Shorted silver, got convinced by my chart pointing to 13.5... Most likely too early. But I did not go all in, at least.
First chart, typical bubble ( anti in this case) pattern developing downwards.
Second chart, fractal comparison to 2008 shape.
Were all fucked
Long time no see :) How you doing?
I just have a question about your hypothesis that some uber rich tycoons are pulling the strings behind the scenes. You state that because austerity has failed there are 2 ways out (print and devalue or deflation and default) and both these ways are bad for these elite.
But if I were the Wizard behind the curtain I would try true austerity - cutting back government spending massively. This would perhaps be detrimental in the short term to the pork barrel spending I usually benefit from but it would avoid the bigger problem of devaluing my assets. If there really is someone behind the scenes why are they not trying this?
If it was an elite me deciding on the playbook I would have put Ron Paul in power at the last election. He would have reigned in spending without creating an autocracy, although you are probably right he would have only lasted one term. That would have been a very pro business solution.
I am not sure there are enough non financial assets for the uber rich rotate into. Only real estate is big enough and most of it is not for sale.
it was perfectly possible for Ron Paul to become president. In fact the mainstream media were so terrified of the possibility they deliberately blacked out his public appearances. Perhaps the reason it didn't happen was because a man like Paul with strong principles would be too hard to control as a puppet.
Regarding the reason for debt expanding beyond stable levels, surely the reason is as simple as a centrally planned interest rate. This is the one price that governments do not leave to market forces. Is it a surprise that the level of debt is sub optimal?
Nothing to argue with there. According to the chart overlaying the Assignat price on the gold price of dollars (below) time is compressed by a factor of 2:1 with current events playing out about twice as slowly. This would put the death knell for the dollar around 2017.
Very nice analogies here https://www.tfmetalsreport.com/blog/5170/french-history-fascinating between the French Revolution hyperinflation and the current US decline. The main difference is now there is a "War on Terror" and in that period the revolution had already occurred and instead there was a "Reign of Terror". The revolutionaries at the time were in control of the printing press whereas now it's still the old guard in charge. I am not sure if it matters, but things really took a turn for the worse after Robespierre was beheaded. Perhaps it would take a monumental event in the US to trigger a full blown meltdown?
I am not convinced of the Royal Court analogy. From what I have read so far Mirabeau was not so much an agent of the Royal court than a man who saw a new vision for France where the people worked together with royalty to govern (still a revolution). Obviously royalty were not interested in this scenario, and whilst they sought his assistance to calm down popular anger and mediate they really did not envisage a change in the status quo and just wanted the problems to go away.
He was a mediator who saw the need for change but ultimately Mirabeau failed in his goal of a moderate outcome. The question is who is the modern day Robspierre who would turn the US on its head? A uncompromising sociopath (perhaps psychopath) who will do anything to achieve his goals of social equality regardless of the cost. There must be many candidates waiting for the opportunity right now in the Democratic party. Whoever he is, he is not a moderate :)
In 2001 the US was in the middle of a severe downturn. Greenspan was afraid of deflation, something pretty much unheard of since there had been a gold standard. Maybe the US just needed a war to prime the economy and it wasn't part of some decade-spanning master plan? I don't think you can use the revolution analogy because there has not been a popular uprising yet.
Still, perhaps it doesn't matter. Whilst there has not been a revolution there definitely is a fiat experiment underway that is reminiscent of the French experience of paper money. The US money base is up 300% since 2008, something that happened in about 2 years between 1790 and 1792.
If the French experience is anything to go by it's already too late to stop. From 1790 to 1792 the Assignat lost about 30% of its value. Since 2008 the dollar has lost about 40% to gold. Around 1792 debtors with mortgages became a powerful lobby and argued for more money printing. Today we have all kinds of debtors arguing for more of the same. They will win the argument. I am sure opinion leaders like Paul Krugman have a big fat mortgage. The tide already looks unstoppable.
So what do we have to look forward to according to the French experience?
1) The law of accelerating issue and depreciation according to Dickson White
2) The rise of gambling (CFDs, spread betting, futures trading) as it becomes unpopular to work for a living
3) The moneyed class in cities will become even more wealthy and seek frivolous luxuries. The poor in the city will become poorer.
4) Popular delusion and intoxication associated with the illusion that money creates wealth. More and more political speeches will call for new QE rationalizing that what we have now is still not enough and that market weakness is due to all kinds of reasons except a weak currency.
5) A rapid and bumpy decline of industry with brief upswings as new money is issued. Factories will close. All activity with long time horizons will cease.
6) Prices will begin rising rapidly. Shopkeepers, initially pleased with the rises will soon notice a slowdown in business. At some point there will be popular unrest, rioting and looting of the shops. This will be condoned by local officials as "only fair" under the circumstances, but the rioters will be paid to go home.
7) Payment in gold will be outlawed. Foreign exchange will be outlawed.
8) Price controls will be brought in to popular demand. Severe penalties will be made for breaking the law. As a direct consequence there will be a rapid reduction in output as factories choose not to produce. Imported goods will not be for sale as their prices will already exceed the legal limit. Once price controls are brought in the decline in wealth will accelerate markedly. Penalties will become worse as the pressure increases.
9) Confiscation will loom large. Everything will be confiscated from abandoned property to assets left behind by people who fled the country to "fair game" such as the property of wealthy individuals. Certainly financial markets will be tapped for windfall profit taxes.
10) At the time of the French revolution the wealthy, and eventually anyone of any means were forced to loan up to half their salary to the state. These days a loan is not necessary as we have analogous levels of income tax. Still, tax rates will rise to unbearable levels.
11) Facing rapid devaluation, and to restore confidence, the government may attempt to back the currency with anything from confiscated assets to subprime mortgages and maybe even the promise of loot from foreign conquests. The worse the situation gets the more outlandish the security.
12) Debtors will find it easy to pay off debts as the currency declines. New rules will be made to enable fair repayment by adjusting the debt for the money supply at the time of repayment. This will also fail because wages and prices will not rise at the same rate.
13) When price controls are removed (because even life in jail is not enough to deter people from trading at a fair price) prices will shoot to the moon, but the price of labour will stay subdued. Prices will seem impossibly high.
14) Absolute essentials such as flour will increase in price more than sugar. Shoes will increase more than hats or gloves. Wages will trail all price rises.
15) There will be an attempt to issue a new currency to be backed by easily redeemable assets.. It will also fail within 2 or 3 years because the assets will be too large to redeem for most people.
16) Finally there will be a return to a metal-backed economy.
17) The damage done will set the country back 40 years or more.
I don't know how many of these predictions come to pass. Some of them are hard to imagine today, but it was also hard to imagine where we are now back in 2007.