Robert Prechter - Economic Crisis - Part 2 of 2

[deanmat]

Dis he say these things would happen "between now and the end of 2010"?

[ANTIDALLARD]

See, I think that there is a danger of viewing a country purely as an economy. But it is also a society, and when your govt invests in people, and communities, everyone will benefit. I know the dangers of pouring money into a bottomeless socialist pit, but social investment can bring a big dividend in finacial and social terms, when done right.

[FreeTheNation]

certainly with regards to power grids and the like. The problem we have in the US is that INSTEAD of investing in the grid, to secure the border from illegal workers, etc....they have chosen to invest in wreckless social programs and growth of government. The money has been wasted on fraud and corruption and now we are left with over 100 trillion dollars of debt.

I am of the opinion that it is now too late to invest further and payback time is arriving.

[ANTIDALLARD]

i wonder , how does Robert explain the success of the high tax / high spending, socio economic models of Europe.

[FreeTheNation]

On what grounds would you consider Europe a success??

[ANTIDALLARD]

Well, the nordic countrys are relatively unaffected by the recession. And Germany, France, Holland have not done to bad. The Thatcher / Reagan model of unrestrained, unregulated markets has imploded, and the phylosophy of investing in infrastructure, social services, health, and education seems to me to be the wisest.

[TeslaGenius]

@FreeTheNation Europe is not "success" but comparing to U.S. it's not failure either.

That still doesn't mean that European model is directly applicable to U.S.(even if one would be able to prove that European model is working well in Europe)

@ANTIDALLARD except for Norway (oil & gas rich country )all other Nordic countries were affected with crisis. I'm surprised that you as European doesn't know that.

[FreeTheNation]

@TeslaGenius

I would comment that Europe has inherited a world peace dividend, paid for by the US tax payer. I largely disagree with US foreign policy, since about 1990, but it has widely benefitted europe. Whether it was the US saving and rebuilding europe in WWII, securing your freedoms with an expensive arms race against communism, saving the world from an oil crisis in the early 1990's, etc, etc, Europe has been a huge benefactor with very little money spent.

[TeslaGenius]

FreeTheNation pls read once again my comment I hope you'll realize that I'm not convinced European model was even necessarily best for Europe. Like you've already indicated there were some other factors that have benefited European development that haven't probably anything to do with that model anyway. I just say that despite the models weaknesses it is still possible to have short term average results Even IF your model is arguably better

there are some other processes that count even more

[FreeTheNation]

@TeslaGenius @TeslaGenius

When I speak of success, I speak of total personal liberty. I have traveled to europe many times, and I love visiting. Many of my French friends, DESPISE their medical system, the unions, etc....and want to leave for the US. I have not yet met a US citizen who wants to leave for less freedom

[TeslaGenius]

@FreeTheNation we Europeans are sheeple.

Mental structure of limiting those liberties was built in each and every one of us for centuries. Long before you started to build the same.

I would say that (despite the fact that I was never in U.S) we haven't got the same idea of "personal liberty"

We Europeans are definitely crippled when it comes to that.

[FreeTheNation]

@TeslaGenius

I Love you guys....I just want to preserve the Constitution and see the US get back to the basics of Liberty. I don't like our Global "footprint" or the economic/social path we are currently taking.

[sugarraygras]

@TeslaGenius Especially those european countries with Monarchy. Those sheeple are subjects and not citizens so have no true bill of rights. Taking England as an example, I have oft been told that our rights are provisioned in law by the Magna cartre, however, I have never met anyone who has read it in its Latin form other than Lawyers. So what individual freedoms can you truly establish from a 700 year old book that you cant even read or intepret correctly if you could.

[lintburger]

Prechter has been right on with his take of economics as really socionomics, and I agree lots of things will need to deflate. Why is it impossible to believe we will not have inflation/deflation at the same time? Prechter even preaches buying gold and silver, quite a bit in fact. I read a lot and hold cash and PM's. Who's right? Who knows? Jim Sinclair is sayin gold will hit 5-6k, I trust him and I respect Prechter, I think if you look at charts gold does well in inflation and deflation.

[barleyLEGALdotCA]

Interesting, but I have a question. When Prechter says "deflation", is he talking about a decrease in prices? Or a decrease in the money supply?

I see people invoke both phenomena interchangeably, so often, I don't know what to think, most of the time.

[FreeTheNation]

Deflation is defined as a decrease in the money supply.

The effect of deflation is falling asset prices, such as real estate and commodities.

There are fewer available dollars, decreasing the available credit, which causes prices to fall.

The reason prices have to fall is because they were inflated, such as the NASDAQ bubble of 1996-2000 or the dow bubble of 2000-2007 or even the real estate bubble. The bubbles burst, the prices fall creating a shortage of credit which shrink the money supply

[barleyLEGALdotCA]

Thanks.

