Podcast

David Stockman: Blame the Fed!

David Stockman, former U.S. Representative and Director of the Office of Management and Budget under Reagan, does not mince words. He sees the monetary systems of the world coming apart.

How did we get here? He identifies the root cause as the intentional over-leveraging of world economies by central planners in a misguided effort to enjoy growth without consequence.

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let the dollar float. Because out of that has evolved — or morphed — a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on what I call the "T-bill standard" or the "federal debt standard." And the other central banks of the emerging mercantilist Asian economies — Japan, Korea, and now, especially, the People’s Printing Press of China — have absorbed this massive emission of debt that otherwise would’ve created powerful negative consequences that would’ve forced politicians to act long ago. In other words, higher interest rates, pressure for inflationary monetary policy, and the actual appearance of price inflation. But because all the bonds on the margin were being absorbed by the central banks, we got away for twenty or twenty-five years with “deficits without tears.”

And he's just getting started. The only thing more impressive than Stockman's CV of insider roles in public economics and private finance is his talent for colorful metaphor.

David Stockman: Blame the Fed!

by Chris Martenson

David Stockman, former U.S. Representative and Director of the Office of Management and Budget under Reagan, does not mince words. He sees the monetary systems of the world coming apart.

How did we get here? He identifies the root cause as the intentional over-leveraging of world economies by central planners in a misguided effort to enjoy growth without consequence.

I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the gold window and let the dollar float. Because out of that has evolved — or morphed — a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on what I call the "T-bill standard" or the "federal debt standard." And the other central banks of the emerging mercantilist Asian economies — Japan, Korea, and now, especially, the People’s Printing Press of China — have absorbed this massive emission of debt that otherwise would’ve created powerful negative consequences that would’ve forced politicians to act long ago. In other words, higher interest rates, pressure for inflationary monetary policy, and the actual appearance of price inflation. But because all the bonds on the margin were being absorbed by the central banks, we got away for twenty or twenty-five years with “deficits without tears.”

And he's just getting started. The only thing more impressive than Stockman's CV of insider roles in public economics and private finance is his talent for colorful metaphor.

Off The Cuff: Lots of Storm Clouds Brewing

PREVIEW

by Chris Martenson

In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish tackle:

The global commodity sell-off
- What’s driving the action here, and what impact would a slowdown in China and other key markets have on the US economy and the major asset classes?
The Fed
- Should investors be expecting more stimulus to follow soon?
Europe
- How close to the wire is the situation there at this point?
Gold
- How should the metal fare up from here? Where should ‘safe money’ park?

Off The Cuff: Lots of Storm Clouds Brewing

PREVIEW by Chris Martenson

In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish tackle:

The global commodity sell-off
- What’s driving the action here, and what impact would a slowdown in China and other key markets have on the US economy and the major asset classes?
The Fed
- Should investors be expecting more stimulus to follow soon?
Europe
- How close to the wire is the situation there at this point?
Gold
- How should the metal fare up from here? Where should ‘safe money’ park?

Getting In Shape: The New Me

by Chris Martenson

I have recently gotten in great shape, have lost a lot of weight, and am writing this to preempt any thoughts that I may be in ill health due to a sudden and pronounced loss of weight. Not only am I healthy, I am in the best physical condition in years.

This is a before and after story.

I had been working very long hours for years following world news, preparing the Crash Course, writing the book, and running a small business essentially solo, for years. Unsurprisingly, I found myself with the sort of body one might predict for someone who sat behind a computer for up to 14 hours a day, day after day.

And then something happened.

Getting In Shape: The New Me

by Chris Martenson

This is a before and after story.

And then something happened.

Understanding What Happens Next

PREVIEW

by Chris Martenson

Understanding What Happens Next

Wednesday, September 28, 2011

Executive Summary

The sentiment on commodities is shifting in an important way.
What happens when a global credit bubble meets a secular rise in energy costs? (Answer: nothing good.)
The only chart you need to understand the future
Why the next steps of the Fed and other central banks is imminently predictable at this point
Given the high probabilities and their huge impact, you need to take steps now to position and protect yourself.
The three critical questions you need to be asking

Part I – What Just Happened

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II – Understanding What Happens Next

Global Carnage

During these turbulent periods, it’s best to back up, widen the view, and ask where we are. Since the beginning of 2011, we observe that global equities have been hammered for losses, while global oil (Brent) and gold remain positive for the year.

