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Tag Archives: debt

  • Insider

    A Tower of Debt Begins to Lean

    How to protect your wealth & integrity through the coming chaos
    by Chris Martenson

    Friday, November 1, 2019, 11:04 PM

    16

    Executive Summary

    • The debt bomb waiting to explode is truly staggering in size
    • Key warning signals we’re approaching a late cycle market crash
    • The Fed’s aggressive actions belie its fear that the system is extremely sick
    • How to use the time left to be on the right side of the coming wealth transfer

    If you have not yet read Part 1: The End of Money , available free to all readers, please click here to read it first.

    The Fed is now flat-out lying to us.

    Jerome Powell insists that the Fed is not printing more money, is not engaging in QE, and is not directly intervening to make stocks go higher in price. But none of this is true.

    In addition, the Fed has reversed course and is steadily cutting rates.  This even as the employment and wage data (if you believe them) have been strong of late.

    So what gives? What could be causing this?

    Hundreds of billions of dollars, printed and injected at a faster pace than in the depths of the Great Financial Crisis is not exactly a comforting sign.

    I am quite certain that something very big is very broken in the background.

    Deutsche Bank might be failing.  That’s a distinct possibility here.  Or it could be massive funding flow reversals from… (Enroll now to continue reading)

     

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  • Blog

    The End Of Money

    Prepare for the coming wealth transfer
    by Chris Martenson

    Friday, November 1, 2019, 11:03 PM

    19

    Today we live in a bifurcated economy: it is boom times for some and bust times for others.

    Your personal situation depends largely on how close you fall on the socioeconomic spectrum to the protected elite class, towards which the central banks are directing their money-printing firehoses.

    Why should we care about this bifurcation? History.

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  • Blog

    It’s The Pace Of Change That Kills You

    And it has now sped up beyond our means to control it
    by Chris Martenson

    Friday, September 6, 2019, 3:39 PM

    44

    The Powers That Be, like central bankers and politicians, are only human. They err. They have to operate with imperfect information.

    But they are also mostly untrained in systems thinking, resource limits, and other such necessary fields — which they could correct for if they cared or dared.

    But they aren’t. And because of this, the pace and the scope of the changes happening are beyond their powers of comprehension, let alone their powers to fix.

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  • Blog

    The Hard Truth

    Why hard assets are so important given the current state of global markets
    by Chris Martenson

    Friday, August 9, 2019, 5:33 PM

    56

    If you prefer to listen to this article, read by its author Chris Martenson, click the player here below: | Download | ___________________________________________________________________________________ It’s very easy to get sucked into the mini dramas playing out across our digital screens. Trump Tweeted this while the stock market did that. Uh oh! Somebody’s experiencing something awful, or…

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  • Podcast

    Tali Sharot: Overcoming The Optimism Bias

    How to wake society up to the big issues we collectively face
    by Adam Taggart

    Thursday, July 25, 2019, 5:23 PM

    10

    Are humans wired to deal with the kinds of existential threats facing society today? This is not just an intellectually-interesting metaphysical question. The answer may well determine whether our species makes it to the next century or not. As PeakProsperity.com readers know well, humans’ relentless pursuit of ‘ever more’ growth is finally slamming into the…

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  • Blog

    We’ve Arrived At The End Of The Road

    Decades of central bank intervention have left us with an unavoidable insolvency crisis
    by Adam Taggart

    Friday, July 19, 2019, 6:33 PM

    18

    Our debt-exhausted economic system has reached a point of terminal instability. This article provides a brief overview of the causal factors leading up to this condition. The article is followed by an in-depth video presentation featuring predictions and advice from a team of economic, financial and legal experts. When Richard Nixon closed the gold window…

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  • Blog
    Black Swan Event

    Waiting For The Black Swan

    War with Iran would be the beginning of the end
    by Chris Martenson

    Friday, June 14, 2019, 2:38 PM

    31

    Two more tankers were attacked near the Strait of Hormuz on Thursday morning  (6/13/19) in the Gulf of Oman, and if hostilities advance we could be facing a ‘black swan’ event. One that changes everything, and divides the world into ‘before’ and ‘after’ periods.

    A lot of us are waiting for ‘something’ to happen. We know that there are too many unsustainable trends and practices running and we fall into the “let’s just rip the Band-Aid off” camp.   Some, like myself, have lost faith in the political leadership and institutions and doubt they retain any capacity to attend to anything more than their own selfish interests, let alone manage the difficult tasks ahead rooted as they are in systems theory and managing complexity.

