With the fundamental and economic backdrop becoming much more hostile toward investors in the intermediate term, understanding the value of cash as a "hedge" against loss becomes much more important. As John Hussman recently noted: "The overall economic and financial landscape, then, is one where obscene valuations imply zero or negative S&P 500 total returns for more than a decade — an outcome that is largely baked-in-the-cake regardless of shorter term economic or speculative factors. Presently, market internals remain unfavorable as well. Coming off of recent overvalued, overbought, overbullish extremes, this has historically opened a clear vulnerability of the market to air-pockets, free-falls and crashes."
The traditional view of the impact of low oil prices seems to be, "It is just another cycle." Or, "The cure for low prices is low prices." We are doubtful that either of these views is right.
"The global dollar standard, that is now the longest-lived of these artificial monetary systems, has developed a bunch of stress cracks and is in the process of imploding right now. There is going to be before the end of this decade, most likely, another emergency meeting of a bunch of finance ministers and economists to try and hash out another world monetary system. It is just history repeating, and it is a natural consequence of a man-made, artificial manipulation of the free market."
All great monetary fiascos are forged upon a foundation of misperceptions and flawed premises. There’s always an underlying disturbance in money and credit masked by supposed new understandings, technologies, capabilities and superior financial apparatus. The notion back in 2006 and 2007 that the world was at the brink of a major crisis was considered absolute wackoism. Incredibly – and well worth contemplating these days - virtually no one saw the deep structural impairment associated with the protracted Bubble in “Wall Street Finance.” An even more momentous monetary fiasco has been perpetrated since the 2008 crisis, constructed upon a foundation of even more outlandish misperceptions and flawed premises.
Dear Mr. President, your country faces a stagnating economy... The truth is it is too late for our politicians to act, because the speculative peak that precedes the crisis is already upon us.
The sums in play are so staggering (an estimated $11 trillion in emerging market debts denominated in other currencies) that even the Fed won't be able to stop the meltdown.
There is no way Fed policy can be win-win-win for all participants.
Well, we got a look at the IBC-Br monthly real GDP indicator on Wednesday and as you can probably imagine given the stagflationary nightmare currently unfolding in Brazil, the picture was not pretty. If fact, we just witnessed the largest Y/Y contraction in series history.
Central planners around the world are waging a War on Cash because, as Ron Paul so eloquently put it "the cashless society is the [government]’s dream: total knowledge of, and control over, the finances of every single [citizen]." It is perhaps ironic then that Sweden, which became the first country in Europe to issue paper money in 1661, is probably going to be the first in the world to entirely eliminate it.
“If they end up doing nothing to address this budget issue ... Houston could be facing the same problem Chicago is now."
It is important to keep in mind that the dollar’s attacks on gold always end the same way – in a painful knockout for the dollar. There have been no exceptions to this rule throughout monetary history, nor will there be this time. Hence the well-known market rule: “Any maximum of the gold price is not the last one.” It would be naive to believe that this golden rule is unknown to that grandmaster of patience, Vladimir Putin, and to Xi Jinping. By systematically increasing their gold reserves, Russia and China are relentlessly moving forward to strip the US dollar of its status as a global reserve currency. America’s standard military solution won’t work in this situation.
In very raw terms, if a man wanted to buy a house and a car in 1975 he had to work just under five years to pay for them.
If he wants a house and a car today, he has to work almost 11 years...
Two nephews of Venezuelan President Nicolas Maduro were set to appear in front of a New York judge today after the pair was accused of attempting to smuggle some 800 kilos of coke into the US. The case raises further questions about drug smuggling among Venezuelan officials and individuals with ties to powerful figures. For his part, Maduro tweeted the following:"The fatherland will follow its course. Neither attacks nor imperialist ambushes can harm the people of the liberators."
The failure of the Fed’s policies of massive money creation, corporate bailouts, and quantitative easing to produce economic growth is a sign that the fiat money system’s day of reckoning is near. The only way to prevent the monetary system’s inevitable crash from causing a major economic crisis is the restoration of a free-market monetary policy.