Mike “Mish” Shedlock Answers: Is Global Trade About To Collapse; And Where Are Oil Prices Headed?

Tyler Durden's picture

From James Stafford of OilPrice.com

Is Global Trade About To Collapse? Where are Oil Prices Headed? A chat with Mike Shedlock

As markets continue to yo-yo and commentators deliver mixed forecasts, investors are faced with some tough decisions and have a number of important questions that need answering. On a daily basis we are asked what’s happening with oil prices alongside questions on China’s slowdown, which commodities or instruments will provide safety in the current environment, will the Euro-zone split in the future and what impact the presidential election is going to have on the economy and markets?

To help Oilprice.com look into these issues and more we were fortunate enough to speak with the award winning economic commentator Mike “Mish” Shedlock.

Mike’s blog: Mish’s Global Economic Trend Analysis is one of the most popular and informative economic blogs online. His millions of dedicated monthly readers find his advice invaluable and we recommend anyone interested in learning more about the global economy and financial markets to stop in and take a look: http://globaleconomicanalysis.blogspot.com

To find his blog, you can also do a Google search for Mish

In the interview, Mish discusses:


·         Why global trade will collapse if Romney wins

·         Why investors should get out of stocks and commodities

·         Why we have been oversold on shale gas and renewable energy

·         Why oil prices will likely fall in the short-term

·         Why the Eurozone is doomed

·         Why there may soon be an oil war with China

·         How government interference is ruining the renewable energy sector

·         Why we need to get rid of fractional reserve lending


Oilprice.com: With oil prices now in the high 80's and news out of Europe getting worse every day, do you expect prices to stay in this range, or do you see them dropping in the short term?

Mish: There are two conflicting forces here. One of them is oil prices over the long-term and the other is oil prices over the short-term.

Even in the short-term you will find there are conflicting forces at play. For example, stress in the Middle-East puts an upward pressure on oil prices. However, economic problems in Europe, a slow-down in Asia and a slow-down in the United States put downward pressure on oil prices. New orders are falling at a staggering rate across the board in Asia, China, Japan, Europe, and the United States which also puts further downward pressure on oil prices.

Long-term, forces such as peak oil and population growth in China are putting pressures to the upside.

One needs to balance all of those factors out when they are about ready to give a prediction on oil prices. My opinion is that over the short to mid-term, oil prices will go down. Long-term, energy is a good place to invest.

Oilprice.com: If your prediction is correct and oil prices do go down – what sort of impact do you see this having on the U.S. economy, if any?

Mish: That's an interesting question. However, the question puts the cart before the horse.

Looking at prices in a vacuum is a mistake. One also has to look at why prices are doing what they're doing. For example, falling oil prices that happen when supply shocks are alleviated are a positive thing. Falling oil prices because of falling demand is another. You seldom see this kind of distinction in mainstream media.

Right now, oil prices are primarily falling because of falling demand, and that is in spite of geopolitical tensions. That is not a healthy sign for the economy.

Oilprice.com: As we have seen with the recent oil workers strike in Norway and subsequent rise in oil prices. Geopolitical risks always remain to keep the markets off balance. Apart from Iran are there any other geopolitical risks you think people should be aware of?

Mish: A key geopolitical risk in the long-term is that China cannot continue at its expected rate of growth. For years, the mantra has been "China, China, China," and many thought China could maintain its 8% to 10% per year growth going forward. That's not going to happen.

I agree with Michael Pettis at China Financial Markets, that China is more likely to see 2% growth than 8% or even 6% growth over the next decade.

2% growth is a shocking reduction, even from the lowered expectations that we've seen regarding China. The implication is commodity prices, especially base metals, are going to be under extreme pressure because of China stockpiles. For further discussion please see "China Rebalancing Has Begun"; What are the Global Implications?

Oilprice.com: What are your longer term projections for oil prices – say 3-5 years out?

