How it All Unravels

2019 September 14
by drdog09

Yes, its Stockton, but do consider what he is saying.

David Stockman: I would recommend recognizing that the “everything bubble” is the most extreme, exaggerated, severe financial bubble in world history. It will inevitably collapse, and there will be massive losses, even greater than occurred in 2008 and 2001.

So, the first thing is to stay out of the casino. By that, I mean the financial-market stocks, bonds, and everything else.

These markets are so artificial. They’re just chasing what the central banks are doing. There’s no honest price discoveries or supply and demand; nobody’s discounting the future of economic growth, productivity, and investment. You’ve got the chart monkeys, 29-year-old day traders who are in charge of the market.

When the big correction comes, there are going to be massive losses, and the panic will be great. All correlations will go to 1—which means everything will fall: the good, the bad, and the indifferent.

There’s this old saying among traders that when the cops raid the house of ill repute, they carry out the good girls, the bad girls, and the piano player too. That’s essentially what’s going to happen.

You can’t be saved by picking high-yielding stocks or conservative blue chips or stocks that provide daily necessities like food—it doesn’t matter. Everything’s overpriced right now because of this huge financial distortion.

When the real correction comes and the central banks are revealed to be impotent and powerless, then everything is going to collapse. You’ll be in harm’s way no matter how clever you’ve been in trying to pick and choose. And stay away from the bubble stocks like Amazon or Beyond Meat or any of those.

The time for speculation is over. We’ve had 30 years of central bank subsidized speculation. We’re going to go into the time and era for capital preservation, and that means the highest priority is to not lose money. It’s to keep your capital safe.

I think the only way to do that is in very short-term, liquid instruments. I don’t think the U.S. government is going to disappear.

I don’t think we’re going to have a national bankruptcy or anything like that. There’s going to be a tremendous fiscal disaster coming. But 90-day Treasury bills will continue to pay you their meager interest, and they will be a safe place to put your money. We have to recognize that the 30-year experiment in what I call “Keynesian Central Banking”—which is almost like central planning—is over.

Therefore, the central banks of the world are going to be in enormous disrepute. They’re not going to be your friends or your savior.

Remember the Time magazine cover from the late ’90s, “The Committee to Save the World”? It had Robert Rubin, Alan Greenspan, and Larry Summers on the cover. They’re now going to be the ogres who destroyed the world.

The one thing that Donald Trump is going to accomplish in his misbegotten tenure is that his ferocious attack against the Federal Reserve will tear away the veil that it’s a beyond-politics cabal of geniuses who are safeguarding your livelihood.

He’s going to tear it apart. He’s going to totally besmirch and destroy the credibility of the Fed, at least in the eyes of his base. It’s going to create an enormous political debate about central banking.

Now, he’s coming at it from left field. He’s totally wrong. But Trump is unlike other presidents who were totally choreographed and scripted and moved their lips in the way that their advisors told them to.

And he’s going to go after the Fed. We haven’t seen anything yet. And I relish the prospect. They need to be beat to smithereens with a strong, lethal political club, and that’s Trump. And after the fragments end up all over the cutting room floor, we can figure out what to do next. But you must take down this institution.

The Fed is the number one, the number two, and the number three enemy of prosperity, capitalism, free markets, individual liberty, and the wealth of people in the world today.

Central banks have to be totally discredited and taken down.

Read the whole thing

What is missing is what causes ‘the collapse’? There are all sorts of causes we could plumb but my number one thought on the matter is the USD loses its reserve status. A suggest this only because there are active agents working to that end – Russia, China, Iran & Turkey. Several others are positioning themselves to be USD agnostic – South Africa, Thailand, Vietnam, Brazil. It also boils down to the fact that losing reserve status can be triggered not by what the USA does but also by what it does not OR others do to us.

As to when we have the recession? I vote after the elections. If Stockton is right that Warren is the Dim nominee then the majority of the Corportists will hold it together till after the election. They would rather deal with a Trump who is sketchy at best vs a raving socialist lunatic like Warren raping them from the Oval Office.

After the election all bets are off. Of course there is good and bad in the event. Course we are all hunkered down of course. People are going to lose homes, cars, jobs. The USD will become worthless as the USDs overseas come rushing home with a hyper-inflation chaser. There are also some good. The Deep State most likely will collapse. Their funding comes from a worthless USD. Unable to fund, unable to operate. Well except for the CIA, they will go back to running drugs. That may not work either as a good chunk of the population croaks in a Fentynal overdose. Essentially a wholesale under brush clearing of the economy is going to occur.

What to do? I suspect for most of us on this Blog there is little we can do. Our lives are short and accumulating more assets not the draw it used to be. Best we can do is shift assets. I for example, should Warren win the nomination, be informing my advisor to move out of the market to cash long before Nov 2, 2020.

But there are things we can do for our progeny –

  • Construct a trust or arrange major asset transfers to the kids while you are still alive.
  • Set up 529’s for the grand kids. Be clever and designate the funding for anything other than the looney tune colleges.
  • Teach those grand kids survival skills in entertaining ways. Help them hone the BS detector.
  • If the grand kids are going to lounge all summer, send them to a tech school to learn welding, wiring, electronics, programming. Or as an alternative arrange for a online course in these skills.
  • Encourage them to learn to function without the USD now as much as they can. Europeans before the EU had the habit of holding Pounds, Francs, Marks in countries they did business with. It was a convenience and a hedge. There are establishments in places like NY, SF, LA, MIA that accept payment in other currencies. Holding small holdings in other currencies might be wise.
  • Enroll them in a Hillsdale history course. They won’t pick it up anywhere else in K-12. See if the school will accept course completion as a substitute for a required K-12 history credit.
  • Find out if by family history you and hence the kids can qualify for a foreign passport. It is possible.

I don’t want to sound dire, the US is still one of the better places to be on this planet. But history shows that even the best of things can be wrought to trash via stupidity. Be ready.

5 Responses leave one →
  1. 2019 September 14 6:20 am
    justrand permalink

    drdog: “I don’t want to sound dire”


    I can only imagine what you would have written if you DID want to dire?!?!?

  2. 2019 September 14 8:20 am
    drdog09 permalink

    Dims have spent $29m on Facebook ALREADY — — and they have not reached the Final Four!

    At this pace and the fact that the DNC is sucking wind on the donations front may exhaust them all before they get to the general election. Couldn’t happen to a better bunch of losers.

  3. 2019 September 14 8:26 am
    JimNorCal permalink

    Should be Stockman not Stockton in a couple places.
    Good advice regardless of the economy. Survival if a Big Event hits.

    I’ve been thinking for the last couple months: even humans used to be controlled by “survival of the fittest”.
    But in modern society losers are preserved. Now that we have, along the West coast, colonies of homeless, mentally ill, drug abusers in each Dem controlled city it’s becoming clear that the margin of error is shrinking. These people die off, reintroduce old diseases like plague and leprosy and are not sustainable in any way.

    Not as dramatic as central bank collapse but another indicator …

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