[anujbahl]

As brilliant as Prechter is, it's too bad he just never understood Gold. It's not just another asset. Unfortunately, this shortcoming has hindered him as a forecaster.

[herbs814]

all assets risk deflation as the US and the developed nations are in or slowly recovering from recessions (lower incomes) at a time they have also accumulated stubbornly large debts... and are facing demographic challenges (fewer private sector workers relative to government tax burdens or relative to retirees). the nations with the highest incomes have the slowest growth. the nations with the fastest growth have lower incomes and less access to global capital markets.

[Wejer3]

I must say that the idea appeals to me... Obama going to jail for violating the constitution :)

Anyway... if the US dollar was replaced with gold, none of these fiat-currency-problems would exist in the first place. Try to inflate/deflate a currency that is governed exclusively by market forces; it's not possible! Gold is gold forever - while the dollar's value goes up and down like a roller coaster...

[thinkladythink]

weje3, even if gold was standard money in the USA & world do you really think the worlds goverments would allow us to keep it in the long run..it was outlawed in the past..people were forced to turn it in for the dollar.. Do you realize why? a space rocket etc can't even get into the galaxy without gold wires..thats how important it is..so why wouldn't they want people to collect it for them..alls they have to do is force us to turn it in.They have no right throwing away our money, sneaky devils

[Wejer3]

"...do you really think the worlds goverments would allow us to keep it in the long run[?]"

That would depend on the states in it at that given time period, but as I see it, any given step in the right direction in the long run is worth pursuing.

"a space rocket etc can't even get into the galaxy without gold wires"

Perhaps this is the case at this one moment, which is no surprise since space industry is pretty much the least free industry right now, so progress is bound to be slow.

[thinkladythink]

several states want to Secede from the USA, but look at the strange things happening in those states since they brought the issue up, the idea of seceding from the USA is to help protect the people of those states from complete ruin and reputation of other peoples ideas,yet they seem to be living in a silent hell of sorts,people disappearing,strange crimes,strange demands of people against contitution,religion,and sickness in abundance, laws are being made of us in the UN without our opinions

[thinkladythink]

I don't see how you can say the space industry is the least free industry?they do all kinds of things without public opinions & knowledge,they just slammed a rocket into the moon looking for water?I wasn't aware of it until I a video afterwards,Is it not public funding they use? we only have one moon & I think we all should of voted on that?I respect science to a degree,but think sometimes they don't care enough about humanity,they look to live in space but fail to protect what we have

[Wejer3]

"I don't see how you can say the space industry is the least free industry?"

For a start, it is heavily regulated, and second, there are no property rights in space, so the only thing space engineering companies are doing at the moment is creating equipment for government space exploration agencies (such as NASA).

Nothing wrong with exploring space, mind you, as long as it isn't government funding it with money it takes from the taxpayers - It can all be completley voluntary donations.

[thinkladythink]

wejer3, is NASA not goverment owned? who ownes it? there is nothing wrong with space exploring true.. but if I build a rocket I wouldn't be allowed to launch it ..so certain groups have a Monopoloy on Space and its FREE skyways... space engineering companies are not what worries me..its Scientist worried more about How to move to Mars than How to keep the Earth safe.. they want to use global warming to warm up Mars..Are they tring to grow a Bio Moon with lumar samples? studies could destroy??

[Wejer3]

"wejer3, is NASA not goverment owned? who ownes it?"

Well, that was my whole point: the government takes taxpayer's money to fund space exploration, while this could just as well be done by private donations, without having to resort to theft.

[thinkladythink]

Agreed... and now many people seem to wonder if we are disposible money pits...we have sperm banks,and egg banks, and Bio everything moving into the USA mostly from India , its changing everything we know and believe in.. I saw a video of the space station that showed Bio products even in it..so we really do need to wonder alot..what technology is out to rule the world and who owns the rights to it..its beyond Theif..total Greed seems to stand out..it will be Lonely at the Top were the Fool sits

[Wejer3]

@thinkladythink - I am not sure exactly what you are talking about now. Please elaborate.

[thinkladythink]

I was agreeing with you then I got off the subject again..and into my own opinion

[thinkladythink]

I am concerned about Bio products taking the place of natural products.. and who the masterminds are ..behind it all ..

[thinkladythink]

wejer3, I was trying to say evreything is about money, and the money is being forfited by gold, and many of the products in the world are turning into Bio products....food ..seed .. medicane .. water... even life ...can be genericly altered .. its almost like its a race to collect all the money without care to natural life ..that already exist ..