Mish: I think it's a fool’s game to make such projections. Most of the projections on the price of gold, silver and oil are ridiculous. They are designed to sell newsletters. The bigger the hype, the greater the sales. On occasion, I will make a call. For example, when crude hit $140+ in the summer of 2008, and others called for $200, I said oil prices would drop to the $45.00 - $50.00 range or so. Oil went to $35.

Moreover, those predicting $200.00 never bothered to think what that would do to the global economy. We saw the same thing in natural gas. People were predicting $25. Look at prices now, at roughly $3.00 NG fell all the way to $2.20, lower than even this staunch deflationist thought.

I'm not willing to go out on the same limb and predict energy prices three years in advance. The reason is we really don't know for sure how central bankers are going to respond. China is particularly important. If there's universal printing of money everywhere, I would expect a lot of that to flow back into prices of gold, perhaps of silver, and perhaps energy, but we really don't know what they're going to do. We don't know when or how the Euro Zone is going to break up. I think it will, but how is as important as when.

In the US, we don't know the results of tax hikes following the 2012 election. Heck, we don't even know who the next president in the United States is going to be. Will it be Republican? Will it be Democrat? Numerous political and economic forces are pulling and tugging in different ways.

I don't believe there's anyone out there that can predict, with any kind of accuracy, what oil prices are going to do. Which is why I believe trying to predict oil prices in the midst of all of these possibilities is a fool's game.


Oilprice.com: What are your views on inflation and hyperinflation.

Mish: Hyperinflation is a complete collapse in currency. It is a political event that kicks off hyperinflation, not a monetary one. Hyperinflation talk hit an extreme when oil prices hit $140. Such talk was silly then, and it is still silly now.

Hyperinflationists in general fail to understand the role of collapsing demand for credit. The total credit market is over $54 trillion. Base money supply is $2.6 trillion and excess reserves are about $1.5 trillion. Seems to me we had huge expansion in credit and Bernanke is struggling to reignite demand. I suggest he will not succeed.

The idea the US$ will suddenly go to zero is ridiculous. The US is the world’s largest holder of gold reserves, and that alone would stop it. Also note that Bernanke, as misguided as his policies are, is still beholden to the banking system. As such he has no desire for it to collapse.

As far as inflation goes, I am still widely misunderstood. I view inflation as an increase in money supply and credit, with credit marked to market. Deflation is the opposite. If one insists that inflation is about prices, then we are in a state of inflation with 10-year treasury rates below 1.5%.  

For those who woodenly view inflation in terms of prices, well, prices may or may not rise. Price have generally risen, but credit is the key behind housing prices, family formation, hiring, and in fact everything driving the economy. So, where is credit going? Demographics and student debt suggests nowhere. Indeed, credit has gone nowhere in spite of heroic efforts by Bernanke.

Oilprice.com: You just mentioned that we don’t know who the next president is going to be and sticking to this topic how big an impact do you see energy prices having on this year's presidential elections?

Mish: I don’t think energy prices are what's on people's minds. What's on people's minds right now are jobs. Oil prices have kind of stabilized and in the very short-term they are likely to stay stable unless there are some dramatic results in the Mid-East or a dramatic slowdown in the US economy.  Both are possible, but a major US slowdown is arguably more likely. Regardless, I think energy prices are going to be a minor election issue.

Oilprice.com: The message on peak oil seems to be confused. Many are adamant that peak oil is the largest threat to ever face humanity, whilst others believe that with new technologies and new fields being found, peak oil is a myth and we are actually swimming in oil. What are your thoughts?

Mish: The idea that we're swimming in oil is preposterous. Moreover, abiotic oil is a ridiculous pipe-dream. That said, the idea that the global economy is going to come grinding to a halt in the next year or two because of oil is also preposterous (discounting a geopolitical Mid-East shutdown). In general, I would side with the peak oil folks, noting that a global recession will likely pressure prices more than anyone thinks, barring a breakout of war or supply disruptions  in the Mid-East.

Long-term, 8% growth in China is mathematically not going to happen. People really need to get a grip on exponential math and the implications thereof. If China does attempt to grow at 8-10% as some people have predicted, there's going to be an oil war of some kind between the United States and China because there's simply not enough oil.