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  • Insider

    Off The Cuff: Into The Abyss

    The Fed's actions are quickly becoming the trigger that will blow up the system
    by Adam Taggart

    Thursday, June 13, 2019, 6:56 PM

    8

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

    • The Fed’s Desperation
      • It’s just playing for time at this point
    • Why Lower Rates Will Blow Up The System
      • ZIRP/Negative rates create all sort of perversities
    • Italy Threatens To Revert To The Lira
      • Is the Eurozone about to break up?
    • Bad Corporate Debt Is The Ticking Time Bomb
      • There’s simply way too much of it now

    In this excellent analysis, John does an exceptional job clarifying the unique point in economic history in which we live. The Federal Reserve is truly out of ideas at this point; it is simply playing for time until the system breaks:

    The point in the cycle where we are now is a really unusual time to talk about lowering interest rates. Normally when the labor markets are this tight, and wage inflation is running around 3% which it is right now, the Fed is usually tightening. Wage inflation is a kind of inflation they understand. This is as opposed to stock prices going up, bond prices, or house prices going up. That is inflation, but they do not count it as inflation. When wages go up, they usually start raising interest rates. It is really telling that they are seeing things that lead them to maybe start easing again even with the economy, in theory at least, still growing ten years into the beginning of an expansion.

    I think they are recognizing the fact that the world – not just the US, but the whole global financial system – is so highly leveraged that any kind of downturn becomes systemically risky. In other words, a 20% drop in stock prices which is the definition of a bear market is something that happens all the time at least historically. This time around, it might knock down other dominos in a way that is uncontrollable. This is just because there is so much bad debt out there.

    When you take on huge amounts of debt, by definition a lot of it has to be bad debt. Usually the good credits have already done their borrowing. If you are going to expand that beyond that point, you are going to have to work your way down into the barrel to the bottom of the barrel. That is where we are now. A lot of people who have borrowed money cannot pay it back. They are only hanging on because the economy is growing and because their paychecks are there. If you take that away, then Boom!. The system starts to fall apart.

    These guys know that at the Fed. They are trying to delay the inevitable easing because they know that interest rates are already so low. The European Central Bank and the Bank of Japan never did get to raise interest rates. The Fed only got to raise interest rates a little bit, which means they have no ammo going into the next recession. Normally the Fed will cut interest rates by about 5 percentage points from peak to trough. This is as a way of reinvigorating the economy during a recession. If they were going to do that now, we would be at negative 2 or 3% on the Fed funds rate. It would be more deeply negative for Europe and Japan. That is uncharted territory.

    What the Fed is doing now is using words. They are trying to talk the market up. It works (for now). Whenever they announce the possibility of easing or the cessation of tightening, you get a nice pop in the stock market. They are hoping that they can elevate asset prices until the China trade deal gets signed and until the turmoil in the Middle East has settled. That will also give the markets a pop, and that will keep the economy growing for a while. It will allow them to raise interest rates another couple of percentage points at the short end of the spectrum to give them ammo for the next recession.

    They really do not want to start cutting right now. From here, they really do not have much room to cut. I think it is highly unlikely that they are going to get what they want. In other words, it is an economy that grows for the next three years and allows them to raise the Fed funds rate to 5 or 6%. That is really, really unlikely in the scheme of things. They are going to be forced in the recession that is probably imminent just because the expansion has been going on for way longer than a normal expansion. It is going to run out of steam pretty soon. They are going to be forced to cut interest rates to zero and beyond.

    That is why Powell was talking about that. Now he is talking about the effective lower bound of interest rates which is below 0%, we found out in this last cycle. We do not know how far below zero it is. That is what we are going to find out this time around. In other words, how negative can you make interest rates before it becomes the problem rather than the solution? From an economic theory standpoint, that is fascinating. That is the kind of experiment you never expect to see in the real world. We are going to do it this time.

    We are going to find out what the absolute lowest level interest rates can go to before it blows up the system. I do not use the words “blow up” lightly. That is what could really happen when interest rates get down to that point, and it turns out they do not work. Then it is game over.

    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.

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  • Podcast

    Turd Ferguson: The Highs In Gold Are Ahead Of Us

    The reasons to own it never changed & are now more important than ever
    by Adam Taggart

    Tuesday, June 4, 2019, 6:52 PM

    11

    With the world re-entering a period of greater economic instability, with the central banks painted into a corner, with global stocks looking weaker by the day, the price of gold is starting to shine again.

    The yellow metal has recently hit all-time highs priced in a number of world currencies (the dollar not among them…yet).

    Is this a short-term result of ‘risk-off’ fever as the markets have stumbled, to be undone during the next rally in stocks? Or are we seeing the beginnings of a more fundamental re-pricing of gold (and silver), as investors wake up to the currency risks created by more than quintupling the world money supply within less than a decade while simultaneously buring the economy under trillions of newly-minted debt?

    Craig Hemke, better known by his nom-de-plume, Turd Ferguson, explains why gold looks like it finally has a brighter future ahead.

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  • Insider
    Downturn

    Why The Next U.S. Recession Will Be Exceptionally Painful

    Our enormous & unserviceable debts are going to crush us
    by Chris Martenson

    Monday, June 3, 2019, 2:29 PM

    16

    We all know another recession is coming at some point.

    Economies are cyclical. Bust always follows boom in the same way the moon follows the sun.

    We very nearly had a recession in early 2016. I remain impressed how it was averted then by the application of tremendous amounts of newly-printed-from-thin-air money.  It took several trillions of dollars globally, but it worked (if we can call enabling the global economy to take on additional $trillions in debt that will never be repaid ‘working’)

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