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Off The Cuff: When Does The System Break?

Where's the line where inflation will become hyperinflation?
Wednesday, February 20, 2019, 1:13 PM

In this week's Off The Cuff podcast, Chris and John Rubino discuss:

  • When Does The System Break?
    • When will (hyper)inflation become the greater risk?
  • When Will The Central Banks Lose Control?
    • Their intervention is becoming increasingly desperate
  • Recession & Debt Exhaustion
    • These are limits that can't be 'printed away' forever
  • The Rise Of Authoritarianism
    • More countries are giving the State more power

One of the most frequent questions we're asked here at Peak Prosperity is: When does all this blow up? When do the sins of the past -- rampant debt/deificit spending, monetary meddling, cronyism, lies & propaganda, resource despoilage -- catch up with us and force a day of reckoning?

Well, in this week's podcast, Chris and John Rubino bravely attempt to answer. Their conclusions aren't pretty; it's better we be forewarned of the risks than slam into them blindly.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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You vs The Recession

To fail to plan is to plan to fail
Friday, February 8, 2019, 6:23 PM

Executive Summary

  • The limits to central bank money printing
  • The key indicators signalling recession
  • The growing fractures in the US economy & housing market, Europe, China & global trade
  • Stepping out of the recession's path

If you have not yet read Part 1: Next Stop: Recession!, available free to all readers, please click here to read it first.

Here in early 2019 the central banks have already caved to the market’s December 2018 weakness by printing more money, softening their plans for reducing their balance sheets and delaying the already timid schedule for introducing new interest rate hikes.  They are panicking early and often and seem inordinately afraid of any sort of downturn in stock prices, which is a concerning matter in itself.

So our asterisk on this claim of ours that a recession has arrived is contained in the phrase “until and unless.”  Until and unless the central banks reignite their QE booster rockets, and do so in larger-than-ever quantities, and do so by giving money to the common people (not the banks), we think that the die is cast.  The recession has arrived. 

Perhaps we should introduce a second idea which is contained in the phrase “they can until they can’t.”  The central banks managed to get a bounce in the equity markets through a combination of easing financial conditions, as they say (i.e. throw more money to the markets), and jawboning. 

This was sufficient to get a relief bounce in equity and bond markets, but it did nothing to alter the many recession indicators we’ll track for you below.  The central banks can still move the markets with their words and deed.  Someday, perhaps soon, it will be shown they can’t.  They can move markets until they can’t.  Other such times of the central banks being overwhelmed by the movement of the market tides were in 2000 and 2008.

What sorts of things could or will swamp the levitating effects of money printing?  One is a full-blown recession that ends up crushing the various crevices that central banks cannot directly control via printing such as real estate, consumer sentiment, and zombie companies’ ability to meet debt payments.

Another is a deflationary event that sweeps across overleveraged debt markets and causes the very worst sort of damage to a debt-based money system built on leverage; a decline in the amount of credit outstanding from one period to the next.  In other words, another 2008-2009 type of event.

The central banks can control things until they can’t.  That’s what history says.  Perhaps something more fundamental has changed since that allows them more complete control than ever, and perhaps we should always have a few of our chips placed on that possibility, but otherwise it’s not different this time and the central banks will once again discover that credit bubbles are really fun on the way up and utterly destructive on the way down.

We think the next recession has arrived and that it’s going to be a real doozy in terms of creating financial market panic and losses.

Specifically, you need to watch out for... » Read more

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Off The Cuff: Further Exploring Our Collapse Trajectory

Chris builds on the insights of his recent report
Thursday, February 7, 2019, 2:57 PM

In this week's Off The Cuff podcast, Chris speaks on:

  • The Immorality Of Central Planning
    • The banks are stealing our future
  • The Poor 99.9%
    • The system is now geared solely for the 0.1%'s interests
  • Our Money Or Our Lives
    • The real damage is happening across our critical ecosystems
  • This Will End
    • Remember that collapse is a process. And local mileage may vary.

Chris recorded this podcast shortly after completing his recent report on the in-process collapse occurring in the key systems around us. Economically, envrionmentally, socially -- it's happening everywhere. Chris spend an hour exploring the collapse dynamic further, ending with this succinct prediction...

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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iForexBlog.com

Off The Cuff: A Brightening Future For Gold?