For a good discussion on the limits of exponential growth, please see Calpers Pension Plan Reports 1% Return; Stunning "What If" Charts at Various Compound Annualized Rates-of-Return Going Forward

Oilprice.com: Shale gas has been generating a great deal of headlines recently. Do you believe it could be the solution to America’s energy challenges? We are also seeing developments in oil & gas extraction technologies. Have we been oversold on such possibilities?

Mish: I think we're oversold on everything. We're oversold on the idea of cheap energy, of free energy, of green energy, of clean energy. We're oversold on the stock market. We're oversold on what Obama can deliver. We're oversold on what Mitt Romney can deliver. We're oversold in so many areas, I can't even mention them.

In regards to new technologies, how much water will it take to extract these reserves in the midst of these droughts? What are we going to do with the contamination, how do we get rid of the waste byproducts? These kinds of projects look good on paper, but are they truly scalable in practice?

I hope I am wrong.

Oilprice.com: What is the role of government in alternative energy sources?  

Mish: The role of government should be to get the hell out of the way and let the free market work. If peak oil really is a problem (and I think it is), the free market will come up with a solution if left alone.

Instead, the government is trying to pick winners. Look at the results. President Obama backed solar panel manufacturer Solyndra and the DOE loan guarantee scheme blew sky high.

Our ethanol program is a total disaster. By government mandate, corn has been diverted to ethanol production smack in the midst of a drought. Corn is not an efficient way to produce ethanol, even if there was not a drought.

Governments seldom back winners. Instead, government bureaucrats back companies that contribute to their campaigns. This is worse than it looks because such activities deprives companies with real solutions a chance at funding.

We need to get government out of the energy business completely and let the free market work.

Oilprice.com: Sticking with the renewable energy theme, do you see them making a meaningful contribution to global energy production over the next 10 years?

Mish: Adding to my previous answer, government subsidies of unviable products and unviable ideas gets in the way of the free market actually producing viable products and viable ideas. Simply put, the more government interferes, the less likely we are going to see advances in the actual direction of a true solution.

Oilprice.com: In regards to presidential elections, how do you think energy will fare under Obama and under Romney? Which sectors will benefit, and which will suffer?

Mish: Mitt Romney has declared that if he’s elected he is going to label China a currency manipulator and increase tariffs on China across the board. That's something that I believe he might be able to do by mandate. If he's elected and he does follow through, I think the result will be a global trade war the likes of which we have not seen since the infamous Smoot-Hawley Tariff Act compounded problems during the Great Depression. Simply put, I think that global trade will collapse if Romney wins and he follows through on his campaign promises.

Unfortunately, campaign rhetoric now is heating up to the point where President Obama and Mitt Romney are trying to outdo each other on who's going to do more to China. Thus, we may very well see a global trade war regardless of who wins.

As an aside, Mitt Romney is pledging to increase military spending. Given Romney’s statements on Iran, it's more likely he would start a war with Iran than Obama. Note that the U.S. military is one of the biggest users of petroleum worldwide and oil price shocks could be devastating.


None of this is any good for the world economy at all. I believe that Romney will do what he says. I believe he's more likely to start wars than Obama, but that doesn't make Obama any good. This is the worst slate of candidates in U.S. history running for president, and I'm writing in Ron Paul.

Oilprice.com: As the global economy slows, where do you see the best investment opportunities available to investors?

Mish: At this point, the best thing to do is wait for better opportunities. I am talking my book, but something like 70-80% cash (or hedged equities) and 20-30% gold seems reasonable. I'm telling people, "Get out of the stock market. Get out of commodities except gold and perhaps a bit of silver."

A global slowdown is underway. Actually, I made a Case for US and Global Recession Right Here, Right Now.

Although nothing is certain, central bankers worldwide are highly likely to pump up money supply hoping to counteract the slowdown. If so, I think gold is going to be one of big beneficiaries. Silver may be a huge beneficiary, and I like it here. However, silver is also an industrial commodity, so gold is safer.

