Prices, Inflation/Deflation, Interest Rates & The Fed

[Arado]

Decent twitter thread from one of the most prominent dollar bulls Brent Johnson here

@SantiagoAuFund
Hi everyone. Based on recent comments/twitter posts/interviews...my email, vm, dm & twitter stream have been inundated with questions about, & challenges to, my assertions regarding QE being "deflationary" rather than "inflationary"

Many extremely smart & successful people (many of whom I like & respect) disagree with me. Vehemently. As such, I have been asked for "Proof" or my "Source" to back up my assertions. The "Smoking Gun" per se... I'll attempt to answer this as clearly as possible below

Some clarification: The assertions aren't to say QE is "never" inflationary. Or "can't" be inflationary. The assertion is that it's "not currently" inflationary. It needs cooperation from commercial banks in form of credit extension (which isn't currently happening).

And...since banks are currently NOT lending... there is no money multiplier effect... and thus the inflationary pressures that would normally come if they WERE lending... are NOT currently present.

As far as "source/proof" goes: My answer is the Federal Reserve Act itself. On broad basis Congress gave Fed power to regulate the economy by setting monetary policy. To accomplish its goals it gave the Fed power to LEND but not to SPEND. Powell recently reiterated this.

As such, with exception of physical currency (notes) & coins, Fed liabilities are NOT legal tender. Because Fed liabilities being legal tender would effectively grant them the power to spend. Which as Powell himself says would be in violation of the Federal Reserve Act.

Basically, as long as the Fed's liabilities (Bank's reserves that remain parked at the Fed) created via QE do not get spent into the real economy via bank lending, inflation will be muted.

Interesting video here from uneducated economist:
-Fed claims that they will allow inflation over 2% from now on, supposedly a major policy shift
-However, Fed hasn't been able to achieve that over the last decade even though it was their goal, so why should we believe them now?
-At the same time, Fed uses manipulated CPI statistics that drastically understate inflation so that normies keep thinking that there isn't inflation
-The financial media is pumping that the 2% inflation is likely this time (perhaps to keep the masses invested in equities?)
-But yet the rich are hoarding cash and preparing for a crash...?


My comment: the media may be trumpeting 2% inflation, but not major inflation, and definitely not calling for a crash either (from stocks being way overvalued). Because when inflation gets serious, then equities are no longer a hedge, and hard assets like metals, land, bitcoin, and maybe survival gear/food are the best bet (and other things mentioned earlier in this thread). And you can be sure that the financial media absolutely does not want people panic buying into hard assets outside of the financial system.

Very confusing - even the smartest macro guys out there can't agree on whether we are in a bear rally within a deflationary debt bust, or if the Fed has (or is about to) crossed the Rubicon into directly spending money into the economy by monetizing deficits, likely leading to stagflation and eventual end of the USD.

 

[EndlessGravity]

I see little discussion in the financial media about how the Fed wants to generate inflation to get rid of the debt because the government is insolvent, or about how seniors on fixed income are completely screwed and forced to speculate in the equity markets or high risk bonds, or how gold and bitcoin should replace negative (real) yielding bonds.

the media may be trumpeting 2% inflation, but not major inflation

The fed talking about "digital printing money" and "inflation averaging" is major. I wouldn't be surprised to see Powell post the brrrrrr video to Twitter himself.

Are you planning to parlay your real estate sales into metals and commodities or sit in cash while the debt bubble bursts?

Sit in cash, probably for however long it takes. I'll try to launch at least one new business in the meantime. However, I'm just going to view that as a money burning exercise.

Also what will make you change your view from deflationary to inflationary?

Great question and difficult to answer. A simple answer: some sign that the money destruction can be systematically stopped each time it gets started. Maybe an indication that de-leveraging can occur. Any data that shows positive economic growth.

What would convince you of deflation?

 

[ball dont lie]

This is not covid related but massive, massive inflation has been occurring in clothing for the last 3 decades.