Interestingly, we see that commodities in general (CRB) are down less YTD than even the best performing stock market (New York), which is not quite what I would have expected. Commodities typically lose first and most in a global downturn, or rout, and the fact that they haven’t suggests that commodities are now being viewed as a safer place to be than equities. This is a stunning turn of events if it holds out going forward.

Understanding What Happens Next

PREVIEW by Chris Martenson

Understanding What Happens Next

Wednesday, September 28, 2011

Executive Summary

The sentiment on commodities is shifting in an important way.
What happens when a global credit bubble meets a secular rise in energy costs? (Answer: nothing good.)
The only chart you need to understand the future
Why the next steps of the Fed and other central banks is imminently predictable at this point
Given the high probabilities and their huge impact, you need to take steps now to position and protect yourself.
The three critical questions you need to be asking

Part I – What Just Happened

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II – Understanding What Happens Next

Global Carnage

The Economy is On the Ropes and Going Down

by Chris Martenson

The risk faced by those who are analyzing macro trends is sounding like a broken record. For those younger readers who have no idea what that phrase means, imagine an mp3 song that will stick on and endlessly repeat a random segment of the song you are listening to until you give your device a sharp knock on the side. That’s what a broken record sounded like.

The world economy is on the ropes, and it won’t ever recover, at least not to anything resembling its recent past. Neither the gleeful housing bubble nor the free-flowing credit that enabled that side bubble to emerge will return. The resources simply do not exist to repeat that final orgy of consumption. A new reality is upon us, and while — fortunately — more and more people are choosing to face our predicament rather than pretend the current risks and challenges do not really exist, the absolute numbers of such forerunners are still small, and for the most part they don’t include any of our political leaders.

The macro trends of worsening public and private debt loads, a looming and unaddressed Peak Oil threat, exponentially increasing global population, resource depletion, and an all-too-human tendency to use the money printing machine to deal with tough economic problems all remain pointed firmly towards an uncomfortable conclusion: There’s a future of less in store for most people.

Our best hope is for a negotiated decline to lower levels of economic activity that allow us to gracefully adjust our expectations to a new and lower level consumption that offers an even more enjoyable and purpose-filled existence. Our worst fear is that a stubborn insistence on business-as-usual by our leadership leads to a future shaped by disaster rather than design.

The fundamental issue is this: You can’t solve a problem rooted in too much debt with more debt. It just doesn’t pencil out.

The Economy is On the Ropes and Going Down

by Chris Martenson

The fundamental issue is this: You can’t solve a problem rooted in too much debt with more debt. It just doesn’t pencil out.

Experts Weigh in on the Recent Action in Gold and Silver

PREVIEW

by Adam Taggart

Over the weekend, we reached out to several popular precious metals experts to get their quick take on the recent downdraft in gold and silver prices.

David Morgan
Ted Butler
Turd Ferguson

Here’s what they had to say:

Experts Weigh in on the Recent Action in Gold and Silver

PREVIEW by Adam Taggart

Over the weekend, we reached out to several popular precious metals experts to get their quick take on the recent downdraft in gold and silver prices.

David Morgan
Ted Butler
Turd Ferguson

Here’s what they had to say:

Twist and Rout: The Fed, Markets, and Precious Metals

PREVIEW

by Chris Martenson

Bernanke, et al., stood pat, much to my great surprise given the macro data they had in hand, and the stock and commodity markets reacted badly. Very badly. The rout I had been expecting has finally arrived, albeit about a month later than I originally thought back in March.

What now?

First, let’s revisit the views I laid out on May 12th in Positioning For The Coming Rout:

Twist and Rout: The Fed, Markets, and Precious Metals

PREVIEW by Chris Martenson

What now?