Bear in mind, I may seem like a broken record on this thesis given cash and gold has been my call for the last year and a half or so.

In spite of calling the global economy exceptionally well, I've simply been wrong about U.S. equities. They have risen far more than I thought, but I still caution that risk is high.

I'm going to repeat my general message here, that another slow-down, and another big downturn in the stock market is highly likely. Equities are quite overvalued at this point, cash is not trash, and staying liquid now, with a percentage in gold, is a good idea.

Oilprice.com: I was hoping you could tell us your thoughts on the Euro. You mentioned previously, that you think the E.U. will split in the future, why do you think this will occur, and what will the economic and political implications be?

Mish: I think it's pretty clear that the euro's going to split because no currency union in history has ever survived without there being a corresponding fiscal union in place. Right now we're in a situation where Germany’s Chancellor Angela Merkel says that "There should be no fiscal union until there's a political union." Francois Hollande said, "There should be no political union until there's a banking union," and the German Supreme Court will not allow a political union or a fiscal union, nor a banking union without a German referendum.

I did a post on this, and it's called, "It's Just Impossible."

If politicians could not get agreements when times were good, how are they going to get these agreements now, when they're bickering over every little thing, including the amount of the ESM, whether or not the bailout of Spain should be via the ESM or the EFSF, and whether or not the Spanish government should be backstopping this loan.

They can't get an agreement on anything, and the German Constitutional Court is hanging like a Sword of Damocles over the entire thing.

For these reasons, the Euro is going to bust up. What happens to the price of the Euro depends on how it busts up. If the breakup is piecemeal and disorderly, it means one thing. If it's orderly and prepared in advance with Germany leaving and the northern states leaving, it's a completely different scenario. Any point along that line is possible, but piecemeal seems more likely. How disorderly remains to be seen.

For example, if Germany exits the Euro and goes on the deutschmark, the value of the deutschmark will soar, whilst the value of the Euro will decline.

Instead, if we see a break-up by Spain leaving, by Greece leaving, by Italy leaving, and the bulk of what's left is Germany and the northern States, then the value of the Euro can soar. Those are the two conflicting possibilities here. The market has not decided which one of those is more likely.

Meanwhile, the Euro is in a low 1.20 range to the U.S. dollar. A breakout or a breakdown might be a signal that the market is expecting one of those possibilities over the other.

We are in uncharted territory and everyone is guessing.

Short-term I am neutral on the US dollar at this level because the euro is a bit oversold, the idea of a Greek exit is no longer unfathomable, and the Fed is likely to initiate QE3 at some point. This is a change from my previous US dollar bullish stance.

Oilprice.com: We mentioned China earlier, and I was wondering what you think the future holds for China, both politically and economically.

Mish: A regime change in China is coming up. The current regime has been focused on growth. However, I think the next Chinese government already understands that the growth at any cost of the current regime is not sustainable. If so, we're going to see a major shift away from an export-driven production model dependent on investment on roads, on bridges, and more production, to a consumption-driven model. That shift will be one of the major forces in the global economy.

If I'm correct on this, then it's going to be a painful adjustment, regardless of what China does. For example, a Chinese slow-down towards consumption would increase the value of the renminbi, would decrease their exports, would help the balance of trade between China and the United States and Europe, and would put intense pressure on commodity prices. In turn, asset prices and currencies of the commodity producing countries, like Australia, Brazil, and Canada will come under heavy pressure.

Oilprice.com: Mark Faber is not a fan of the Federal Reserve, blaming them for the current US economic situation. He said, “Usually under a gold standard you have a bubble under one sector of the economy but you don’t have it across the board globally and that’s really what the Federal Reserve has done over the last couple of years.” Do you agree? Is the Fed to blame? And what can be done to avoid this in the future?

Mish: I agree with part of it, if not most of it. However, the idea that the gold standard itself causes bubbles is fallacious. The gold standard does not cause huge bubbles. The real culprit is fractional reserve lending. Historically, problems happened when banks lent out more money than there was gold backing it up.