I have a sweatshirt from the early 90s I still wear to the gym and it hasnt pilled and only has a tiny hole that I hand sewed up. I would pay $100 or more for another one, but even at $100 the quality wouldnt be the same. The material used now is honestly shit. Everything is the lowest garbage available.

More examples are jeans. In the 90s I wore Leivs 505s. The 501s seems a bit too much for me with the button fly, though thats what my dad wore. I used to buy a few pairs at Sears for maybe 40-50$ and feel I got a good deal because they were thick and very durable. I bought a few pairs and somehow when I left to go to college one nearly new pair was stuck in a box of my stuff which then was under a whole bunch of other boxes in the basement. 15 years later I found that box and I was shocked, stunned, how good those jeans were compared to today. Now you would have to pay $200 to $300 dollars, maybe more. I do have a couple pair of high end Japanese one wash denim pants and even those, at $250 are not as good. This was what normal guys with $40 could buy at sears in 1995.

Now the jeans are paper thin, quality control is very, very low with 4-5 pairs of the same pants in the same size all fitting differently, different inseams, waist size, etc.

Another example of this was Banana Republic and J Crew. I used to visit a thrift store near in the early 2000's and found some pairs of Banana Republic shorts from the 90s. I got them for $3 and loved them, so I went to the mall and bought a pair for $50. The used pair from the 90s outlasted the new pair, with the quality of the fabric, WAY higher. In the early 2010's I bought another pair of BR shorts for $50 and wore them for half the summer before I threw them away. Pilled in between the thighs. Bad stitching.

I could go on and on. In the last 5-10 years this trend has accelerated to retard speed. Something you like, buy a few spares, because in the next couple of years the quality will be garbage.

That is the same with currency inflation. Buy your products today, because in 6 months or a year it will have much less value.

For shoes I try to buy Alden boots used from ebay and even at $200 they last a long time. If you buy anything that is below extreme luxury and very high quality US made, its basically garbage.

I recently got a Singer sewing machine that is from the 60s and it works perfectly. I had a Toyota Camry from the early 90s that I drove cross country (USA) many times and only changed the oil and the brake pads. It was perfectly engineered. I could pay a lot of money for that eras Camry or Honda Civics.

Its all very disappointing that we all should have been hoarding clothes from the 80s and 90s because now only people with lots of money can something that is not junk while everyone could afford it 40 years ago.

 

[Arado]

The fed talking about "digital printing money" and "inflation averaging" is major. I wouldn't be surprised to see Powell post the brrrrrr video to Twitter himself.

That meme is a better advertisement for Gold and bitcoin and the US losing reserve currency status than for equities. I know Dave Portnoy is using the meme to pump stocks, but the gold bugs are just as inspired by the Fed's inflation talk. Stocks did poorly in the 70's and the Venezuelan stock market hasn't kept up with inflation either, while anyone buying gold would have done great.

And I know the Fed hates gold more than anything, since it's outside their control. So they want the masses to think inflation is coming but not too much, it's a balancing act.

Great question and difficult to answer. A simple answer: some sign that the money destruction can be systematically stopped each time it gets started. Maybe an indication that de-leveraging can occur. Any data that shows positive economic growth.

What would convince you of deflation?

Deflation was my base case, and if you see my posts in late 2018 I was calling for a deflationary collapse in markets. The difference though is that I realized that the Fed will always do what's necessary to kick the can down the road. Now they are out of options in terms of (per Ray Dalio) monetary policy 1(lowering rates) and running out of options for monetary policy 2(buying financial assets) and only have monetary policy 3 (spending money into the economy) left.

The reason why I'm skeptical that the deflationary scenario will play out, is because it's too easy for politicians to promise handouts and steal people's money via inflation - it's the playbook that's happened countless times throughout history. In addition, in real life we've had inflation far above the CPI for many years already as I've mentioned several times on this thread (housing, education, healthcare, shrinkflation, crappy food, etc). The only thing that's gotten significantly cheaper is electronics and those are largely a one off purchase and account for a small % of necessary expenses and largely caused by globalization and automation, not monetary policy.