It's finally breaking out of its consolidation phase
Thursday, January 31, 2019, 2:49 PM

In this week's Off The Cuff podcast, Chris and Mike "Mish" Shedlock discuss:

  • The Complete Sham of Corporate "Earnings"
    • Now an art of putting lipstick on a pig
  • The Growing Revolt
    • Everywhere you look, the Establishement is being increasingly questioned
  • The Empire Digs In
    • More, and more secretive, measures are being past to protect its advantage
  • A Brightening Future For Gold?
    • It is finally breaking out of its consolidation phase?

The price of gold has long been in a consolidation phase, and it now seems to breaking out to the upside. There are both fundamental and market-driven reasons for this.

On the fundamental end, supply is becoming a real issue. And with the Powell Fed completely caving to the markets, expectations of a more 'dovish' Fed policy going forward is also adding wind to gold's sails.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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Facing Reality

Only those willing to see things as they are will prosper
Friday, January 25, 2019, 9:19 PM

Executive Summary

  • We are fighting (i.e. losing against) exponential functions on multiple fronts
  • Social unrest (e.g. Yellow Vests) is a spreading symptom that collapse is accelerating
  • Which path will collapse take?
  • Preparing for the future of "Less"

If you have not yet read Part 1: Collapse Is Already Here, available free to all readers, please click here to read it first.

The reason I write and speak and sometimes travel to talk about The Three E’s – the Economy, energy and Environment – is because I hope to reach those who are ready to listen…and to then act.

Typically, I find that I am reaching people with a certain level of economic and professional success in their lives (many doctors, engineers, architects and lawyers in my audience) and who have the entirely-too-rare ability to face difficult information square on.

One of the more important principles concerns exponential growth, which has a nasty habit of speeding up towards the end.  Those numerate among us grasp the serious implications of exponential growth quickly and easily. The rest of us have to work a lot harder to understand, which is why most of the masses never do.

In the world of finance, exponential (or parabolic) growth always ends badly for the last investors in. Just ask those who bought into dot-Com stocks or Bitcoin near the highs.

However, where any of today's inflated prices go from here is not subject to traditional analysis.  Everything depends on the actions that the central banks will take from here.  Will they print more?  Undoubtedly. 

How much more suppression of the price of gold will the authorities demand?  As much as necessary to keep unwanted attention off of their policy errors.

Looks, what I’ve learned from investing is(...) » Read more

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Off The Cuff: The People Are Rising Up Against The Elites

The working classes have hit their breaking point
Friday, January 25, 2019, 11:12 AM

In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:

  • Class Warfare
    • Growing tenions between the rural/worker vs urban/financier classes
  • Why The Yellow Vest Movement Matters
    • It represents a populist anger brewing around the world
  • Financialization & Globalization Are The Disease
    • They give the elites tremendous advantage over everyone else
  • The Empire Is Striking Back
    • The global establishment is squashing unrest by every means it has

Chris continues to track the Yellow Vest protests across France Europe because it's representative of a populist ire festering around the globe. Decades of financialization and globalization have created a parasitic elite class that is bleeding the working classes dry.

France is emerging as ground zero for a rebellion against those elites. And the Establishment Empire is doing all it can to suppress the movement before it catches fire in other countries, as it is already threatening to elsewhere in Europe. How soon until we see folks don their own yelow vest in the US, UK, Canada and Australia?

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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Off The Cuff: The Flip-Flop Fed

Powell suddenly starts singing a dovish tune
Thursday, January 17, 2019, 9:01 PM

In this week's Off The Cuff podcast, Chris and Axel Merk discuss:

  • The Fed's Flip-Flop
    • Powell suddenly starts signing a dovish tune
  • Which Risks Are The Ones Most Worth Watching
    • Not all risks are created equal
  • Corp Profits vs Wage Inflation
    • Why does the Fed value one and hate the other?
  • Outlook For Gold
    • Looking better and better

Our resident Fed expert, Axel Merk, does his best to interpret the abrupt capitulation Jerome Powell has recently demonstrated.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more

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AFP

France Yellow Vests Protests: Act IX

Violence between the State and the People is escalating
Monday, January 14, 2019, 6:29 PM

This past Saturday (1/12/19) more Yellow Vest protests in France broke out.  The protests always happen on Saturday, and because this was the ninth one it's being called “Act IX.”