[Wejer3]

Personally, I don't see the problems with genetically improving foods for our own benefit. However, it is ultimately the consumer that decides what he will or won't buy, whatever it is food, medicine, electricity or a vacation. So if you don't like GMOs, no one will force you to buy them - simple as that.

[Wejer3]

If I understand it correctly, Obama, thanks to his to great expansion of big government, has to get money from somewhere to run this whole apparatus, and I only see two sources:

1. Tax the americans heavily, or

2. Inflate the currency, by printing more money

1. would rob people of their money, then destroy it, while 2. would rob people of the *value* of their money, and thus indirectly destory their assets by inflation.

However, I dont see how any of these could lead to deflation ...

[FreeTheNation]

My understanding from speaking to Bob Prechter is that IN SPITE of all of this inflation, there are so many trillions of dollars in credit derivatives, bonds, notes, etc...that CONFIDENCE ONLY is holding up the system. He thinks that events will occur that will undermine this confidence and once that happens people will see that there isn't enough money to pay what they think is owed to them.

We saw the deflation last fall.

It is quite confounding

[Wejer3]

Well, that's what I don't understand... how "trillions of dollars in credit derivatives, bonds, notes" would lead to deflation.

Deflation, IIRC, is when the value of a currency becomes scarcer, and thus the value of the currency *increases*. The only really reliable way I can think of doing this would be to *physically* destroy it - and destroying money doesn't seem like a reliable way to pay ones debts.

By contrast, inflation -- taking on the printing press for money -- seems more likely.

[FreeTheNation]

Money can be destroyed in numerous ways:

1. Debtors don't pay - Hence the mortgage meltdown last year, which is far from over.

2. People lose confidence in the money supply. There is only 1 dollar printed for roughly every 552 owed. If people got nervous and ran on the banks FDIC would collapse.

3. Government promises to pay can not be met.

We are seeing this in California.

If deflation was as easy to stop as just printing money, it would never have happened at any time in history.

[thinkladythink]

it seems like our money is being destroyed because the goverment refuses to listen to the public.its Our Money they give to other countries.its Our Boys & Girls they send to other countries . its Our Factories that they give to other countries..its our Food they give to other countries..our PEOPLE are loosing their Homes,Jobs,Money, there is no War PLAN OFFERED to the public..WHY can't WE Vote on our MONEY issues..instead of congress & private parties..its OURS..is America running America?

[BringBackCapitalism]

This is the truth. It's incredible how confident people are given all that's going on.

[thinkladythink]

wejer3,the question should be How can we legally remove everyone that is blocking truths from the public?everyone that has put us in this mess,should be held accountable..JAIL..both parties past & present..that continue.without public aproval. NO More decissions should be allowed without a mandatory PUBLIC VOTE.you would hold an accountant responible if he threw away your money,& you couldn't even feed your family, the oil profits should belong to America,our Kids died in Vain,&they want more,NO

[mrblack97ram]

no buying the deflation argument? Where are housing prices at since 05? By the time this depression ends you will be able to buy a new car or truck for 10 grand....... Stay long the market sucker,

[special1740]

Bob Moriarty is arguing that when the derivative market will collapse, the dollar will lose its value entirely and then gold will take over as currency, b/c it can be used for barter.

I don't know...

Anyone have any different opinions?

[ednan9]

Conqueror the crash for congressman and senator? lol....its a tough book with complex graphs and charts, govt is too dumb to understand it

[marnevivek]

Prechter is the KING !!!!

[mainesprocket63]

Thanks for posting this interview. A point that Bob didnt touch on is what will happen when the dollar puts in a bottom. The dollar is heavily shorted so as shorts cover the dollar goes up and as the dollar goes up the markets go down and investors sell. Essentially a snow ball effect will start. US banks hold over 187 trillion in derivatives, it's a mind boggling black hole of leveraged worthless bets that powered our prosperity for the past 15 years. The system is rotten to the core.

[imigrantpunk]

Thanks for the upload!

I think that the next major development will be deflation. maybe not to the extent that Bob is predicting, because the govt will try to soften the landing by printind and "stimulating"

[luvzpalin1]

THANK YOU GUYS !!!!

[FreeTheNation]

It's the thing that drives me crazy more than any other subject. Prechter's view deserves respect because he called it 7 years ago. I also respect Peter Schiff....hence my problem.

[haveabeer123]

ditto...

I think Bob is short term and Pete is long term... watcha think?

bc they both agree on possible hyper inflation and gold as reserve currency... Bob is just not as emphatic as Peter about it, he rather wait and see whereas Pete already sees it happening...

[30percentplusreturns]

Obama and Bernanke are disasters. I think there will be hyperinflation. Obama has no shame in destroying this republic and to even trust this government you have to be delusional. Im not buying this massive deflation argument.