First, let’s revisit the views I laid out on May 12th in Positioning For The Coming Rout:

Rob Hopkins: Making the Red Pill Taste Good

by Chris Martenson

Rob Hopkins is a true pioneer of the movement to intelligently prepare and adapt society for entering a post-Peak-Oil future. His brainchild, Transition Towns, has been one of the most successful initiatives to date in inspiring hundreds of cities, towns, and communities around the globe towards using local cooperation and interdependence to shrink their ecological footprints.

Many readers on our site lament the inertia or hostility we all frequently encounter when trying to 'wake up' family, friends, and neighbors to the warning bells we see on the economic, energy, and environmental fronts. Chris and I often get asked for advice on how to make the red pill 'tasty' for the uninitiated. So we look at the success Rob's model is having at spurring individuals and communities to action, and ask him: What's your secret?

In short, it's about making Transition feel "more like a party than a protest march." Make it personal to the participants. Focus on celebrating the local benefits and empowerment it produces. As Rob says, the core Transition principles are "not about taking people back to something worse than today; they are a step forward. They are about building resilience, bringing people together, giving them the sense that anything is possible in such a way that everybody benefits."

Rob Hopkins: Making the Red Pill Taste Good

by Chris Martenson

Off The Cuff: The Fed is Merely Treading Water at This Point

PREVIEW

by Chris Martenson

In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish cover:

Yesterday’s ‘Operation Twist’ announcement by the Fed:
- What exactly was announced yesterday and what’s the likely impact?
- Who is likely to benefit (and who isn’t)?
- What’s likely to be announced at the next Fed meeting in six weeks?
- How much ability does the Fed really have to influence the outcome of our economic situation anymore?

Off The Cuff: The Fed is Merely Treading Water at This Point

PREVIEW by Chris Martenson

In this week’s Off the Cuff with Mish & Chris podcast, Chris and Mish cover:

Yesterday’s ‘Operation Twist’ announcement by the Fed:
- What exactly was announced yesterday and what’s the likely impact?
- Who is likely to benefit (and who isn’t)?
- What’s likely to be announced at the next Fed meeting in six weeks?
- How much ability does the Fed really have to influence the outcome of our economic situation anymore?

Slow Money: Raising Investment Capital For Local Enterprise

by woodytasch

I sometimes wonder whether the “numb” in numbers was just waiting for the 21^st Century. As in what my friend Lee said to me over breakfast the other day, after a cursory discussion about the week’s stock market turbulence: “I try to keep up, but it’s pretty mind-numbing.”

Within a few minutes of that remark, the following sentence came from the radio: “Investors are struggling to make sense of this week’s volatility.”

Wild gyrations in the Dow. Joblessness claims. The national debt. The price of gold. The price of oil. Retail sales. The body count from Afghanistan. Yen to the dollar. The number of cities each day in August that had their hottest day on record. $24 billion (McDonalds’ 2010 revenue). 1,100 (McDonalds locations in China). One every 18 hours (number of Yum! Brands restaurants–KFC, Pizza Hut, Taco Bell, A&W–opening in China). One-fifth (per capita water consumption in China compared to that in the U.S.). 19,000 (average earthworm population per acre in Boone County, Iowa). 1.9 million (average earthworm population per acre on Thompson Farm, an organic farm in Boone County, Iowa). 5.79 billion (record number of NYSE shares traded on August 16, 2011). Three trillion (annual Ogallala Aquifer overdraft, in gallons). 2.7 (average annual rate of depletion of the Ogallala Aquifer, in feet per year). 200 (average thickness of the Ogallala Aquifer, in feet). Number of years until the Ogallala Aquifer is completely depleted (do the math).

So, how’s that morning coffee going down?

These are certainly mind-numbing numbers. They are the numbers that shout the Big Story of the 21^st Century: mankind heading towards a global population of 10 billion, and the global economy growing from $60 trillion per year to who-knows-what, and everywhere we look, stresses and strains on political, economic, cultural, and ecological systems.