I think we should call our current crisis The Great Default because that is exactly what we need and should do. PS. I think your the only one who really knows what is going on. Keep up the great work!
when people stop calling people like David Icke "crazy" and start noticing the scope of the plan to destroy us (well, most of us), THEN we might have a chance. Congress ain't gonna do shit. Obama aint gonna do shit. They are hamstrung by the Fed and the people that own the Fed.
It's amazing that Karl can be so spot-on without ever seeming to touch on the energy side of things. I arrived at much the same conclusions from my study of peak oil. Given the rate at which energy supplies are contracting, any stimulus money is going to create an unsupportable amount of demand, causing energy prices to consume the stimulus money, creating a bigger disaster. Oil production peaked in 2005 at 73.8 mbpd. For every day since then it has averaged 73.5 and is now falling rapidly.
I agree there is absolutley no conversation of the confluence of Peak Oil and the current Global fiscal crisis/depression. These are Siamese twins, yet as Richard Heidenberg says the talk will about bankruptcies, unemployment, foreclosures and NOT about a Global Peak in liquid energy.
BTW I has some hope with Pickens Plan, but I think T Boone has given up as the situation is hopeless and decided not to waste anymore of his money or time for fellow humans who are determined to go over the cliff
Thanks for taking the time to provide all the info you do. I find your daily ticker very informative and helpful when it comes to the financial fiasco we are experiencing.
This whole fed/dollar/bond ponzi scheme started to unravel in October but , unlike Madoff , the fed gets to reload with more borrowed money to keep the scheme alive ! One thing about ponzi schemes , no one knows when they will unravel , Madoff's lasted for quite a few years , but unravel they will !
The more i read about the federal reserve the more it sounds like a big ponzi scheme themselves. Thanks for your up to the minute market ticker and video updates. You're awesome!
I have essentially no confidence in the "value" of a dollar because it is dependent full faith and credit, etc. When (not if) a lot of the public begins to suspect the same thing, the dollar is cooked. Isn't that what will result in hyperinflation? This despite my agreement with all of your other points?
.... Hence, you get hyperinflation despite lower real (that is, real as divorced from the incredibly devalued currency) prices for goods and services. I'm trying hard to understand these things in order to position myself and my family for survival. It makes a big difference which scenario portends.
Mr. Denninger, isn't one factor in whether or not hyperinflation occurs keyed to the public's confidence in the currency? If said confidence is lost, then currency devaluation alongside more issuance of such "debt" instruments leads to hyperinflation in terms of the money supply, which then leads to major "increases" in prices because it takes so many of the "debt" instruments to obtain goods and services.
If by confidence you mean that with a lot, people would buy stuff, and with little, they will buy less, then yes, the value would fall. However, there are more factors, such as goods and services. Since we are a little more serious now, more people are working in the U.S. thus having the value of the imaginary supply and demand rise, offsetting both the confidence and inflation that is inherent in the system.
Interesting point -- loss of confidence resulting in a downward spiral of deflation in a feedback loop sort of way?? But doesn't it reach a nadir where the currency is so worthless that nominal prices necessarily rise?
It can, but as long as the goods and services increase in direct relation to the inflation, we really won't see any real price changes aside from annual "here-and-there" moments (relating to a company's loss of profit and other similar possibilities).
You can't hyperinflate without WAGES being linked. If it is attempted without that then it instantaneously bankrupts everyone in the middle class and below, and you suddenly have 150 million VERY HUNGRY and VERY PISSED Americans who start writing documents that being "When in the course of human events...."
There is no (longer) any means to link wages to prices as union membership is insufficient to do so.
Thank you for the reply. I just discovered the Market Ticker so I'll be cogitating on what you say. I agree that intentional hyperinflation requires higher wages, but what about the type that results from simple but complete and absolute loss of confidence in the currency? As you say on your site, fiat money is only as good as the public's confidence in it.
exactly, the inability to refinance deficit from borrowing results to the loss of public confidence and forces to monetization and rising inflation. it's the swing between public and private confidence that inherently produce inflation and deflation.