The gold standard did one thing for sure. It limited trade imbalances. Once Nixon took the United States off the gold standard, the U.S. trade deficit soared (along with the exportation of manufacturing jobs).

To fix the problems of the U.S. losing jobs to China, to South Korea, to India, and other places, we need to put a gold standard back in place, not enact tariffs.

Oilprice.com: Mish, thank you for your time this has been a very enjoyable and enlightening conversation for us.

For those of you who haven’t seen Mish’s superb blog and daily economic commentary we strongly recommend you visit his site: http://globaleconomicanalysis.blogspot.com. You can also do a Google search for Mish.

Source: http://oilprice.com/Interviews/Global-Trade-Likely-to-Collapse-if-Romney-Wins-Interview-with-Mike-Shedlock.html

Interview by James Stafford of Oilprice.com

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I think I need to buy a gun's picture

when argentina defaulted in 2001 they repegged the peso to the dollar and their stock market has gone up a nice 5-10% a year ever since at least thru 2008, our stock market will go up 4-8% manipulated for the next 10 years

chumbawamba's picture

Mish looks like a plump woman.  I think he's hiding something.

I am Chumbawamba.

Gringo Viejo's picture

I listen to Mish on "Coast To Coast." He gives me a woody. He can be my cellmate anytime.

Taint Boil's picture



Mish can be an a$$hole – but he is a smart a$$hole. He has a way of putting you in your place. I always listen to what he has to say…..

And .... me too, if we were in prison together I would protect him in the shower.

wang's picture

mish being even referenced on ZH is a shark jumping event


why not just reference Leo



Mr Lennon Hendrix's picture

Mish has been wrong about what the market will do for over three years now. 

Deflationistas please band together and stop talking.  We get it, you don't understand the new paradigm of economics when the world uses fiat currency to stop gap the financial system.

And as for those like Leo who are trying to outsmart the system, better luck next time.  Instead of playing roulette with all of your chips why not cash them out for gold and silver bullion.  At least then you aren't making any bets on what the counter party risk is.

Spitzer's picture

Mish: Hyperinflation is a complete collapse in currency. It is a political event that kicks off hyperinflation, not a monetary one.

But he thinks Bernanke can stop it in 15 minutes

Hyperinflationists in general fail to understand the role of collapsing demand for credit. The total credit market is over $54 trillion. Base money supply is $2.6 trillion and excess reserves are about $1.5 trillion. Seems to me we had huge expansion in credit and Bernanke is struggling to reignite demand. I suggest he will not succeed.

Didnt he just say hyperiflation is NOT a monetary collapse ?


The US is the world’s largest holder of gold reserves, and that alone would stop it.

No actually the ECB is. The Fed has no physical. Only the treasury does

Also note that Bernanke, as misguided as his policies are, is still beholden to the banking system. As such he has no desire for it to collapse.

Yep, he can stop it in 15 minutes...

Uber Vandal's picture

This little snippet from the Treasury web site is a good read about FRN's:


Congress has specified that a Federal Reserve Bank must hold collateral equal in value to the Federal Reserve notes that the Bank receives. This collateral is chiefly gold certificates and United States securities. This provides backing for the note issue. The idea was that if the Congress dissolved the Federal Reserve System, the United States would take over the notes (liabilities). This would meet the requirements of Section 411, but the government would also take over the assets, which would be of equal value. Federal Reserve notes represent a first lien on all the assets of the Federal Reserve Banks, and on the collateral specifically held against them.


Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are "backed" by all the goods and services in the economy.


blunderdog's picture

   Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything This has been the case since 1933.

1933, really?  What year was that?

Michael's picture

I was banned from Mishes's blog.

But I still think depressions, not hyper-inflations for the USA.

I still visit/lurk.

Uber Vandal's picture

Perhaps we will have both and go full Zimbabwe, 95% unemployment with a side order of 98% daily inflation.




Crash N. Burn's picture

1' Hyperinflationists in general fail to understand the role of collapsing demand for credit. 


