Here’s one of three scenarios I wrote for the upcoming book.  As long as we leave this behind the firewall (no sending or reproducing please), this is okay.

I am almost done with the book editing process, which began 10 days ago. 70,000+ words, 51 graphs/images, hundreds of references….suffice it to say that going through all of that in just 10 days has been quite a feat – and leave it at that.

Enjoy the sneak peek!

Scenario 1: A Slow Tumble

Framing: In this scenario, nothing ever goes horribly wrong, but neither does anything ever quite work “right” again. What has worked in the past doesn’t seem to work anymore, greatly puzzling the economic and financial authorities. 

It is October of 2014, and the U.S. and European economic leaders are meeting for the second time in six months for another summit on how to combat the persistent economic weakness that has stumped and embarrassed central bankers and politicians alike. Unemployment has remained stubbornly high—well over 10 percent in both economic arenas—and successive rounds of stimulus, both monetary and fiscal, have perplexingly failed to have any lasting impact on either employment or final demand.

The most anticipated announcement of the year – perhaps too anticipated (sell the news?) – will answer the question, “How much new money will the Fed decide dump into the situation at their next meeting?”

With Fraudclosuregate picking up steam and threatening to shut down the US housing market for a while, or at least throw a double handful of sand into the gearbox, the Fed has gone on an all-out propaganda war to try to convince everyone that “inflation is too low” and that such a perilous state justifies another gigantic round of thin-air money printing.  Yes, they call it “quantitative easing” to try and inject a note of academic rigor into the conversation, but we can just call it what it is:  money printing.

Hardly an hour goes by without the airwaves being inundated with another Fed official making another statement about the “too low” inflation and what we need to do about it.

This past week was a wild one.  Gold and silver broke out to new highs, the dollar weakened, China’s grumblings about the dollar’s value took on new urgency, and the Dow held at over 11,000 (although another $4.69 billion thin-air money injection on Friday might have helped some).

How do we make sense of all this?

Unfortunately there are no compelling fundamental reasons to support what we are seeing unless you consider thin-air money printing, or the promise thereof, to be a fundamental driver.  While I understand how the various Wall Street gamers can consider front-running new Federal Reserve monetary excesses by piling into risk assets, trying to participate in such activities is raw speculation at best, and blind gambling at worst.