Fed is taking bailout money , leveraging up to 50-1 , taking that money and bailing out banks who are in turn using that money to drive down interest rates by buying US govt debt . What a ponzi scheme all on borrowed money from future generations !
One problem with your explanation of creditor nations keeping their money at home and stimulating their economy is if they currently are buying our debt not only will they stop buying our debt but they will have to sell what they have bought to stimulate their own economies . That means the wholesale dumping of US dollars Who is going to buy them at the same time the fed /treasury is trying to raise (from whom)? record amounts of money ! From whom ? Good bye dollar !
"Debt is inherently deflationary. The inflationary impact of additional credit creation is temporary; in the longer run debt always has a deflationary impact".
The opposite is true. Borrowing is always inflationary in the long term(and it's deflationary in the short term(you remove capital from the private sector), what the FED has been doing lately). Borrowing in the long term is more inflationary than monetizing because of the interest. you answered the question yourself in your last report.
Better get out your calculator again. Debt is always deflationary in the long run because exponential systems always swallow all the resources (money) and collapse the supply.
You can never win playing this sort of game against an exponential function. Ever.
If you think you have, you're deluded and will soon be smacked upside the head by the mathematical reality of it.
Go read the most recent Ticker; it explains this quite clearly.
that would be true in a situation where the currency was linked to a gold standard.
in a fiat currency, borrowing will inflate it in the long run, because the senior currency debt from your exponential function can only be monetized.
a country would choose to default on its domestic debt instead of printing money to finance that debt if the cost of printing money exceeded the cost of default.
last 10 years, massive debt from borrowing. Are you smarter than gold in the long run ?
you decrease borrowing from others, others cannot lend to you, it's a reverse process on the borrowing side, but you monetize your debt by QE, inflating your senior currency and propagating inflation to the rest of the minor currencies, which also follow at the QE race. At some point(1-2year) inflation appears at the weakest link forcing rising rates/or devalue it's currency. It's a 2way race. The difference with japan's QE is the nature of the global QE led by the senior currency of the system.
How do we pay it back? Well instead of BORROWING printed money, we can CREATE money backed by the full faith and credit of the US (like bonds are) and we don't have to pay it back because it belongs to us. I know this would cause inflation but what we are doing now will cause inflation AND debt. Please watch this great vid about this very subject and the history of banking in general. Its about 3 hrs but skip if you like (tho i don't recommend so). Google "Money Masters"
Thank you, I have seen money masters one year ago. I understand how money works but with the amount of interest that will be generated from having to pay back 50 trillion dollars of our money to other countries, the inflation will be far too high even when creating it by our credit (and I know the U.S. is the largest supplier of credit). And I'm not too sure we can have great faith in the U.S. credit market now with the failed scheme of the Federal Reserve. limited to space...bummer youtube.
Well our credit is shot thats for sure but we have no other alternative. If we denominate our currency in gold it will be monopolized by the same International banks like the IMF and World Bank who control the majority of gold reserves. I think that while we have this rapid increase in currency we should slowly raise the reserve requirements of all banks so the inflation will be subtle and maybe even think about silver instead of gold as a currency. We must do something and either way its bad.
"If we denominate our currency in gold it will be monopolized by...banks..."
IIRC, the banks' share of the world's gold is rather small since they've been selling so much for so long. Anyway, if they hoard it then it won't effect the purchasing power of gold currency much. Regardless, it would be pointless to have a gold standard without eliminating fractional reserve banking. Otherwise, gold is used merely as a prop for the same old pyramid scheme. Banking reform is essential.
"IIRC, the banks' share of the world's gold is rather small since they've been selling so much for so long."Where did you get this piece of information?A central bank releasing its gold stock is usually an event because it is rare.
Gold is a limited commodity on the Earth. We have not yet reached the point when all gold has been extracted from the Earth but it is in good way.This reminded,how can you say that hoarding wont affect purchasing power?
The question concerned monopoly. CBs obviously hold gold as reserves to protect their fiat money. That gold is no more a threat than the trillions of "dollars" or whatever they also hold as reserves.
You can google: central bank gold sales, central bank gold agreement, gold leasing, etc. Australia sold 2/3 of its stock in '90s.