One mans' credit is another mans' debt, and  Mike Maloney is a hyperinflationist who released  -

Mike Maloney – Debt collapse and $20,000 an ounce gold


2. Cash is not trash


Sorry Mish -

Silver breaks $33 an ounce overnight – Cash is trash video


3. However, silver is also an industrial commodity


Right. and that means we consume it. Above ground silver stockpiles are at their lowest in history. Sounds bullish to me!




bankruptcylawyer's picture

i have to agree in some ways. 

mish has done a really lousy job elucidating one of the most common topics on his blog ( which i visit regularly ) ----inflation versus deflation . 


any deeply competent blogger ---of which i consider mish one of the few out there-======by now should have laid to rest the constant hum drum aabout the alleged "debate" of inflation versus deflation. mish has really failed to point out that the debate is a sham. there is no debate. mish is very proud, i would even say  hubris-----when he toots his horn about deflation. he is of course technically correct about how the result of income and debt repayment is killing demand. i'm still quite shocked that he has not yet been able to come up with a proper lense for his audience to approach this subject though. 

he very well understands the concept of 'reflation' and why the stock market and especially bond markets are massively over-valued. he even accepts that oil is overpriced and that free money has flooded its way into every asset class owned by banks to keep a collapse from happening. and yet, like so many out there he harps on the fact that the problem of the impending collapse is one of deflation. COMMON ALREADY!!!!. 

THE PROBLEM HERE IS A LINGUISTIC PROBLEM OF HOW ECONONOMISTS HAVE USED 2 WORDS TO FRAME THE DEBATE. it's WRONG to talk about the price problem in terms of inflation and deflation as separte things. they are both happening all the time and with varying speed and frequency to different people, insittuitons, assets classes, central banks, currencies, bonds, etc......

its DUMB for educated critical thinkers NOT to understand that most of the people out there have been mislead. and that they need to be made to see that the false debate is intentionally misleading as to policy prescriptions. of course the deflationistas are usually keynsians. the inflationistas are characterized as classical austraian types. but if characterization were not antiquated, then how is shedlock both an austrian and a deflationist!!!!!?!?!??!!?!!?!?!?

ITS BECAUSE THEY ARE ANTIQUATED. shedlock gets the whole picture and the importance of debt restructuring or a jubilee of one sort or another, and yet, he has not at all made the connection about how the so called 'economic' debate about inflation versus deflation is actually a rhetorical trap made to entice bloggers and academics into wasting their time in a false dichotomy. it's rather sickening to me acutally. particularly when i see people in debates with paul krugman. mr demand side himself . 

i mean, this is all smoke an mirrors. YOU ARE EITHER WITH THE FEDERAL RESERVE OR YOU ARE AGAINST IT. This should be the first starting point in austrian economic debates, not whether one word or another word characterizes the nature of how messed up the price system is. What comes after the federal reserve is something to be figured out in reality , not as some academic exercise. in theory you can talk about alternatives to federal reserve notes all you want, in application you are either using a corrupt entities currency, or you are not. 




Lester's picture

Shedlock has struck me as an idiot for years.

Not like I am an apologist for RM Nixon, but to continue to spread the confusion that "Nixon took us off the gold standard" is bullshit.  What Nixon did was stop the "usual gang of suspects" (whom are all regularly in the news these days) from continuing to use France as their proxy for Looting American Gold.

America was The Only Nation redeeming its fiat for gold; and only to other Bretton Woods signatories or world bank buddies.  Nixon foiled the plot to remove all our gold and doing so extended American potential and financial power for a decade or longer.  France was the sole nation continually seeking greenback redemptions.  Not like in 1971 there was a great pile of dollars being left in France by American tourists with suitcases/touristers full of cash was there?  So where was France finding all the dollars and who was funneling them to them?

It was halting the plunder of OUR Gold that got Nixon watergated.  The lesson was not lost on successive office holders.  Ford had 2 close-call attempts, Reagan Hinckley we know got us George Bush and RR was never the same again...

America has been looted and betrayed for the last 25yrs non-stop.  Bullshit like Shedlock peddles is a distractive attempt to keep the confidence factor up while the marks lose their last nickel still confident that there is order and rationale to the activity they pursue which used to be called "investing".



