Friday, May 10, 2013

The Third & Final Bubble: Enjoy The World Around You Before It Pops

After last week's performance on CNBC, this week we get another dose of reality from Peter Schiff on Fox News discussing the Fed induced bubble in stocks, bonds, and real estate.

If a small portion of the trillion+ of dollars currently printed every year should begin to enter back into the energy or agriculture market (it is already spiking the cost of rents), then you will have the trifecta that ends this charade: rising inflation in the goods people need to survive every month. When this occur the Fed must decide to either stop printing or ignore it and just hope for the best. Either scenario will lead to total disaster (for the real value of asset prices) and the world will once again see that the emperor has no clothes.

This process will most likely occur first in Japan and provide a blue print for what is coming for the U.S.

In the meantime, and I say this with all honestly, enjoy the world around you today where people are more happy in general because they think this is a real recovery. Most people have no understanding about what is currently happening and therefore have no understanding about the consequences today's actions will induce.

This bubble will be the last bubble because when it begins to collapse central banks and the governments will already both be "all in." There will be no bailout that comes from Mars or Jupiter. The bill will finally come due for the 70 year debt super cycle that has now bankrupted every layer of the economy.



For a complete discussion on the most likely first domino to fall during the next collapse see:

Japan Steps Into The Abyss: Begins Largest Money Printing Experiment In History

2013 Outlook: Japan's Government Debt Bomb Goes Off


9 comments:

  1. What causes it to crash is a "nat-sec event".

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  2. While he may be right, is Peter Schiff not full of hyperbole?

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    1. You will not look back on it as having been hyperbole when the impending collapse occurs. There is no way to save the current system. It must be "reset", or feel free to choose a different euphemism. In any case, the changes will be profound, and Schiff's warning cries are not hyperbolic.

      Fasten your seatbelts.

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    2. But how long might this take to happen. Maybe we will all be surprised at the ability of governments to keep this thing going? Perhaps any crash is 5-10 yrs off and in the meantime, those of us who hold gold/silver start to suffer belief fatigue as we see the bubble inflate and through lack of participation('due to an imminent crash') miss out. Not by any means comparing Peter Schiff to a stopped clock, but his 'collapse of the dollar' warning does not seem imminent.

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    3. In my view, it is wise, broadly speaking, to recognize that those in power may be able to keep the balls in the air longer than one might reasonably expect. Having said that, though, I believe that they have already begun to lose control, and that their ability to extend the game much longer is now badly compromised as a result.

      The recent, obvious manipulation of the paper gold price, the Cyprus template, and subsequent chatter about using a similar approach in other major countries, are both signs of desperation. The paper and physical gold markets are bifurcating as we speak. Massive amounts of physical gold are moving from weak to strong hands. Japan, as Kyle Bass called years ago, is rapidly nearing a major crisis point. The Netherlands, France, and other Eurozone countries are facing impending crises. The world's economies are now too interconnect for there not to be a cascade in the near future.

      With regard to belief fatigue, as you call it, stay focussed on the fundamentals.

      Fact: the world is at the end of a debt super-cycle

      Fact: insane amounts of currency have been, and continue to be created out of thin air in an absurd effort to resolve the biggest debt bubble in history by creating unimaginably large amounts of further debt

      Fact: all fiat currencies end up worthless, and this time will not be different

      Fact: whenever empires collapse, and fiat currencies implode, PMs are invariably sought out as safe havens, and this time will be no different

      Fact: the turbulence that is appearing with increasing frequency in markets is a sign of INstability

      If you own bullion outside of the banking system, you need only patience in order to benefit from your foresight. There are, of course, many related decisions that need to be considered carefully, but the fundamentals of PM ownership couldn't possibly be any stronger.

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    4. Oh, and while it is a fool's game to attempt any specific timeline, I would be shocked if there isn't a major crisis within the next two to three years, and expect it to come sooner.

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    5. Tinky, Understood. You make a good and sensible case, and by and large I agree. I really do!! However, sometimes I fear/question the element of the so called silver/gold bug group that take every gold-positive news story verbatim but then rubbish any story or news item that is anti-gold. I also worry about the use of statements like "the world is at the end of a super debt cycle", as espoused by Kyle Bass, as having taken on fact and certainty. People repeat these as though they are indeed certainties. They may be - in then end, but for the moment healthy skepticism in both directions is important.

      Thanks Tinky for your thoughtful reply.

      Apologies Tuna, I do not mean to invade your blog as a forum.

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  3. Dotcom crash was followed by another mega crash about 6 years later... it's been about 5 years now since the mega crash... this cannot go on much longer

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