Euro banks have sold 400 tonnes/yr or so. It keeps gold price in check vs their currencies. Slowing CB gold sales and lease rates (hoarding) are very bullish for gold.
So I don't see how CB gold is a monopoly. When they hoard, it makes it harder to keep the gold price down. And in a gold-money world, the effect would be similar. Until it's spent, it doesn't much effect the purchasing power of gold money in the marketplace. A common misconception is when people say "there isn't enough gold". There's always enough. CBs could inflate gold money by dishoarding, but can't CREATE gold out of nothing. We'd trade in denominations of gold by weight set by the market.
Ummmmm... Well, I dont like much the concept of purchasing power but apparently, you only consider that effects on purchase power when they move it down because I dont see how a risning price in gold does not increase the purchasing power (which is a concept I dont like)
Ummmm, well, you state it well. Personally, I prefer to think of goods. Purchasing power derives from the medium used to exchange goods. This is why I stay away from it.
Whatever, you did not answer if hoarding gold has any up or downwards effect on purchasing power.
You apparently missed the answer when you read my posts. Look below and see what I said about the effect of hoarding by central banks on gold.
Dishoarding gold in a gold-money system would cause some downward pressure on purchasing power of the medium, but it is physically limited to the amount of stock they have.
They could monetize that gold with redeemable gold certificate currency and lend it out. But you'd have to have bank reform first with 100% reserves.
Well, I did not miss the point since I suggest that you seemed to consider only the downward side. I talked about hoarding and you respond by the effect of dehoarding.
Would have been more straightforward to answer with the effect of hoarding.
Good to see that we can write with opposing views and not be too textually violent:)
Central banks will do what their traditional function is, to print currency.
This is bad for people who arent owning corporations or banking loans books.
But as the credit supply circulations are secured by intervention in relation between (banks) & (corporations/retailers) the real economy will be insulated from the debt crisis during 2009.
Despite all the past gloom, rises in unemployment will be halted.
This whole economic fiasco reminds me a bit about a tale by Beatrix Potter, The Tale of Ginger and Pickles. It's about a general store that goes under because the eponymous owners provided unlimited credit.
They are not being prosecuted because we can't even manage to get 1/3rd of 1% of America pissed off enough about this to show up in DC and shut that city down.
1/3rd of 1% of the population, by the way, is 1 million people.
I dont share all this pessimism going around, because due to technological advancements in cybertrading & internationl cybernetic supply chains between players. This will cause the real economy to level off in 2009 as consumers are still buying the products that they need in the real retail economy.
Credit supplies have been secured by worldwide government injections which have created stable circulating credit systems.
Employment wont be severely affected in this stable real economy.
The Story of 2009 is Debt, you are completely correct. This is a level of Atrocity to a Nation, that purposefully is used to profit off peoples' expenses, and use them for target practice, like in China under the CCP or North Korea, under... The CCP, or Russia, Burma, Africa, etc... All Under the safeguard of the CCP. America's worst enemies are bankrolled by the CCP.
Anyway, back to the Story...The Greatest Depression we have ever seen as human beings in terms of Economy is coming.
Money is not Created when credit is extended, Debt is created. Credit=Debt. Therefore Paperbill, namely "Money" is Debt, created to enslave the populace and make them into Debt Slaves forever being controlled by an interest and tax rate.
Please consider reading "The Nine Commentaries on the Communist Party". If you think the Price System is evil, read the lectures... I sense you would take the Red Pill and go down the rabbit hole.
It will be Heaven on Earth, when the day comes when an "Economist" understands the real VALUE of Money and Real Wealth, instead of toxic corporate profit, and catastrophic bailout schemes. Let me ask you a question, If Bernie Madoff, (Former Chairman of the NASDAQ) and former Chair of the SEC, the Elite of Elite, have orchestrated this $50B ponzi scheme, how Rotten do you think the Market has gotten?
Time is running out. Gold has Value and comes from the Earth, but Stock up on Food FIRST.