For me to buy into the deflationary scenario, I need to see some type of fiscal restraint on behalf of government. Not saying that they have to balance the budget, but at least if they can keep monthly deficits at something like 1% of GDP, then that means that the Fed won't be printing more money than what is being destroyed in debt defaults. I don't know if there is a magic level of M2 or monetized deficits that push it one way or another, but I'm following the pundits closely for signs that things are breaking in either the deflationary or inflationary direction.

I think you are well-placed to hedge both scenarios with large portion of your portfolio in cash, and a decent position in gold (which does ok during deflation and awesome in stagflation), some civil unrest resistant land. What I would also suggest is a decent holding in bitcoin (which has a large upside and is largely uncorrelated with other assets) and a very small percentage of the portfolio levered to inflationary assets like options in metal miners, commodities or foreign equities. That would mean trimming the position in US equities.

I appreciate your engagement on this thread and look forward to hearing your thoughts as this evolves.

 

[Arado]

Here are a couple good recent videos on this topic. The key question remains whether the Fed "printing" is actually filtering into the real economy or remains locked up in reserve accounts at the Fed. In addition to the money supply circulating, there's individual propensity to spend vs. save and bank's willingness to lend (velocity), ongoing currency destruction from debt repayments, as well as the actually supply of goods and services available that determine whether we are in inflation or deflation. Lots of moving parts here, and be skeptical of any pundit that pushes one side of the story without acknowledging the nuances.

Long term I still think the inflation side will win out, as throughout history it's always been easier to print money and bail out anyone making a fuss rather than do the hard work of letting inefficient businesses die and allowing creative destruction. In the short term there may be various hold ups and so the deflationary forces can create major crisis until the politicians get their act together and fire up the printing press.

As I've mentioned before, the experts still can't agree on whether recent Fed actions have pushed us in one direction or the other. Plan for both scenarios, though the ideal would be finding cash flowing quality businesses to invest in that would do well in either scenario.

 

[Blade Runner]

Watch Gammon's interview with Steven Van Metre, which is the most accurate view of what's going on. He was made an instant macro sensation (in the interwebs universe) when he succesfully integrated his studies of macro as a CFP and reading Lacey Hunt, Richard Werner and many other sharp thinkers in the current macroeconomics field. Brent Johnson found him and was instantly impressed with his knowledge and analysis. He's also a good guy who is a nice, nerdy type that anyone can be happy for becoming "successful" in the new internet age.

A quick summary is as follows: deflation is setting in due to QE being incredibly deflationary, which has to do with the Fed pumping reserve accounts after members or primary dealers buy them (they don't get to touch the money), and sucking money out of the system to buy said bonds (no creation of money via loans in the real economy). The government has effectively crowded out real enterprise by running such huge deficits and having this 24 trillion dollar debt (surprise, surprise). Thus, productivity will not even have a bat's chance in hell of making a turnaround to overcome the rolling over of the loans, especially when rates are 1% or soon, less. Even if the Fed balance sheet is erased by legislation, you still have the problem of the government having killed productivity, and need at least a decade or two to even hope for a turnaround.

Until a change in the Federal Reserve Act comes (or is ignored), inflation won't set in --- but please note that eventually a deflationary spiral will lead to inflation --- again due to the reaction by the government. But according to the current law/rules, deflation rules the day.

 

[Tactician]

Quick sleepy thought, so take this with a grain of salt: The majority of July Fed Senior Loan Officers are reporting tightening of loan standards + less loans being requested in a ton of categories. Even if interest rates are low as hell, if credit expansion isn't taking place, then it doesn't matter. Way harder for recovery to happen without credit creation for businesses.