More violence occurred, and the police are becoming more and more draconian and brutal in their responses.  Many injuries have happened among the protestors, a lot of them quite serious. Tempers are fraying all around. » Read more

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A Bust For The Ages

Much less oil than expected = much less Everything
Friday, January 11, 2019, 7:48 PM

Executive Summary

  • In short, we've been lied to about the production potential of America's shale wells
  • Huge decisions have been made based on the (faulty) assumptions we've swallowed
  • When it's finally clear than much less is going to be available (and at a higher price) all hell will break loose
  • The choices we make right now will determine how bad the reckoning will be

If you have not yet read Part 1: The Shale Oil 'Revolution' Actually Reflects a Nation in Decline, available free to all readers, please click here to read it first.

The reason I keep bringing us all back around to the energy situation is because it’s so critical to, well... Everything

To make good decisions, you have to be armed with good information.  That’s not easy to find these days, especially in the US where we are saddled with a massive propaganda campaign when it comes to energy.

It’s aim seems to be to convince everyone that there’s nothing to worry about. It's a near-constant barrage of these sorts of talking points and ideas:

  • The US is the new Saudi Arabia
  • The US is hitting new production records each month
  • The US is now a net exporter of oil for the first time in 75 years
  • Technology has improved so much that shale wells can now break even at $40/bbl oil prices.

And so on.

The problem with this sort of messaging is that the statements all need a couple of giant asterisks next to them, with some heavy explaining attached to add critical missing context.  They're misleading, at best. And collectively inaccurate.

If you buy into these stories, you'll probably make the wrong choices.  When, not if, but when the US enters the next phase of the oil story, it will all be over.  There aren’t any new source rocks to go after. 

I think we’re just a few years away from that decline phase, which means we don’t have a lot of time to prepare for what is certain to be an ugly period of adjustment. 

As I wrote in Part I, the WSJ has finally managed to run some basic numbers and discover that the shale story has been over-hyped by the operators.  It’s quite a fascinating tale, one that we are quite familiar with at Peak Prosperity.

These companies committed quite a few frauds along the way, each of which contributed to over-estimating how much oil (referred to in the industry as the "EUR") that would come out of an average well, which include:

  • Claiming much lower than observed rates of decline (5% vs ~15%)
  • Using a tiny cluster of highly prolific wells to represent the entire play
  • Excluding really crappy wells entirely from the calculations for the “average”
  • Using ridiculously long estimates of well life (50 years when there are already wells tapped out after 10 years in some cases)

These are way beyond simple analytical differences and amount to overt fraud.  Okay, fine, caveat emptor to the investors, right?

Well, the problem here is that the US generally, and major corporations as well as individuals specifically, have bought the story hook-line and sinker and made big, long-term decisions based on these frauds.  Ford dropped selling sedans in North America to focus on selling trucks and SUVs, the US government rolled back plans on fuel standards, and individuals bought pickup trucks and/or SUVs under the theory that gasoline would always be cheap.

At a minimum, you should not be invested in.... » Read more

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Off The Cuff: A Matter Of Desperation

The Powers That Be are out of options that work
Friday, January 11, 2019, 1:59 AM

In this week's Off The Cuff podcast, Chris and James Howard Kunstler discuss:

  • Zig-Zag Markets
    • There's a war going to keep prices propped up
  • A Matter Of Desperation
    • The central planners are out of tricks
  • The Masses Are Getting Angry
    • And are turning their ire on those in control
  • Our Broken Political System
    • Furiously focusing on all the wrong issues

Jim Kunstler returns to share his views on what's ahead in 2019. Like Peak Prosperity, he sees the coming year as one when the forces of reality start to re-exert themselves after a decade of magical thinking.

Those in control of the system have juiced it as hard as they could for as long as they could, and now the limits to that 'extend-and-pretend' era are quickly becoming visible. And the bottom 99% is beginning to realize that not only was the "prosperity" of the post-GFC recovery largely fraudlent, but what there was of it went as spoils to the elites. Expect further social outrage like we're currently seeing in France to boil over into many other countries in the coming months.

Click to listen to a sample of this Off the Cuff Podcast or Enroll today to access the full audio as well as all of PeakProsperity.com's other premium content. » Read more