There are NO enlightened Leaders, No Courageous Human beings yes, who can bring order to what will occur, as of now. Obama, Mccain, a Politician? a Businessman? Where are the Leaders who fulfill the Duty to the Nations' people? America is the International Police and will not rest until their is Peace and Stability, but now is very weak within and our people are ANGRY. The Denial has not gone away yet, and Panic has not set in, But We are In for the Worst to come.
The Inflation is coming,just a matter of time. How can we used Debt for Real Wealth? How can we put our faith in a Federal Reserve that Manipulates the citizens by firstly stabbing them in the back and then now cutting their throats? The average American, which accounts for 90% in this country, (probably higher) has no idea how the money is distributed and into whose pockets...i mean do you, does Karl? NO! These vile Corporations have never been for the Workers. The sole motivation is Profit.
Yeah the farmer is in big trouble but he can eat his products. What is going to eat the financial guy? in exchange for what finncial whatever product? Dollars? Wait the farmer is going to make his family suffer from hunger to keep exchanging his products for the financial guy products. Problem solved.
A farmer produce something and sell it to a wise financial guy in town. The frmr gets money save it and buys financial Whatever from the wiseguy. The smartguy is in trouble spent malinvest and loose the farmers money, then ask the farmer for more money. The farmer plays for some time, in the end the guy from town buys some of his products. One day the farmer gets in trouble, the guy don´t buy much else and the frmr needs money.
I see what you are saying but I still do not see how money is 'destroyed' in your examples.
For example, if suppliers do not get paid. How does that equal money 'destruction'? Or if an invenstor doesnt get his expected returns on an initial investment? How is that destroying money? Or when a company goes into bankruptcy. How is money destroyed?
I can see what you are saying in the short-term leading to lower prices.
However, how will all this new money creation from all the bailouts NOT equal a massive rise in prices once the economy recovers and all this new money injected into the money supply eventually filters its way throughout the economy?
There are more than a few economists now saying in there is a long-term inflation risk stemming from these bailouts.
Why won't all commodities go up due to the inflation caused by all these bailouts?
I know you said that the dollar wont go lower because of other countries are in worse shape. What do you mean by that? Other currencies are in worse shape?
But how will that still not stoke inflation from these bailouts???
Because the value of services is increasing. because so many people are motivated by the Obama Campaign, or are realizing the problems with the debt, they submit to working harder therefore making more money and offsetting the visibility of inflation.
They are trying to solve an exponential collapse with a linear printing press.
It cannot work. All they are doing is transferring the leverage to the Federal Reserve's balance sheet instead of forcing it into the open and destroying it (and who holds it), which would clean the system.
There will be plenty of suffering here. Americans are accustomed to going to the store any time and picking up what they want. When that is no longer possible, they will freak. People in third world countries are more accustomed to a hardscrabble life.
This is going to be a very tough year. Stores will close, layoffs will continue; bankruptcies, defaults and foreclosures will continue unabated.
REITs right now are being held up by their dividend payouts. Pay close attention to their leverage - the levered ones (most of them) will be in serious trouble within six months if not outright bankrupt.
There's quite a few that already cut dividends. I still don't know how REITS like GGP are staying afloat. I don't think they will be included in the bailout even though they begging pretty hard right now like VNO.
NBER dating is irrelevant. You said the slowdown would be evident in Jan. or so. It was not. Unemp was just about at 5 when you said it would go north of 5. Not much there. Also, your predictions are redundant (GDP is jobs, housing, rec. spend., etc.). You really made one prediction weak economy. Then, your magnitudes and specific sectors were off the mark (autos were worse than rec. spend., e.g.). Ditto on markets pred. ok on direction; off on magnitudes and specific names or sectors.
Always enjoy listening to your thoughts Karl. Scary how similar they are to my thoughts. And I agree that the number one problem at this point? Is the HIDING of the problems. The lack of transparency.
I read over your predictions for 2009 on your site. As a trader, I'm more of a 'reactive' guy, than a 'predictive', but I'd have to say that I agree with the liklihood on nearly all your points for 2009; including the dollar.
Not to sound Keynesian (which I can't stand the mercantilistic ideals of Keynesian economics) I wouldn't mind the debt so much if it was actually fueling growth. Infrastructure, real growth, etc.
But the debt is being used to pay for debt, that was .... brought on by debt. That's the problem.
