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In the years leading up to mid-2007 keen observers noted dangerous leverage
in the US debt markets and some predicted that the bubble would pop. Predictions
like this were contrarian while the market was rising, and they were
ridiculed. But then when the bubble did pop, those same contrarians became
nearly household names as network TV invited them on to explain their
predictions.
From mid-2007 though the end of 2008 a great deal of pressure on the system
from the dangerous leverage was relieved. Many pundits switched sides to join
the pre-2007 contrarians, and the spotlight widened. By late 2008 through
March 2009 a few optimistic analysts telling investors to buy back into the
markets became the new contrarians.
In 2009 we have witnessed a shift from a pseudo-free market overloaded with
debt and leverage to a more controlled market driven by public sector
stimulus money. This publicly supported market includes the big Wall Street
banks as well as some in Europe. Stimulus money and quantitative easing has
shifted much of the pressure from the debt bubble onto the public at large.
Through the process of watching this slow-motion train wreck (still ongoing),
the consensus opinion about danger in the system has shifted from an imminent
threat to a long-term threat. Before 2007, a few "doomers" were
contrary to the consensus, and for the most part they were right. Late in
2008 and early 2009, a few optimists were contrarian and for the medium term,
they have been right. There were some excellent bargains during that time
that have paid off very well.
The point is that during times of transition, surprises are always the order
of the day. Look to the consensus on both sides, optimistic consensus and
pessimistic consensus, and expect a surprise different from that consensus,
depending on which direction we go.
One of the few
things we are confident about is, some very improbable things will happen.
Surprises will occur so often they will become routine... I am sure this was
only the beginning of a parade of shockers.
-Richard
Maybury 06/09
This is true because the market CANNOT reward the majority for long. A zero
sum game, the market must reward a minority. If too many people pile into one
line of thinking, the market is primed for surprise.
Because of the slow-motion train wreck we are all passengers on, we have
reached a unique dichotomy of opinions. This divergence can be boiled down to
the inflation-deflation debate, with a few variations. On the inflation side
we have both optimists and pessimists, who view the coming inflation as
either good or bad. And on the deflation side we have mainly pessimists who
see continued downward pressure on the stock market, the housing market and
consumer prices as well.
Running parallel to these general impressions, we have a crazy-out-of-control
government that has given in to the temptation of printing its way out of
this mess. The deflationists view this as an exercise in futility, while the
inflationists say that you cannot print these amounts of dollars without it
affecting the markets sooner or later.
A few cunning analysts are hedging their bets saying we will see another
deflationary collapse first, followed by a bout of high inflation. But nearly
all of the pundits who are still predicting "doom" have lengthened
their horizon to several years to make way for the slow speed at which this
train is tumbling down the tracks.
Frankly, I'm not buying it.
Call me contrarian, but I say that when the rubber band breaks this time it
will snap back with a speed and fury that will make your head spin.
In fact, I think that the longer this drags out (and I'm only talking weeks
and months now), the more abrupt the correction will be. While at one time it
may have happened over a month, it could now happen overnight! The laws of
economics can only be violated for a limited time frame. So far that time
frame is four months and counting. Or viewed another way, 15 years and counting.
Viewed yet another way, 38 years and counting. And viewed one more way, 96
years and counting. These are four waves of economic violation that are
converging right in front of us.
What kind of
correction are we looking at?
I think we will have a correction of ALL FOUR waves of economic and monetary
violation... all at once!
To see this, you must view the imbalance that has developed during each of these
time frames. On the medium scale we have the imbalance of debt in the West
with surplus in the East. This imbalance is an ongoing flow that has not only
gone parabolic, but is projected to continue through at least 2025 (BIS
study)! How can a trend that has gone parabolic in only 15 years continue for
another 15 years?
In the shortest time frame, the imbalance is between market technical
patterns, managed through media spin and "other means", and long
term (secular) market fundamentals. This imbalance is most obvious in the
divergence of the public sector and the private sector. The public sector has
been bailed out by the private sector without its consent. In fact, against
its wishes. This has created an imbalance of fairness that is boiling under the
surface tension of the green shoots media hype.
