I’m a little on edge about the news of a few more banks nearing failure today. Is this going to snowball?
Just curious if anyone has any copium.
Or if the dollar is going to collapse, please tell me. Because I have a stack of under-the-bed cash that I could liquidate into tools, new appliances, office supplies, etc.
My senses have been quite accurate on this, which I put down primarily to likely getting the intention of the Fed correct.
If you look at a number of contrarian investment commentators, like Schiff and Rickards, you'll often find they say that the Fed, Yellen, Powell, Bernanke etc. are fools, incompetent and making errors. I believe the opposite is true. They are skilled at rolling over the financial and political system when many contrarians have been signalling the they will collapse them. The intent of the Fed and Treasury is to avoid recession.
Going back to last year I posted here - that is the Fed's intention and that their path to doing this will be a mix of QT and QE. Pushing rates towards 7% and then using targeted QE and bailouts to paper over things that break. i.e. these bank failures we are seeing.
They are going to chart the course that presents the least damage, between fighting inflation and keeping the economy propped up.
I expect this to be a shallow recession, because that's what they are steering for. There was a recent video of Larry Summers, who is of this clique, saying that there needs to be job losses, to deal with inflation. Suggests they are going for a shallow recession.
The more interesting question is why they have ended up in this position. Primarily why did they print so much money for coronavirus. This is something we can only guess at. The evidence points towards the virus accidentally escaping from the lab. As those who were salivating for a pandemic were not ready to go with their control systems. It took them about a year from them to get somewhat organised. I believe the response was chaotic and taken as the Great Reset/2030 class saw this as the moment to pounce with the cashless control-grid society. But they got it wrong and the virus was nowhere near dangerous enough. So they created a giant mess. I can't really see much purpose behind doing that.
If it wasn't for the COVID response and the Ukraine war, we'd probably be plain sailing right now through the Biden boom, of actual real economic growth of about 1%.
Since more rate hikes are essentially necessary - they need to get rates to about the level of CPI - I think more banks will go under, there will be bankruptcies, foreclosures, price deflation, a run out of stocks etc. Once inflation is pushed down to about 2% by their measure - they will go back to QE, and likely one last insane bubble rally, followed by an event rivalling the Great Depression. And this will be used to change the monetary regime over to CBDCs etc.
I think a dollar collapse has a probability of about 0%. I expect it to loose somewhere around 10% of global reserves over around a period of three years, say by Jan 2027, and then resume it's slow decline. I don't really know what such a process will lead to. But it's quite possible that dollar inflation will persist for some time or indefinitely.
The dedollarisation trends really complicates the picture. If it were not for that, I'd say the best asset to be in now would be the dollar. And I'd expect all other broad asset classes to take a hit in the recession, including gold and BTC.
But if the recession is coupled with weakness or crisis with the dollar, then I'd expect gold and BTC to do well instead. Since BTC is about 60% below it's all time high and gold is at it's all time high, I think a hedge into BTC makes far more sense (if made now), even if it goes down. The safety status of any asset right now is in the air, but BTC seems the safest play with a 2+ year horizon.
Dollars under the bed is not a bad hedge, ideally coupled with something else bought at a good entry point. I only give buying advice at cycle lows, and right now nothing is at cycle lows. As mentioned BTC is at a decent price. It may never see these price again, but it could drop considerably in the near-future.
It will be more clear what to do as things unfold. Primarily, as the recession bottoms, you want to put all your cash into a number of high quality assets at cycle lows. I would say, primarily BTC and or shorter-term crypto holds; precious metals; commodities that will do well over the coming years - lithium, copper, uranium; an anchor in real estate; select tech stocks.
Things could obviously go much worse with people like this -
The extent of bubbled that have no relation to actual wealth is bigger than ever before. The last 14+ years has seen a giant growth of what is essentially extended usury. There has been a growing class of people who have been inflating bubbles they are all in on. People have seen huge paper gains on assets that are priced far above what a non-bubble economy would pay. They will have to come back down somewhat. My leaning
is The Fed can keep them more inflated than in 2008-9, but that's a 51:49 call.
As mentioned I only make calls when I am very sure. Over the last year or so they have had a 100% hit rate. Probably all posted on the forum.
- we will see the Fed push towards 7% - it seems most contrarians expected a quick rollover to QE
- we will see the Fed use QT, with targeted QE to paper over failures
- you should have been DCAing into BTC/crypto since July 2022 (the bottom), but be prepared for a big buy in a big crash
- calling the BTC bottom withing 24 hours in the BTC or crypto thread (Jan 2023)
- calling the 2023 top and suggesting shorting the Russell 2000 in this thread - up 20-30%
- signalling the brief $20k BTC bottom on 10 March in the crypto of BTC thread
Finally, when this thread was created, I thought it would be the most perfectly titled thread the forum had seen.
At the moment, the only thing that is obvious is that we are in a recession. Unknown Fed trickery and how much rope they have makes it difficult to have any ballpark on potential downsides and timing. And the dollar uncertainty. As things unfold more, it will be more clear what to buy and where things might go. Focus should be on getting into quality assets at cycle low in the coming two years or so. If you do that, then you won't need to threat so much when this happens again.
Also a scenario worth considering is that the economy could be very different on the other side of a recession, i.e. Japanification, when the stock market has still not recouped it's 1989 highs -
Interactive daily chart of Japan's Nikkei 225 stock market index back to 1949. Each data point represents the closing value for that trading day and is denominated in japanese yen (JPY). The current price is updated on an hourly basis with today's latest value.
We are on the cusp of a lot of unknowns.