Keynesian economics never works in the real world because the part of the theory where you bank supluses and pay down debts during boom times never happens. There is no political will to do so, ergo, the entire theory is fatally flawed as it can never be practiced.
Yeah. Thing is, that one of the cornerstone of Keynesian economics states that to avoid Depression, when that cycle starts, the government should stimulate the economy with infrastructure improvements.
Whether that will help or not ... well, you know me and predicting the future. But it does let you know where their mind is at ...
But when the administration in power starts talking about "infrastructure stimulus to avoid Depression", it's obvious that they are taking the Keynesian route.
YOu people need to RESPECT Denninger. Get control of yourself and embrace the horror. This man is GOD. Everyone else is a pee-on including Pissy Shiff. Funny how Pissy himself posts on this thread and try to talk himself up under a different name. SHAME
"The problem is that if the unconventional monetary policy works, and the economy picks up, the Fed will come under pressure to normalize rates and reduce excess liquidity to prevent a rise in inflation. The resulting rate rises will inflict massive losses on anyone who bought bonds at today 2.25 percent rate." Quote from Reuter´s John Kemp
The worse news is that if it DOESN'T work then the bond market dislocates anyway and you still lose :)
The long end of the bond curve has become yet another momo play by hot money. Many people think you only buy bonds for coupon (current income.) Wrong. Most bond trading is in fact done for capital gains, and that market is several times the size of the equity market.
The bond market IS the credit (debt) market, and it, along with FX, is the "real deal".
you are pointing to hot long bond momo play but at the same time you are saying that gold/pm will fall. you do not make sense.
"world is screwed WORSE" this becomes a bit of a tiring moto. just check the starting fiscal and external position of each participant to the QE race and think again about currencies.
Evidence? All around you. We just had a far-eastern nation print a DEPRESSION-level contraction in GDP (>10%). China, according to some reports, has had 20% of their factories close - already - due to lack of demand. Britain's currency has imploded, losing 30% of its value against the dollar in less than three months, and their banks are on the edge (again). The ECB's banks are more levered than ours and hiding more.
GBP was the first to go in the QE race, that's why. Second coming is the USD due to the need to attract capital inflows to
finance external deficits. the truth is that if you stimulate too much, bond yields rise, the currency plunges, or inflation rises. there is no free dinner. In general, the more effective the policy in generating inflation, the bigger the FX negative. But the weird is you expect long bond to implode and gold to fall, just no sense there.
Precious metals prices don't move, it's the currencies around them. A gallon of gas was 30 cents in 1960. Dimes were made of 90% silver at that time. Those same 3 dimes made in 1960 can still buy you a gallon of gas today. All precious metals do is help you retain your savings today. Inflation steals away your "dollar" savings in the future, especially with a pathetic savings yields at banks.
What kind of logical is this that the dying US (the addict) is better than the temporarily-layoff China (the drug pusher)? Peter Schiff's argument is more sound. The end of WWII with all the returning soldiers did not collapse the US war-time weapon-manufacturing economy back then. US adapted to other things. The end of consuming US will not collapse China's export driven economy either. China will adapt. But the US will have nothing left but its own hyper-inflationary economy.
There seem to be two schools of thought on China. Some see inherent instability in the nation due to the ethnic tensions (100's of different ethnic groups) and disillusionment. Also, much of China still lives a third world life. No opinion, myself.
The coming imminent Collapse of the Chinese Communist Party, will bring an Unprecedented freedom and Liberty to China. You see Karl, is right when he says that Overseas will be affected FAR worse than us, especially China because The Free Market System compared to the Tyrannical Communist Controlled system in China is like comparing Apples and Skyscrapers: completely different.
China's Fundamentals are Destroyed, while America's fundamental are alive and well but buried underneath Corruption.
"Cheap plastic crap" shows the kind of attitude leading the down fall of US. Manufacturing tangible things are not crap. 70% of the economy driven by consumption based on credit expansion is crap. Fabricating pieces of financial papers to con the world for trade settlement is even criminal. The US is on a downward path to beyond third-world status. This kind of arrogant comments and tone do not help in begging from the rest of the world. But soon you will learn how to be a beggar.