Anyway, might be worth a scroll. Good night

https://www.federalreserve.gov/data/sloos/sloos-202007-table-1.htm

 

[Arado]

Watch Gammon's interview with Steven Van Metre, which is the most accurate view of what's going on. He was made an instant macro sensation (in the interwebs universe) when he succesfully integrated his studies of macro as a CFP and reading Lacey Hunt, Richard Werner and many other sharp thinkers in the current macroeconomics field. Brent Johnson found him and was instantly impressed with his knowledge and analysis. He's also a good guy who is a nice, nerdy type that anyone can be happy for becoming "successful" in the new internet age.

A quick summary is as follows: deflation is setting in due to QE being incredibly deflationary, which has to do with the Fed pumping reserve accounts after members or primary dealers buy them (they don't get to touch the money), and sucking money out of the system to buy said bonds (no creation of money via loans in the real economy). The government has effectively crowded out real enterprise by running such huge deficits and having this 24 trillion dollar debt (surprise, surprise). Thus, productivity will not even have a bat's chance in hell of making a turnaround to overcome the rolling over of the loans, especially when rates are 1% or soon, less. Even if the Fed balance sheet is erased by legislation, you still have the problem of the government having killed productivity, and need at least a decade or two to even hope for a turnaround.

Until a change in the Federal Reserve Act comes (or is ignored), inflation won't set in --- but please note that eventually a deflationary spiral will lead to inflation --- again due to the reaction by the government. But according to the current law/rules, deflation rules the day.

Good stuff. I think the inflationists would probably agree but note that in the current political climate there is zero pressure for the Fed to remain true to the Federal Reserve Act. Their purchase of corporate junk bonds and bailing out the municipals is evidence of that, and most think it's only a matter of time till they start purchasing equities outright. It still all comes down to whether the Fed can get money supply into the real economy, and if they do it at a faster pace than the debt destruction.

 

[Blade Runner]

I think that all of us agree that at least in the end there will be inflation. Not that there isn't inflation in the US, and there has been, for some time --- just with particular classes of goods or assets (school, health care, housing, etc). Social issues will reach a boiling point when household goods or common things like food start to really contract and prices go way up on those. That will happen this decade too.

 

[EndlessGravity]

It still all comes down to whether the Fed can get money supply into the real economy, and if they do it at a faster pace than the debt destruction.

Cool videos. The charts and step by step are very nice. You've also put a point on the situation with your statement. Which is happening faster and how can we tell? I like that Gammon says we're playing with a 100 piece puzzle but with only 10 pieces. Couldn't feel more true.

Let me share an anecdote I've shared in other threads, one which may have you re-thinking inflation.

My wife and I have credit scores in the 800s. Our relationships with our banks span decades with personal and business-related investments. In 2010 and 2011, banks couldn't give us loans fast enough. Mortgages, credit cards, personal loans, didn't matter. They practically BEGGED us to buy real estate.

Today, we're being denied a basic mortgage by major financial institutions. The reason? They aren't doing any mortgages. Period. Zip. Zero. I laughed out loud when they told me this. I'm also sure you've seen the lending data that shows they're tightening standards, but can you imagine inflation when they won't give the most qualified buyers basic loans?

That's a fundamentally broken system and the repo market suggests the same.

I'm guess real estate prices are going up because buyers-in-the-process are chasing declining inventory as buyers-to-be find out they aren't getting approved. I wouldn't give it too long for us to hit the wall there. The government can't halt mortgage defaults and rent evictions forever. They can try but it's only a matter of time.

If regular people can't use their home's equity as a piggy bank, will they be able to keep expanding their credit? Maybe those 50% Millennials living at home now will have some extra spending money or help their parents with the mortgage but I wouldn't bet on it.

 

[kel]

Mortgage rates seem quite low right now, though. Supposedly you can refinance and cut your rate in half right now.