Bay of Pigs's picture

I told Mish that stuff for the last 4 or 5 years, from 2006-2007. He called me a conspiracy nut back then

BigJim's picture

 ...America was The Only Nation redeeming its fiat for gold; and only to other Bretton Woods signatories or world bank buddies. 

we were running out of gold because, relative to the other Bretton Woods signatories, the US inflated to pay for guns and butter, ran trade deficits, and that's why its reserves were drained, not because of some evil 'plot'.

To stop the gold reserves draining, Nixon could have devalued the dollar... but he would have had to devalue it a lot, and this might have caused a panic and an immediate flood of USD back home. As it was, the USD started collapsing until Volker put a stop to it, but that was long after Tricky Dick had left office, so, from a political standpoint, Nixon did the right thing.

Which I'm sure comforts him enormously as he roasts in Hell.

All Risk No Reward's picture

The problem with being an arrogant twit, of which Mish is one, is that it hides knowledge that might otherwise be able to break through.  Mish has some excellent insight and some absolutely awful insight (Bernanke isn't dumb, Mish, he works for a criminal cartel that has systematically broken the law to run a bubble / bust operation via their Debt Money Tyranny system).

It is hit or miss, so I don't bother with him.

BTW, inflation or deflation is a false dichotomy.

I expect both to happen - first a spiked pit deflation to bust all the debtors, eliminate Big Finance Capital's (BFC) competitors, roll up much of the world's physical assets under BFC front corporations (due to "dumb" Bernanke... -lol-) and then, most likely, hyperinflate to balance their books and call it "even."

At that point, I can only hope that Mish finally "gets" that this was an Art of War level crime, and not some misguided actions of an "academic."

I think people misinterpet what has been done the last 4 years - they weren't trying to prop up what they know can't continue.  That's the narrative to cover up what they were really doing.

They've offloaded trillions in debt to the general public and the've secure trillions in cashola via their front corporations - all just ahead of the most wicked deflation the world has ever seen.

They might still QE3, but the price of corn skyrocketing on its own doesn't bode well.  They know hungry people do desperate things.  But if they do QE3, it isn't to help you - so stop being naive and expecting a helicopter to drop anything but and anvil on your head or GMO seeds on your organic farm.  If they do QE3, it is so they can offload more debt onto you and yours and issue more debt to you so they can secure the cash for themselves.

You see, they are simply "quantitatively easing" their own losses...  and it is going to be "hard" on you and yours.

And don't expect some clown financed and promoted by BFC to over ride the wishes of BFC.  They don't promote anyone who will not obediently take orders.  The CIA, etc...  reports to Big Finance Capital at the highest levels.

Kennedy learned that the hard way after refusing to participate in an Operation Northwoods false flag event engineered to create a false pretext for war.  Once Kennedy was out of the way, though, Operation Northwoods went live against Vietnam in just 9 short months.  LL Lemnitzer, the guy "the President" demoted for presenting Northwoods to him, went to head NATO.

BFC rewards those who follow orders and those who don't - but the rewards are very, very different.

Never One Roach's picture

ARNR, in the micro-outlook, do you think oil will drop substantially since you say, "all just ahead of the most wicked deflation the world has ever seen." 

Mish doesn't really answer the question but opines instead  [basically] 'it may go up or it may go down.'

prains's picture

Thanks All Risk to the point and spells out the end game nicely

Triple A's picture

I like mish but i can't believe he thinks the bottom is in with housing.

Cabreado's picture

"3. Zero Hedge. The mysterious person(s) behind this massive continuous stream of reports and analysis from the loony bin of Wall Street and beyond has a manic edge but accurately reflects the madness of the current situation. Zero Hedge seems to post virtually around the clock, every day. They are relentless and hugely comical, with exactly the right sharply malicious overtones required in these evil times. The characters who infest their comment section are some of the worst vermin in trolldom."


Since you are Chumbawamba,

what do you think?