Treasury Market peaks them dumps, due to lack of foreign investment moving forward. Fed has to print money to buy Treasuries. How is that not terrible for the dollar?
I'm tired of optimism, it's short sighted! We need to create authentic long-term solutions. I understand their are obstacles ie congress, treausry, fed, etc. I want to pull back the curtain in 2009 to reveal the corruption and arrogance that is raping our country.
Karl, keep up the good work. i respectfully disagree w/ Gold. we are paying premium to get physical gold and silver. some vendors experiencing delay in delivery. all the best in 2009.
i think the fact that the us has NO industrial infrastructure creates a very big problem in that we cannot produce the things we need as the countries that produce those items melt down and go into chaos...its a bad deal all the way around...
a piece of puzzle left out of the picture is Mexico..as oil prices continue to decline the and the US job market dries up Mexico loses its two biggest sources of revenue...then the united states has a third world country with millions of refugees on its southern boarder...we already know that investment in developing markets is dead...we could have a very very serious problem by the end of 2009.
is it possible that the country is under martial law with out a public anouncement? that would open the door for the 'president' to order the congress to "pass" whatever is put infront of them...and keep their mouths shut...
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Sorry, my Denninger, I tally your predictions a little less favorably. Recession was not evident in Q1. Unemp. was not north of 5%, but north of 6% - that may not be a big difference to an amateur economist, but to pro it is. No hyperinflation - doesn't say much. Gold, also, held up okay. You said government will meddle - that is like telling me there is oxygen in the air. You did not say how much; rather, you said if it meddled a lot, it would be bad.
i think the united states will be hit much harder than the rest of the world on average. other markets/nations/systems just dont have a bubble. maybe you only get the worst depressions where the biggest bubbles are imploding, and maybe all the bubble-free zones only get a recession or a mild depression. or at least i hope for this, it would be fair if this global crisis causes most damage in the markets that have the biggest bubbles.
Well, we print money to allow for the easy credit over the last 10 years. No one has to work and you could buy a house or a car no problem. People have to BUY credit bonds which backs up this credit. When foriegners and other people with bonds realize that their yields are negative because of defaults, no one will buy bonds! I wouldn't!
The biggest problem is where the 'debt money' comes from - the privately owned Federal Reserve. The Federal Reserve and it's corrupt fractional reserve monetary policy amasses more and more debt due to INTEREST.There is not need for the INTEREST if congress goes directly to the Treasury without INTEREST.
End the Federal Reserve and fractional reserve lending at interest and we can begin to recover once again. Not to end it, is only to continue to down the same path.
Thanks for the video. Been wondering where you are.
I think people like your vids because we get to hear you speak and we can watch it while we might be working on something else. That is what I do. So that is why I prefer the vids to a blog.
Thanks for the video Karl. Your website is great - but really enjoy the video blogs.
You are correct about us in the UK. We are royally screwed.
We have a housing bubble just as big (if not bigger) than in the US, financial services is on its knees (which is our biggest industry sector), retailing is on its deathbed (watch how many of our retail chains go bust in January alone) and to top it off we have an unelected clown as PM trying to bankrup the country.
As long as Karl think keynesian economics works he will be wrong more times than he is right.
The truth is cold and hard to swallow, it's that government will not do the right thing until they are forced to.
Karl is forgetting the the dope dealer is not just one person it's 1 billion people. And maybe just maybe the dope (debt) will be consumed by the dealers?
Nah that's crazy only Americans know how to spend.
My apologies then but you videos make you out to be a believer in Keynesian economics. I guess I should have asked you first.
So I retract my statement, Karl is not a Keynesian.
You are just a believer in government, fiat, and spending will solve our current economic problem? (I'm asking)
NOTE: I know it would work if we could, the problem is we can't so it won't. <- strange statement I know but that's how our monetary system works, a gigantic riddle.
I apologize for calling you a believer in Keynesian economics and you insult me with a blanket statement that applied to anyone reading this post would be false? :) lol
I don't mind being "ridiculed" for my false statements, it makes me go validate my belief and correct them.
