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
PREVIEW by Chris MartensonTuesday, 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.
by
Chris Martenson
This is a piece that I wrote in response to a request for a guest authorship over at ZeroHedge. It builds on a point, made in yesterday’s piece, that Switters thought had not yet been fully addressed elsewhere in the great Inflation/Deflation debate.
I am interested in your thoughts on this line of thinking. I will send it over to ZeroHedge later on.
My central thesis to this crisis, developed a few years before it even hit, is that the economic troubles are the symptoms, while the money system itself is the cause.
My views on this are expressed in the opening of an article that I initially penned in 2006 but updated in 2008:
The Sound of One Hand Clapping – What Deflationists May Be Missing
PREVIEW by Chris MartensonThis is a piece that I wrote in response to a request for a guest authorship over at ZeroHedge. It builds on a point, made in yesterday’s piece, that Switters thought had not yet been fully addressed elsewhere in the great Inflation/Deflation debate.
I am interested in your thoughts on this line of thinking. I will send it over to ZeroHedge later on.
My central thesis to this crisis, developed a few years before it even hit, is that the economic troubles are the symptoms, while the money system itself is the cause.
My views on this are expressed in the opening of an article that I initially penned in 2006 but updated in 2008:
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
PREVIEW by Chris MartensonTuesday, 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.
by
Chris Martenson
Every so often I read an article that very nearly perfectly reflects my views on the bailout and stimulus packages. This is one of them, at least from the perspective that we’ve really solved nothing but instead are actually deeper in debt than before.
How is it possible to solve a crisis rooted in debt by going deeper in debt?
That’s a good question, and more and more financial professionals are asking the same thing. The following article is well worth reading in its entirety at the link below. Be sure to pay attention to the last sentence, as we’ll be spending some time on that very topic over the next few weeks.
Sustaining the Unsustainable
PREVIEW by Chris MartensonEvery so often I read an article that very nearly perfectly reflects my views on the bailout and stimulus packages. This is one of them, at least from the perspective that we’ve really solved nothing but instead are actually deeper in debt than before.
How is it possible to solve a crisis rooted in debt by going deeper in debt?
That’s a good question, and more and more financial professionals are asking the same thing. The following article is well worth reading in its entirety at the link below. Be sure to pay attention to the last sentence, as we’ll be spending some time on that very topic over the next few weeks.
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