 

[Arado]

Cool videos. The charts and step by step are very nice. You've also put a point on the situation with your statement. Which is happening faster and how can we tell? I like that Gammon says we're playing with a 100 piece puzzle but with only 10 pieces. Couldn't feel more true.

Let me share an anecdote I've shared in other threads, one which may have you re-thinking inflation.

My wife and I have credit scores in the 800s. Our relationships with our banks span decades with personal and business-related investments. In 2010 and 2011, banks couldn't give us loans fast enough. Mortgages, credit cards, personal loans, didn't matter. They practically BEGGED us to buy real estate.

Today, we're being denied a basic mortgage by major financial institutions. The reason? They aren't doing any mortgages. Period. Zip. Zero. I laughed out loud when they told me this. I'm also sure you've seen the lending data that shows they're tightening standards, but can you imagine inflation when they won't give the most qualified buyers basic loans?

That's a fundamentally broken system and the repo market suggests the same.

I'm guess real estate prices are going up because buyers-in-the-process are chasing declining inventory as buyers-to-be find out they aren't getting approved. I wouldn't give it too long for us to hit the wall there. The government can't halt mortgage defaults and rent evictions forever. They can try but it's only a matter of time.

If regular people can't use their home's equity as a piggy bank, will they be able to keep expanding their credit? Maybe those 50% Millennials living at home now will have some extra spending money or help their parents with the mortgage but I wouldn't bet on it.

Great points. The thing that keeps annoying me is that inflation and deflation are happening simultaneously and in different sectors, as I've mentioned several times, so any time someone comes firmly down on one side of the equation ("The Fed can't get inflation!" or "We're already in inflation - just look at the stock market!") it's pretty useless.

The key question as an investor that we all are trying to answer is simple - should I panic buy into the housing market now that rates are low even though prices are high and put the rest of my money in hard metals and prepper gear (and maybe some selective equities that will survive the chaos), or stay in cash and buy assets on the cheap when the crash comes?

No one wants to give a clear answer because no one can predict if the Treasury will go balls to the wall and spend like they did in March/April and the Fed will monetize all of it. Both have to happen for 'inflation' to kick in - and by that I mean where the average Joe realizes his cash is getting devalued.

Very interesting about the credit contraction - does that mean that the housing bidding wars are about to come to a screeching halt?

Even if there isn't enough monetized fiscal spending to push us out of deflation and into inflation, we'll have to look at whether a stimulus bill passes, how large it is, and whether there is uniparty rule next January. If so, then things will get passed bigly, the Fed will monetize, and the chances of a mass insolvency event and nominal crash are lower.

 

[EndlessGravity]

[A]ny time someone comes firmly down on one side of the equation ("The Fed can't get inflation!" or "We're already in inflation - just look at the stock market!") it's pretty useless.

100% agree. This shit is too complicated and it's best to act with that fact in mind than anything else.

RE: stock market. I did expected hard downward pressure on the stock market going into September like we're seeing. Treasury auctions and repo data were too suggestive of deflation. Snyder also talks about certain widespread business (and therefore, economic and financial) bottlenecks and I've partially come around to this view just recently. Equity assets look like inflation but the tide just has to go out a bit further at the right moments. This is probably that moment.

The key question as an investor that we all are trying to answer is simple - should I panic buy into the housing market now that rates are low even though prices are high and put the rest of my money in hard metals and prepper gear (and maybe some selective equities that will survive the chaos), or stay in cash and buy assets on the cheap when the crash comes?

I take a different view. Humor me: always be re-positioning yourself for where you want to end up, regardless of everyone and everything else.

I'll probably end up paying a very high premium for our new property. However, I should have made the move more rural a year ago when we began to get uneasy. We didn't avoid the 2007 bubble based only on financial data but because it felt wrong how everyone was pressuring us to snatch up (specifically) expensive condos and it felt wrong for where we were at the time. I didn't want expensive condos.