RichardENixon's picture

I'm not Chumbawumba but what I think is Kunstler should read his own comments section if he wants to see some real depravity.

bugs_'s picture

"...the worst vermin in trolldom...."

I am sooo proud of ZeroHedge.

Cabreado's picture

I like ZH too, or I wouldn't read here.

I like humor, too, and we all need it.

"Mish looks like a plump woman.  I think he's hiding something."...

But that is not humor,
it serves no one,
it diminishes for sure,
it diminishes the messages that can be found here,

and at the eleventh hour,

everyone on the planet should give a damn.



11th_hour's picture

Indeed we should!

It seems as though most would rather focus on the trivial than the real.  Well, with exception of most ZH readers / commentors...

Bay of Pigs's picture

WTF? Obviously you dont know Chumblez...

blunderdog's picture

No kidding.  Anyone who hangs around these boards should understand that to be a tremendous compliment.

This is the INTERNET, remember.

fxrxexexdxoxmx's picture

good to see you back.


Can you seee that I am friend? Can you see that I will always be your friend?

Stoploss's picture

That's why im writing in Ron Paul!

Libpublicrats? Ummmm, No..

Abitdodgie's picture

You push buttons on Diebold

PiratePawpaw's picture

Shedlock is a baffoon. I get better analysis from my cat.

francis_sawyer's picture

 "Heck, we don't even know who the next president in the United States is going to be"


Maybe WE don't, but I'm sure somebody does...

Sofa King's picture

Ahhhh...a follow up to Obushma. We're screwed!

Meesohaawnee's picture

does it really matter WHO it is.. not in my world. You could have bozo the clown. ,,ooops im sorry we already do. ok. Howdy doody. means nothing.

Abitdodgie's picture

"Will it be Republican or will it be Democrat" If he has not figured out there is no differance between the party's , then why are we reading the rest of his dribble.

All Risk No Reward's picture

A Big Finance Capital funded and promoted lackey operative will be the next President.

That was easy.


Roger Knights's picture

It (the next president) could be Biden.

Haole's picture

"Moreover, abiotic oil is a ridiculous pipe-dream."

Yeah "Mish", you're right, it's all rotten lizards, plankton and palm trees...

I stopped reading after that sentence because it is indicitive of not only how at least some of this guy's statements lack relevance but how potentially distorted his perception of reality is.

NotApplicable's picture

Reality is merely one's most plausible belief system.

Haole's picture

Reality is not altered by what anyone believes.  Fixed it for you.

NotApplicable's picture

Ummm... gee thanks. I was AGREEING with your statement.

But since you broke it in an effort to fix it...

None of us are all-knowning, or all-seeing, therefore, TO US, reality is just all of our perceptions assembled as we logically BELIEVE them to be.

And since we act on these beliefs, reality IS altered by our own actions.

Now, I guess I should go back and downvote you to get even or something for your failure to comprehend what wasn't a difficult concept.

But instead I'll just ask that maybe you pay attention to what I said, instead of being teacher's helper.


Haole's picture

Whatever melts your butter, my apologies in the meantime I guess...

BTW, I don't up or down vote anyone, ever, myself included.

Spitzer's picture

your original comment made me laugh my ass off Haole

Snake's picture

"Reality is made of language".

 J. Lacan.

DanDaley's picture

Sure, until you get a lightning bolt up your butt and can't say boo.  Pure reality.

BigJim's picture

People like Lacan seem unable to appreciate that there's reality, and then there's our various perceptions and interpretations of it.

Hence statements like, "Well, in my reality, Gaia is a great Earth Goddess who will protect Her own", etc.

Arrowhead's picture

 I don't necessarily buy the abiotic oil theory as I understand it but your statement about reality not being altered by one's beliefs is a bull's eye. Why don't people BELIEVE that?

Mr. Poon's picture

Abiogenic oil may or may not be the reality, but I don't think it's something we should count on.  The sensible approach would be to limit the possibility for negative surprises while leaving open the possibility for positive surprises; and the sensible approach here is to make very conservative assumptions regarding the world supply of petroleum.