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More Liquidity on the Way

Monday, October 25, 2010, 5:07 PM

The most anticipated announcement of the year - perhaps too anticipated (sell the news?) - will answer the question, "How much new money will the Fed decide dump into the situation at their next meeting?"

Estimates range from a low of $500 billion to as high as $4 trillion. In the middle of the range is Bill Gross of PIMCO, who thinks the Fed needs to buy around $100 billion a month of US Treasuries (effectively monetizing the entire US deficit next year), while the high end is claimed by Jan Hatzius of Goldman Sachs, who makes the case that the Fed's own "Taylor Rule" requires them to buy $4 trillion if they wish to close the apparent gap that exists between that rule and economic reality.

What began as a temporary rescue operation by the Fed and the feds to try and perform a normal Keynesian jump-start operation on the economy is now a permanent fixture without which the markets cannot operate.

» Read more

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The Fed's Dangerous Game

Monday, October 18, 2010, 5:08 PM

With Fraudclosuregate picking up steam and threatening to shut down the US housing market for a while, or at least throw a double handful of sand into the gearbox, the Fed has gone on an all-out propaganda war to try to convince everyone that "inflation is too low" and that such a perilous state justifies another gigantic round of thin-air money printing.  Yes, they call it "quantitative easing" to try and inject a note of academic rigor into the conversation, but we can just call it what it is:  money printing.

Hardly an hour goes by without the airwaves being inundated with another Fed official making another statement about the "too low" inflation and what we need to do about it.

» Read more

Insider

The Impact of Thin-Air Money

Saturday, October 16, 2010, 11:52 AM

This past week was a wild one.  Gold and silver broke out to new highs, the dollar weakened, China's grumblings about the dollar's value took on new urgency, and the Dow held at over 11,000 (although another $4.69 billion thin-air money injection on Friday might have helped some).

How do we make sense of all this?

Unfortunately there are no compelling fundamental reasons to support what we are seeing unless you consider thin-air money printing, or the promise thereof, to be a fundamental driver.  While I understand how the various Wall Street gamers can consider front-running new Federal Reserve monetary excesses by piling into risk assets, trying to participate in such activities is raw speculation at best, and blind gambling at worst.

» Read more

Insider

Future Chaos: There Is No "Plan B"

Wednesday, October 13, 2010, 11:27 PM
Wednesday, October 13, 2010

Executive Summary

  • Perception will drive the market shift.
  • Awareness of Peak Oil is still low but spreading rapidly.
  • The military is mobilizing, but civilian government is AWOL.
  • The Post-Peak transition will be more chaotic than it need be.
  • We have time to prepare (but not much).
  • Taking informed action now is critical.

Part I

If you have not yet read Part I of this report, please click here to read it first.

Part II

It's All About Perception

On my plane ride back from DC, I happened to sit next to an insurance professional who was chatty.  After hearing about his washed-out business trip to the Cayman Islands, I told him about my work and the ASPO conference I'd just been to.  He'd never heard of Peak Oil before.

When I encounter someone who has not heard of Peak Oil, I experience the same sense of disorientation as if they said they had never heard of 9-11.  The only difference between the two is that Peak Oil might have much larger and even more devastating effects.

The good news is that this reminds me that we are further away from the tipping point of awareness than I sometimes think, (hopefully) providing us with an extra year or two or preparation time.  The bad news is that when the tipping point arrives, it will do so all at once, and probably with more disruption than if people had been allowed to more slowly internalize the implications and reality of vastly higher oil prices.

As we explored in the previous report, it's not the fundamentals that will finally lead to the shift, it's perception.  Right now, on a fundamental basis, there is every indication that a liquid fuel crisis is imminent.  Perhaps the data is wrong and will be corrected, or perhaps a massive discovery will change the game, but right now our best information is that depletion and demand are going to swamp supply in the near future.

Insider

Currency Wars Continue

Monday, October 11, 2010, 11:49 AM

I admit, there are certainly some very interesting things unfolding over in the mortgage world, but as much as I think they are important and worth following, they are not the greatest risk we face at this time.

The mortgage fraud mess has the potential to trigger for the next down-cycle, but it's not going to supply the majority of the fuel for the next conflagration.

For that we need to keep our attention riveted upon the looming currency wars.

This weekend at the IMF's annual meeting, the world's economic leaders tried to iron out some differences on the subject of currency manipulation and debasement.  The bottom line is that everybody wants a cheaper currency; practically all major countries are actively pursuing cheap-currency policies.  And tensions are building.  Here's how the US press described the outcome:

» Read more

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Live Update From ASPO

Friday, October 8, 2010, 8:56 AM

I am learning so much at the ASPO conference that I thought I should just 'stream' it along to you as I learn it.  While I could sit on it for a while and work it into more polished content, I think that getting it to you faster has its benefits.

One of my greatest joys here is meeting all the enrolled members and Crash Course admirers in attendance.  I love being able to put faces with screen names.  I would like to find more chances to do this somehow.

At any rate, what follows will simply be stream-of-consciousness writing from my time here.

Insider

Our Destructive Tendency to Print (or, Why the Markets Bolted Yesterday)

Wednesday, October 6, 2010, 2:15 PM

Stocks soared, bonds caught a huge bid, and commodities of every description took off - grains, energy, metals, gold, and silver.

What happened?  Was it suddenly determined that everything was worth more all at once?  No, what happened is this:  The markets are figuring out that what we have been predicting here for several years is, in fact, the direction in which the world is actually headed.  Printing is being selected over austerity. » Read more

Insider

A New Arrival

Monday, October 4, 2010, 12:35 AM

I have some happy organizational news to share today, and as a valued enrolled member, you're hearing it first before we announce it to the site at large. Our small staff here at Martenson Central welcomes our first general manager, Adam Taggart. » Read more

Insider

Prediction: Things Will Unravel Faster Than You Think

Friday, October 1, 2010, 4:26 PM

Prediction: Things Will Unravel Faster Than You Think

Friday, October 1, 2010

Executive Summary

  • We do not live in a linear world
  • Complex systems are inherently unpredictable (sort of)
  • Accepting "what is"
  • Banking on perception
  • The dawning of awareness of Peak Oil, sovereign insolvency, & currency debasement
  • Hope alone is a terrible strategy
  • What you should do

Part I

If you have not yet read Part I of this report, please click here to read it first.

Part II

Banking On Perception

When it comes to markets riding on a flawed fundamental premise, perception is everything.  

Consider that in December of 2007, the world had plenty of food, but by February of 2008, we saw food riots and the international perception of food scarcity.  Almost nothing had changed with respect to the fundamental quantities of food stocks between December and February, and that's the point.

Or consider that one month Iceland was in fine shape and the next month desperately broke.  Ditto for Greece.  Again, there was nothing that had fundamentally changed from one month to the next, in terms of cash flows or debt levels, that would justify the size of the adjustments, but they happened nonetheless, and they happened quickly. 

Insider

All-Out Currency Wars

Tuesday, September 28, 2010, 12:41 PM

The currency wars have begun, and the implications to world stability and wealth could not be more profound. Fortunately, all of my long-time enrolled members are prepared for this outcome, which we've been predicting here for some time.

When pressed, the most predictable decision in all of history is to print, print, print.  So I can't take credit for a 'prediction' that was just slightly bolder than 'predicting' which way a dropped anvil will travel; down or up?

The only problem is, widespread currency debasements will further destabilize an already rickety global financial system where tens of trillions of fiat dollars flow daily on the currency exchanges.

Here's a recent sampling of news items demonstrating the fever pitch that is being built:

» Read more