BTW: I noticed you did not answer my question and responded in anger, it makes one assume your answer would not conflict with my original assumption.
sorry Karl i couldnt quite make you out when you said why you thought gold wasnt gonna go that high and the dollar sink. Could you explain it?
And i hear you when it comes to the pound. Ive still got a basic understanding of economics but im hating all of these so called "solutions" Borrow more money and using it for government spending!! Keynesian economics is retarded!
Great video again, always so informative. I like the videos more then reading the site because your commentary on the subjects help make it a little less depressing, even though it doesn't ever seem to go away (the problems i mean).
What to say, have a good year! Cant wait for more videos.
Karl, I don't think PETER SCHIFF is wrong? Sorry man! That's why they are building FEMA Camps in USA becauze the real shit will be there! Listen also Gerald Celente, who has great track record and is talking about civil unrest in USA!
Peter Schiff's recommendations have not only been wrong, they've been ruinous. I'll put my record up against his any day of the week.
If you did what he recommended at the start of last year you saw the entirety of the Asian market (where he thought you should be) gutted AND the dollar went higher. You got rammed twice.
Peter Schiff has acknoledge that he didnt predicted such a strong dollar rally serveral times.
But its not only Peter Schiff that is predicting a rise on comodities (specially precious ones) and a big fall on the dollar. Jim Rogers and Marc Faber are also predicting exactly the same. They agree with you with England "going down". Can you explain more why you think the dollar will hold and why commodities will fall?
Denger. Deflation in the US will never happen. I can't believe you've bought hook, line and sinker the gospel of the MSM. The stocks Europac buys are still giving ridiculous dividends. Your portfolio may be down, but you are still getting ridiculous dividends and yields. People who have opened up accounts with Peter's company within the last three months are now up 30 percent. Remember he's the one who has called everything that has been going on. Not you.
Ha, if you think the Austrian school is wrong. You might actually research Keynesian economics. Or move to China, and live it. Perhaps try Iceland...see how that one went.
My source is the US office of management and budget. That is what the stats show. What's yours? The debate about Keynesian economics came about due to the great depression. This lead to the expansion of the federal government, the Supreme Court's reversal of decades of jurisprudence limiting federal govt powers under the Commerce Clause, etc.
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hakan35353535 2 years ago
britain is already in a big mess good prediction.
harshvgaus 3 years ago
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Good video. Thanks.
JRCrowley 3 years ago
I think we should call our current crisis The Great Default because that is exactly what we need and should do. PS. I think your the only one who really knows what is going on. Keep up the great work!
sean4worthington 3 years ago
Actually, you are not the first person who has predicted the UK may get kicked out of the EU.
Nymphe14 3 years ago
when people stop calling people like David Icke "crazy" and start noticing the scope of the plan to destroy us (well, most of us), THEN we might have a chance. Congress ain't gonna do shit. Obama aint gonna do shit. They are hamstrung by the Fed and the people that own the Fed.
TadRapidly 3 years ago
It's amazing that Karl can be so spot-on without ever seeming to touch on the energy side of things. I arrived at much the same conclusions from my study of peak oil. Given the rate at which energy supplies are contracting, any stimulus money is going to create an unsupportable amount of demand, causing energy prices to consume the stimulus money, creating a bigger disaster. Oil production peaked in 2005 at 73.8 mbpd. For every day since then it has averaged 73.5 and is now falling rapidly.
Iconoclast421 3 years ago
I agree there is absolutley no conversation of the confluence of Peak Oil and the current Global fiscal crisis/depression. These are Siamese twins, yet as Richard Heidenberg says the talk will about bankruptcies, unemployment, foreclosures and NOT about a Global Peak in liquid energy.
BTW I has some hope with Pickens Plan, but I think T Boone has given up as the situation is hopeless and decided not to waste anymore of his money or time for fellow humans who are determined to go over the cliff
valhala56 3 years ago
you default on your debt through inflation.
CuriousTOknow1 3 years ago
you can repay the interest whenever you want when you are the 'fiat' itself.
the long run ends when the people are fed up and demand other than fiat.