Both the 38 year timeline and the 96 year timeline have created an imbalance
in the fractional reserve system that has also gone parabolic in the last
decade. I am talking about gold. No, the price of gold has not gone
parabolic, but the ratio of available gold to outstanding paper currency HAS
gone parabolic.
The central banks of the world are well aware of this. It is why they have slowly,
inconspicuously changed from net sellers into net buyers. This gradual shift
is extremely significant, because as net sellers they were supporting their
own fiat regime. But now as net buyers, they, as a group, are stressing it.
Why would they do this unless they knew it was about to reset?
This fractional gold reserve imbalance is the one imbalance the media and
governments do not want you to know about. This is the one that will RESET
the entire system. This imbalance, once corrected, will make central bank
fiat currencies sustainable once again. This is why they are net buyers! Here
at FOFOA, we like to call it FREEGOLD!
Do I think this magnitude of a reset could happen overnight? Yes, I do. Why?
Because that is the way you get the most "bang for your buck".
Surprise is the order of the day! "Devaluations always happen by
complete surprise as to exert maximum leverage effect."
It matters not one iota how well you do in the stock and bond markets leading
up to the reset. Neither does it matter what
the "gold market" does between now and then. The ONLY thing that
matters is how you are positioned on that one - fateful - day! Everything
will be reset and surprises will abound.
Some of the entities that you think most deserve to be wiped out will turn
out to be the BIGGEST beneficiaries of this "overnight" transfer of
wealth. And others who thought they were fully hedged will be wiped out.
These are the kinds of surprises I expect. I am truly in the mode of
"expecting the unexpected" with a timeline shorter than a normal TV
season. ;)
Call me contrarian. But please don't call me a "doomer". I do not
view this as doom. I realize the difference between the monetary system and
the real economy. I recognize the difference between real capital and
illusory wealth. The current monetary system is like a virtual grid, an
electronic parasite overlaid on the real world. It can completely vanish and
leave the real world totally intact. I look forward to a new beginning for
the entire system. A healthy start like we have not seen in generations.
This reset is not
something I am pushing for. It is not something I even wanted a mere year and
a half ago. Instead, it is what I see as inevitable. Yes, many will be hurt
and I will mourn their losses as some of my own loved ones are not well
prepared. But what can I do more than I am already doing? We cannot fight the
inevitable. We can only prepare.
Some have said that I am only viewing the forest and not the trees. That I do
not care for the individual trees that will be engulfed by the forest fire. I
do care, and this is why I blog.
There is NO SOLUTION that will save everyone's dollars. There are simply too
many of them. There is NO SOCIALIST PARADISE. There is only reality and,
living in it as we do, we must each walk our own Trail into the future.
Perhaps I am wrong and this fateful day will come later than I expect. I hope
I am wrong. More people will make it to the safe harbor in the meantime. But
do I venture out into the open sea while I wait? No, I remain moored to my
anchor.
So call me contrarian, but follow the consensus voices out into the choppy
waters at your own peril.
Supplemental
reading:
What did the top central bankers of the world know and when? This is an
excellent forensic examination of our monetary leaders. One has to wonder, if
this much was known at the top level of central banking, shared, published
and ignored by those with the most power, what preparations were made by the
central bankers that did not ignore the warnings?
The Man Nobody Wanted to Hear
DER SPIEGEL
What do you give the leaders of the free world in a gift bag? What if they are
sitting around talking about money? Why... gold coins of course!
G-8 Leaders To Receive Gold Coins
AP
United Future World Currency
Disclaimer:
The above is presented for entertainment purposes only and in no way
constitutes financial advice. Please consult with a REAL financial advisor
before making any rash decisions. They will probably direct you to some of
the new and improved securitized investment vehicles. Yes, they will pay you
interest, until they default and you lose your principle or until the whole
darn thing is toilet paper. But then again, I am not a financial advisor so I
probably don't know what I am talking about. Remember what they say,
"gold is not a financial investment because analysts cannot value it
because it does not pay interest". I couldn't agree more!
Sincerely,
FOFOA
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