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No Exit – The Coming Wealth Trap
by Chris Martenson
Tuesday, October 13, 2009

Executive Summary:

  • A large investment theme and strategy is discussed.
  • A hyper-concentration of income gains towards the top over the past thirty years is shaping our story.
  • A rapid and large shift in investment preferences could entirely reshape the investment landscape with startling speed.
  • Those early to the game win; those late will find themselves stuck in a wealth trap. 

This week’s report was supposed to be an extension of last week’s, but I need to take a little detour here.  I received quite a few responses to The Sound of One Hand Clapping, and it occurred to me that there is a very important bit of thinking that needs to accompany that article.

In this report, I will tell you exactly why I am convinced that the next round of destabilizing price adjustments – adjustments that will completely reshape the value of your income and assets – will not follow any prior historical model.  Fortunately, with a bit of analysis, I think we can predict what sorts of changes will happen well in advance and get ourselves properly positioned.

Here is a representative question, asked by enrolled member Eric, who raises an important point:

I agree with your analysis in one hand clapping.  Can you address how inflation will take hold if the new money is only in banks’ hands?  I can see the banks piling into various assets creating bubbles, but I don’t see where the common man is going to get access to this extra created money unless it is sent directly from the government in the form of stimulus checks.  Otherwise, I cannot see runaway inflation occurring.  Thanks, Eric

Great question.  How can inflation occur if people can’t afford to pay for things?  Given that both earning and borrowing money seem to be depressed avenues for most people, where will the new buying pressure come from that will stoke inflation?

This is a good question, and it leads me to another insight that I’ve been nursing for a while.  I realize I may not have shared it yet, at least not directly, and that certainly needs fixing.

No Exit – The Coming Wealth Trap
by Chris Martenson
Tuesday, October 13, 2009

Executive Summary:

  • A large investment theme and strategy is discussed.
  • A hyper-concentration of income gains towards the top over the past thirty years is shaping our story.
  • A rapid and large shift in investment preferences could entirely reshape the investment landscape with startling speed.
  • Those early to the game win; those late will find themselves stuck in a wealth trap. 

This week’s report was supposed to be an extension of last week’s, but I need to take a little detour here.  I received quite a few responses to The Sound of One Hand Clapping, and it occurred to me that there is a very important bit of thinking that needs to accompany that article.

In this report, I will tell you exactly why I am convinced that the next round of destabilizing price adjustments – adjustments that will completely reshape the value of your income and assets – will not follow any prior historical model.  Fortunately, with a bit of analysis, I think we can predict what sorts of changes will happen well in advance and get ourselves properly positioned.

Here is a representative question, asked by enrolled member Eric, who raises an important point:

I agree with your analysis in one hand clapping.  Can you address how inflation will take hold if the new money is only in banks’ hands?  I can see the banks piling into various assets creating bubbles, but I don’t see where the common man is going to get access to this extra created money unless it is sent directly from the government in the form of stimulus checks.  Otherwise, I cannot see runaway inflation occurring.  Thanks, Eric

Great question.  How can inflation occur if people can’t afford to pay for things?  Given that both earning and borrowing money seem to be depressed avenues for most people, where will the new buying pressure come from that will stoke inflation?

This is a good question, and it leads me to another insight that I’ve been nursing for a while.  I realize I may not have shared it yet, at least not directly, and that certainly needs fixing.

It’s Time To Prepare
by Chris Martenson
Tuesday, October 6, 2009

This week’s report is going to be largely free of data and news snippets and full of my opinions and broad strokes of logic.

As my long-time readers know, I consider my main occupations to be information scout, dot-connector, and analyst.  But as a side job, I also provide a decisive alternative to the mainstream economic propaganda machine, which is thoroughly dedicated to maintaining the status quo, regardless of cost.

I completely understand why our fiscal and monetary leaders would seek to hide the truth from us all.  We live in an economy that is based on growth and debt – which means it is a Ponzi scheme – and there’s nothing more important to such a system than faith and confidence.  So economic propaganda is not just a noxious by-product spewed from our economic tailpipe; it is viewed by those in power as a form of fuel, a necessity for our peculiar economic engine.  They may have a point.

For my new readers, I want to make it clear that I do not expect or wish you to believe me over anyone else.  Heck, trust neither me nor them, if that works for you; instead, trust yourself and your gut instinct about what is right.  I began trusting myself several years ago, and I am much better off as a consequence.