Not to make it out like I'm a magic investing guru. Our philosophy is just a version of the old maxim: when others are greedy...etc. We save, we wait, we ask ourselves what we want. Then we deploy capital and credit worthiness when we see exactly what we want. I sell when I'm sick of dealing with things.

What happens if the Fed hyper-inflates my money? Others would think to spend theirs; I would save even more.

No one wants to give a clear answer because no one can predict if the Treasury will go balls to the wall and spend like they did in March/April and the Fed will monetize all of it. Both have to happen for 'inflation' to kick in - and by that I mean where the average Joe realizes his cash is getting devalued.

Globally, they won't go balls to the wall enough. Even if they do, the numbers are too un-comprehensible to matter anymore, triggering people to act in the opposite way as intended.

Very interesting about the credit contraction - does that mean that the housing bidding wars are about to come to a screeching halt?

I'll either be very wrong or very right. However, yes, I'm anticipating that across the board. When? I'll casually commit to by March 2021.

Even if there isn't enough monetized fiscal spending to push us out of deflation and into inflation, we'll have to look at whether a stimulus bill passes, how large it is, and whether there is uniparty rule next January. If so, then things will get passed bigly, the Fed will monetize, and the chances of a mass insolvency event and nominal crash are lower.

Uniparty rule. However, this is interesting. Is the risk of mass insolvency going down or up? Can the government just keep changing the rules? For how long can they do so?

I've watched several renters disappear in the middle of the night. Seriously. Middle of the night, all your shit by the curb. This is in a good part of town. Businesses getting wiped out even after PPP and other goodies. What does it all mean?

 

[NoMoreTO]

Ron Paul recently Penned an article below. It is starting to hit home for me that this entire crisis is just dragged on from 2008. Prices have flown since then, my rental property in a 2nd tier city in Canada has probably tripled in value, but local wages are about the same. This idea of the US collapsing as a currency (and the world going back to gold standard ) is also being touted by Peter Schiff.

It just seems like they can only play this game so long, and like a gambler down at the casino, they keep doubling down and worsening the situation for all of us.

[
Federal Reserve Chairman Jerome Powell recently announced that the Fed is abandoning “inflation targeting” where the Fed aims to maintain a price inflation rate of up to two percent. Instead, the Fed will allow inflation to remain above two percent to balance out periods of lower inflation. Powell’s announcement is not a radical shift in policy. It is an acknowledgment that the Fed is unlikely to reverse course and stop increasing the money supply anytime soon.

Following the 2008 market meltdown, the Fed embarked on an unprecedented money-creation binge. The result was historically low interest rates and an explosion of debt. Today total household debt and business debt are each over 16 trillion dollars. Of course, the biggest debtor is the federal government.

The explosion of debt puts pressure on the Fed to keep increasing the money supply in order to maintain low interest rates. An increase in rates to anything close to what they would be in a free market could make it impossible for consumers, businesses, and (especially) the federal government to manage their debt. This would create a major economic crisis.

The Fed has also dramatically expanded its balance sheet since 2008 via multiple rounds of “quantitative easing.” According to Bloomberg, the Fed is now the world’s largest investor and holds about one-third of all bonds backed by US home mortgages.

Congress has expanded the Fed’s portfolio by giving the central bank authority to make trillions of dollars of payments to business as well as to state and local governments in order to help the economy recover from the unnecessary and destructive lockdowns.

Contrary to what most “mainstream” economists claim, a general increase in prices is an effect — not a cause — of inflation. Inflation occurs whenever the central bank creates money. Increasing the money supply lowers interest rates, which are the price of money, distorting the market and creating a bubble (or bubbles) that provides the illusion of prosperity. The illusion lasts until the inevitable crash. Since the distortions come from money creation, the system cannot be “fixed” by just requiring the Fed to adopt a “rules-based” monetary policy.

