A very fair analysis of a doleful predicament. The debt & currency situation goes beyond being a mere problem because now it simply cannot be solved. Except by owning real assets and abandoning paper and fiat.
I was at an event yesterday listening to their fixed income "Expert". He paints the picture that the fed controls interest rates. I asked him the question during Q&A - if the Fed is going to shed $4-5 Trillion off their balance sheets over the next year or two and the government is going to have to "refinance" debt that is coming due - who is going to buy our debt? If the Fed is done printing money to fund the government. The free market will have to set the rate of treasuries and they are looking more and more like junk bonds.
He was stumped for a moment - then he replied there was report recently that said our government will be bankrupt in 17 years unless major changes happen. He put his faith in that our government would stop spending and raise taxes.
I responded - Are you new to our country, our politicians are addicted to spending money. The room laughed - but I was not trying to be funny.
I do not think people understand how much a billion dollars is - let alone a trillion. My firm is not small and we manage $8 Billion dollars. The government just added $40 B in new debt in one day. That would wipe out 5 firms of our size - taking the last cent from every client - that would be every day for the foreseeable future.
I notice a lot of mainstream financial people and economists just flat out do not want to confront the gov't debt situation and deficits. They just gloss over it in their analysis. They do not want to talk about how $33T in debt, $2T deficits, tax reciepts lower than SS/Medicare/Medicaid/defense, etc... If they are confronted with it they just come up with some word salad garbage answer.
Great write up once again Chris. You're on fire lately.
Very interesting dynamic we have in the USA now as we "balkinize" culturally, and politically (due somewhat to refugee resettlements and chain migration). We have pro Hamas Palestinian-Americans (or whoever they are) actually having parades in NYC/Michigan/college campuses after one of the most barbaric savage massacres in modern history (babies being beheaded, children shot front of their parents, 250 teenages shot in the back at a rave, etc...). We have people in congress who support Hamas.
We wouldn't have had people parading in the streets 30-40 yrs ago in the USA after somthing like this. Europe has the same cultural balkinzation due to mass migration. So this is a very new dynamic politically and culturally and it will add to more political dysfuction, tribalism and lack of unity and cohesivness in the USA, Europe, etc...
It sure does seem all roads lead to gold. And I'm no gold bug.
I marvel at the S&P chart from post WWII to today---how low and reasonable it was post war when we were actually productive and growing to the perilously high spikes we have now when we are sputtering along on a service based economy that struggles to gain ground.
I don’t have all the answers (obviously). The Fourth Turning theory says society is headed through another “perilous gate of history” between ‘20-‘25, on the other side of which there will be 1 clear winner who has vanquished their enemies. There will be no stalemate or compromise. Happens roughly every 80 years - looking back .... WW2, Civil War, Revolutionary War, etc.
Let’s all hope the “good guys” win yet again. Buckle your chinstraps.
Good summary. Add entering 2024 election cycle and the planned uprisings, race riots, censorship mandates and civil war may finally shock the markets. Right now, we are undergoing the usual positive seasonality and rebalancing. Earnings this quarter have the potential to disrupt upward progress in the SPY, especially among the bank stocks.
I see no way out of the mayhem except for default, either outright devaluation (unlikely) or continued inflation just like the rest of the shithole countries
Excellent work here and all I can say is humanity never knows what is staring them right in the face but the ruling class do an excellent job of never wasting any opportunity to concentrate wealth. If you look at the monetary policy and the last 2 decades the FRB has expanded its balance sheet by 12.14% annualized, coupled with ZIRP allowed for major misallocations of wealth and resources and an explosion of debt fueled accumulation of real assets. This lead to massive concentrations of wealth that was financed at very low rates, and the creation of all that debt money now is earning nearly $1T in risk free interest, this will further concentrate wealth and will lead to continued and accelerated debt build as the FRB needs to conjure credits out of thin air to pay all this net new interest.
Sometimes I feel like if a massive Asteroid storm hit the earth and killed all humans, the next day the stock market would still be up. Nothing seems to ever kill the stock market going up and to the right. Going into what a 15 year bull market now since March 2009.
They lied about the jobs market last year by 1 million. It was mainstream news. It's already beyond the point of no return and they're deliberately making it as worse as it can possibly be. No government numbers can be trusted anywhere, on any subject.
The silver lining is with difficult times produces a stronger and a more morale country a return to our nations values a true faith in god instead of government.
Just heard somewhere about oil maybe going to $300. That happens then say hello to major if not hyper inflation. Who da thunk that we get in trouble using SPR reserves for political purposes with OPEC cutting and major oil suppliers say fu to the US. I’d be worried about basic food costs at that point
A very fair analysis of a doleful predicament. The debt & currency situation goes beyond being a mere problem because now it simply cannot be solved. Except by owning real assets and abandoning paper and fiat.