This week (ending 10/1/09), despite the massive run up in stock over the past few months, despite the outrageous amounts of bailout and stimulus money applied, despite every attempt to put a positive spin on things, jobs continued evaporating, auto sales slumped to multi-decade lows, bankruptcies soared 41% over the prior year, and tax receipts continued to slide.

States such as California are sliding into fiscal chaos, and some, like Michigan and Alabama, are already there.

We are about to enter another leg of the downturn, and this one will be even bumpier and more uncertain than the last. 

It’s Time To Prepare
by Chris Martenson
Tuesday, October 6, 2009

This week’s report is going to be largely free of data and news snippets and full of my opinions and broad strokes of logic.

As my long-time readers know, I consider my main occupations to be information scout, dot-connector, and analyst.  But as a side job, I also provide a decisive alternative to the mainstream economic propaganda machine, which is thoroughly dedicated to maintaining the status quo, regardless of cost.

I completely understand why our fiscal and monetary leaders would seek to hide the truth from us all.  We live in an economy that is based on growth and debt – which means it is a Ponzi scheme – and there’s nothing more important to such a system than faith and confidence.  So economic propaganda is not just a noxious by-product spewed from our economic tailpipe; it is viewed by those in power as a form of fuel, a necessity for our peculiar economic engine.  They may have a point.

For my new readers, I want to make it clear that I do not expect or wish you to believe me over anyone else.  Heck, trust neither me nor them, if that works for you; instead, trust yourself and your gut instinct about what is right.  I began trusting myself several years ago, and I am much better off as a consequence.

This week (ending 10/1/09), despite the massive run up in stock over the past few months, despite the outrageous amounts of bailout and stimulus money applied, despite every attempt to put a positive spin on things, jobs continued evaporating, auto sales slumped to multi-decade lows, bankruptcies soared 41% over the prior year, and tax receipts continued to slide.

States such as California are sliding into fiscal chaos, and some, like Michigan and Alabama, are already there.

We are about to enter another leg of the downturn, and this one will be even bumpier and more uncertain than the last. 

A Dollar Crisis in the Making
by Chris Martenson

In this post, I respond to the recent flurry of activity in print and in blogs about the dollar, US indebtedness, and the risks associated with both.

Mish recently posted a mixed grab-bag entitled Countdown To Dollar Implosion Madness, in which he (very rightly, in my view) took to task various bloggers and other Internet sources that have been peddling rumors of bank holidays and setting specific dates for a dollar implosion.

I don’t like trading in unsourced rumors, either by the mainstream media or by bloggers (as they are very nearly always proven wrong), and I am especially leery of setting dates for future market events.  So kudos to Mish for his efforts to hold bloggers to a higher standard.

However, I took exception to a snippet from a WSJ article by Andrew Batson, entitled Households Start to Rival the Chinese in Treasury Market (originally blogged about by Michael Pettis here), that offered the comforting impression that domestic savings are growing and are possibly sufficient to fund the US government deficit.

A Dollar Crisis in the Making
by Chris Martenson

In this post, I respond to the recent flurry of activity in print and in blogs about the dollar, US indebtedness, and the risks associated with both.

Mish recently posted a mixed grab-bag entitled Countdown To Dollar Implosion Madness, in which he (very rightly, in my view) took to task various bloggers and other Internet sources that have been peddling rumors of bank holidays and setting specific dates for a dollar implosion.

I don’t like trading in unsourced rumors, either by the mainstream media or by bloggers (as they are very nearly always proven wrong), and I am especially leery of setting dates for future market events.  So kudos to Mish for his efforts to hold bloggers to a higher standard.

However, I took exception to a snippet from a WSJ article by Andrew Batson, entitled Households Start to Rival the Chinese in Treasury Market (originally blogged about by Michael Pettis here), that offered the comforting impression that domestic savings are growing and are possibly sufficient to fund the US government deficit.

New Martenson Report – The Coming Collapse
by Chris Martenson

Enrolled members should have received this report on Sunday via e-mail.  If you did not, please contact us so we can make sure that you don’t miss future reports. 

If you are a registered user (not yet enrolled), this report is well worth upgrading for. 

New Martenson Report – The Coming Collapse
by Chris Martenson

Enrolled members should have received this report on Sunday via e-mail.  If you did not, please contact us so we can make sure that you don’t miss future reports. 

If you are a registered user (not yet enrolled), this report is well worth upgrading for. 

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