Saturday, 9 April 2016

A Tale of Two Collapses [stocks, bonds, commodities, real estate]......................from Rico

History repeats, some say. Others suggest it rhymes really well. Let's consider that it repeats, just not in exactly the same way.
- Take the term "collapse." There is more than one flavor of collapse.
The "Great Depression" was bad, and the "Greater Depression" will be bad...just in different ways. It will not be fun
- One might argue that the "Greater Depression" has already started, but because it doesn't 'look' like the last one we haven't yet noticed.
The "Great Depression" was a DEFLATIONARY COLLAPSE. Currency was worth more as prices collapsed. This 'deflation' bogeyman is exactly what the FED (especially Ben Bernanke) has been scared witless of and is trying to avoid at all costs. They are wrong. They are fighting the last war, while clueless about the next one. Fighting the last depression will not help anyone avoid the next depression.
- The 1930's financial markets saw stocks drop 90% from 1929-1933, Secure bonds were the best thing to have. Commodities sank. Most real estate was owned outright.
The "Greater Depression" is an INFLATIONARY COLLAPSE. Currency is worth much less as prices increase.
- Money is now being created to avoid a price collapse. More money will be created. This time, stocks...and especially commodities...will surge to the upside as people panic and try to get out of rapidly depreciating currencies in general (and bonds in specific). Next to bonds, real estate will also be devastated because no one will want to lend money long-term, and real estate is built on a mortgage market which will vanish.
Forewarned is forearmed.
- Trusting the very same people that have made a mess of things to 'solve' the mess they created is delusional. The cavalry is not coming to rescue you, or anyone else. We're all on our own at this point.........

No comments: