and rather finish with a few questions. If it was the crazy lunatic fringe who foresaw the financial crisis coming, voiced it publicly (amidst laughter) and were correct not only in what happened but more importantly "why" ...then why are "we" still crazy? Oh, I know, because gold and silver have fallen in price? "We" say gold and silver prices have been "diluted" with paper substitutes, are we crazy about this or does it make common sense that "something" is negating the simple laws of supply and demand?
If you agree that the façade, charade, house of cards, Ponzi scheme or whatever you'd like to call it is on its way down, please read my work tomorrow. I plan to write about some common sense preparations which by no means will be a complete "survival guide". Hopefully it will make your brain churn a bit as to what might be needed to be done. There is a possibility of "the worst case scenario" actually occurring, if this is the case, you should be thinking like a caveman here and now.