Once the lockdowns end, the Fed’s actions may lead to a short-term boom. However, the long-term effect will be even more debt, continued erosion of the average American’s standard of living, and the collapse of the fiat money system and the welfare-warfare state. The crisis will likely be brought on by a rejection of the dollar’s reserve currency status. This will be supported both by concerns about the stability of the US economy and resentment over America’s hyper-interventionist foreign policy.

The question is not if the current system will end. The question is how it will end.

If the end comes via a meltdown, the result will likely be chaos, violence, and increased support for authoritarian movements as desperate people trade their few remaining liberties in hopes of gaining security.

However, if pro-liberty Americans are able to force Congress to begin cutting spending — starting with the money wasted on militarism — and to move toward restoring a sound and sane monetary policy that includes ending the Federal Reserve, we can minimize an economic crisis and begin restoring limited constitutional government, a free-market economy, and respect for liberty.
/QUOTE]

Ron paul Institute

 

[Arado]

I take a different view. Humor me: always be re-positioning yourself for where you want to end up, regardless of everyone and everything else.

I'm definitely not following Jim Cramer and CNBC, but one should plan based on what assets are relatively undervalued, based on what is likely to happen in the future.

What happens if the Fed hyper-inflates my money? Others would think to spend theirs; I would save even more.

You mean you'll save more in metals and bitcoin or save more cash? Don't quite follow.

Uniparty rule. However, this is interesting. Is the risk of mass insolvency going down or up? Can the government just keep changing the rules? For how long can they do so?

Globally, they won't go balls to the wall enough. Even if they do, the numbers are too un-comprehensible to matter anymore, triggering people to act in the opposite way as intended.

I'll either be very wrong or very right. However, yes, I'm anticipating that across the board. When? I'll casually commit to by March 2021.

Uniparty rule will lead to balls to the wall fiscal spending especially if the dems win and institute some crazy welfare spending, and the Fed will monetize a good chunk of it. But you're right, there's still plenty of debt that's destroying money at the same time. Just depends which force take precedent. I don't think anyone knows the magic number of how much monetized spending is necessary to push us out of deflation, but better to be in front of the curve.

I've watched several renters disappear in the middle of the night. Seriously. Middle of the night, all your shit by the curb. This is in a good part of town. Businesses getting wiped out even after PPP and other goodies. What does it all mean?

In that case the insolvency still has to play out. Get your cash ready to buy deals.

 

[NoMoreTO]

Lately I have been thinking about the plan to lockdown through at least mid 2021. Deficits are ballooning and the economy is much worse than it seems due to money printing going on right now.

Federal Reserve purchases of corporate bonds and JUNK bonds are so high that the capitalist economy is essentially being bought up by the bankers. This creates zombie corporations which are weaker than ever.

My own take is that Zombie corporations will essentially become publicly owned, ushering in soft communism where corporations, citizens(UBI) are essentially all funded by the government, but some level of free market behaviour in our purchases remains in the system.

 

[andy dufresne]

There are no smart 'investments' these days. Keep a good supply on cash to pay off fixed investments you have already made like car loans and mortgages. Keep a decent amount of cash ready for SHTF.

The rest of the money you get should IMMEDIATELY be turned into real hard goods that you can barter for when the system collapses.

 

[Arado]

There are no smart 'investments' these days. Keep a good supply on cash to pay off fixed investments you have already made like car loans and mortgages. Keep a decent amount of cash ready for SHTF.

The rest of the money you get should IMMEDIATELY be turned into real hard goods that you can barter for when the system collapses.

What is a good mix of cash vs. hard assets and how is this perspective impacted by whether you think a deflationary or inflationary collapse is the next likely scenario?

 

[Arado]

Wrangling over SCOTUS replacement for RBG will make fiscal stimulus deal unlikely in next few months. That would be deflationary.

 

[NoMoreTO]

Stocks, Gold, Silver, Lumber all down yesterday. USD is gaining strength?

I'd like to sell before the election and buy afterwards. There is a historical pattern around the election - whether Dem or Republican wins.