I was at an event yesterday listening to their fixed income "Expert". He paints the picture that the fed controls interest rates. I asked him the question during Q&A - if the Fed is going to shed $4-5 Trillion off their balance sheets over the next year or two and the government is going to have to "refinance" debt that is coming due - who is going to buy our debt? If the Fed is done printing money to fund the government. The free market will have to set the rate of treasuries and they are looking more and more like junk bonds.
He was stumped for a moment - then he replied there was report recently that said our government will be bankrupt in 17 years unless major changes happen. He put his faith in that our government would stop spending and raise taxes.
I responded - Are you new to our country, our politicians are addicted to spending money. The room laughed - but I was not trying to be funny.
I do not think people understand how much a billion dollars is - let alone a trillion. My firm is not small and we manage $8 Billion dollars. The government just added $40 B in new debt in one day. That would wipe out 5 firms of our size - taking the last cent from every client - that would be every day for the foreseeable future.
Million : Billion : Trillion in perspective
1 million seconds = 11 days
1 billion seconds = 31 YEARS
1 trillion seconds = 31,000 years
🤯
I notice a lot of mainstream financial people and economists just flat out do not want to confront the gov't debt situation and deficits. They just gloss over it in their analysis. They do not want to talk about how $33T in debt, $2T deficits, tax reciepts lower than SS/Medicare/Medicaid/defense, etc... If they are confronted with it they just come up with some word salad garbage answer.
Great write up once again Chris. You're on fire lately.
Very interesting dynamic we have in the USA now as we "balkinize" culturally, and politically (due somewhat to refugee resettlements and chain migration). We have pro Hamas Palestinian-Americans (or whoever they are) actually having parades in NYC/Michigan/college campuses after one of the most barbaric savage massacres in modern history (babies being beheaded, children shot front of their parents, 250 teenages shot in the back at a rave, etc...). We have people in congress who support Hamas.
We wouldn't have had people parading in the streets 30-40 yrs ago in the USA after somthing like this. Europe has the same cultural balkinzation due to mass migration. So this is a very new dynamic politically and culturally and it will add to more political dysfuction, tribalism and lack of unity and cohesivness in the USA, Europe, etc...
It sure does seem all roads lead to gold. And I'm no gold bug.
A little gallows humor: "So you are saying there's a chance" that the market will be going up in fourth quarter :-)
Ah. the more the world and financial markets fuck around, the more we will find out.
Well said.
I marvel at the S&P chart from post WWII to today---how low and reasonable it was post war when we were actually productive and growing to the perilously high spikes we have now when we are sputtering along on a service based economy that struggles to gain ground.
Great article Chris. Thank you.
I don’t have all the answers (obviously). The Fourth Turning theory says society is headed through another “perilous gate of history” between ‘20-‘25, on the other side of which there will be 1 clear winner who has vanquished their enemies. There will be no stalemate or compromise. Happens roughly every 80 years - looking back .... WW2, Civil War, Revolutionary War, etc.
Let’s all hope the “good guys” win yet again. Buckle your chinstraps.
Good summary. Add entering 2024 election cycle and the planned uprisings, race riots, censorship mandates and civil war may finally shock the markets. Right now, we are undergoing the usual positive seasonality and rebalancing. Earnings this quarter have the potential to disrupt upward progress in the SPY, especially among the bank stocks.
I see no way out of the mayhem except for default, either outright devaluation (unlikely) or continued inflation just like the rest of the shithole countries
Excellent work here and all I can say is humanity never knows what is staring them right in the face but the ruling class do an excellent job of never wasting any opportunity to concentrate wealth. If you look at the monetary policy and the last 2 decades the FRB has expanded its balance sheet by 12.14% annualized, coupled with ZIRP allowed for major misallocations of wealth and resources and an explosion of debt fueled accumulation of real assets. This lead to massive concentrations of wealth that was financed at very low rates, and the creation of all that debt money now is earning nearly $1T in risk free interest, this will further concentrate wealth and will lead to continued and accelerated debt build as the FRB needs to conjure credits out of thin air to pay all this net new interest.
Great article btw
The only problem with shorting right now is that we could always become the Venezuelan market, instead of the 30 year despair of the Japanese market.
Sometimes I feel like if a massive Asteroid storm hit the earth and killed all humans, the next day the stock market would still be up. Nothing seems to ever kill the stock market going up and to the right. Going into what a 15 year bull market now since March 2009.
They lied about the jobs market last year by 1 million. It was mainstream news. It's already beyond the point of no return and they're deliberately making it as worse as it can possibly be. No government numbers can be trusted anywhere, on any subject.
The silver lining is with difficult times produces a stronger and a more morale country a return to our nations values a true faith in god instead of government.
Just heard somewhere about oil maybe going to $300. That happens then say hello to major if not hyper inflation. Who da thunk that we get in trouble using SPR reserves for political purposes with OPEC cutting and major oil suppliers say fu to the US. I’d be worried about basic food costs at that point
https://progressforum.org/posts/y4kYmFhqmA6gxsu9Y/radical-energy-abundance is a bull perspective