CuriousTOknow1 3 years ago
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J.P. Morgan Said Bankrupt Within 48 Hours
halturnershow. blogspot. com/2009/01/urgent-jp-morgan-said-bankrupt-within. html
Gilgamesh73 3 years ago
Would be a solution to the FED´s inflation problem immanent in printing money like crazy.
They try to orchestrate the proper default cascade to avoid being screwed up alltogether.
As shown the FED´s governors boards didn´t really care for americans and even less for their tax money.
XD!
0PsycoDad0 3 years ago
What are we Really at now? Around $5 trillion and counting?!!!!
swizzlecheeks 3 years ago
$7 t committed, $1 trillion or so spent, PLUS The Fed's games.
kdenninger 3 years ago
Comment removed
dconjar 3 years ago
Thanks for taking the time to provide all the info you do. I find your daily ticker very informative and helpful when it comes to the financial fiasco we are experiencing.
mjamesb2008 3 years ago
Thanks for your expertise Karl and valued opinions . I believe what you just stated is TPTB agenda .
brianinheaven 3 years ago
Exponential functions ALWAYS run into reality folks. Always.
Go read today's Ticker.
kdenninger 3 years ago
This whole fed/dollar/bond ponzi scheme started to unravel in October but , unlike Madoff , the fed gets to reload with more borrowed money to keep the scheme alive ! One thing about ponzi schemes , no one knows when they will unravel , Madoff's lasted for quite a few years , but unravel they will !
brianinheaven 3 years ago
The more i read about the federal reserve the more it sounds like a big ponzi scheme themselves. Thanks for your up to the minute market ticker and video updates. You're awesome!
8cat18 3 years ago
I have essentially no confidence in the "value" of a dollar because it is dependent full faith and credit, etc. When (not if) a lot of the public begins to suspect the same thing, the dollar is cooked. Isn't that what will result in hyperinflation? This despite my agreement with all of your other points?
jibbytot 3 years ago
.... Hence, you get hyperinflation despite lower real (that is, real as divorced from the incredibly devalued currency) prices for goods and services. I'm trying hard to understand these things in order to position myself and my family for survival. It makes a big difference which scenario portends.
jibbytot 3 years ago
Mr. Denninger, isn't one factor in whether or not hyperinflation occurs keyed to the public's confidence in the currency? If said confidence is lost, then currency devaluation alongside more issuance of such "debt" instruments leads to hyperinflation in terms of the money supply, which then leads to major "increases" in prices because it takes so many of the "debt" instruments to obtain goods and services.
jibbytot 3 years ago
If by confidence you mean that with a lot, people would buy stuff, and with little, they will buy less, then yes, the value would fall. However, there are more factors, such as goods and services. Since we are a little more serious now, more people are working in the U.S. thus having the value of the imaginary supply and demand rise, offsetting both the confidence and inflation that is inherent in the system.
Youanden 3 years ago
Interesting point -- loss of confidence resulting in a downward spiral of deflation in a feedback loop sort of way?? But doesn't it reach a nadir where the currency is so worthless that nominal prices necessarily rise?
jibbytot 3 years ago
It can, but as long as the goods and services increase in direct relation to the inflation, we really won't see any real price changes aside from annual "here-and-there" moments (relating to a company's loss of profit and other similar possibilities).
Youanden 3 years ago
You can't hyperinflate without WAGES being linked. If it is attempted without that then it instantaneously bankrupts everyone in the middle class and below, and you suddenly have 150 million VERY HUNGRY and VERY PISSED Americans who start writing documents that being "When in the course of human events...."
There is no (longer) any means to link wages to prices as union membership is insufficient to do so.
kdenninger 3 years ago
Thank you for the reply. I just discovered the Market Ticker so I'll be cogitating on what you say. I agree that intentional hyperinflation requires higher wages, but what about the type that results from simple but complete and absolute loss of confidence in the currency? As you say on your site, fiat money is only as good as the public's confidence in it.
jibbytot 3 years ago
exactly, the inability to refinance deficit from borrowing results to the loss of public confidence and forces to monetization and rising inflation. it's the swing between public and private confidence that inherently produce inflation and deflation.
CuriousTOknow1 3 years ago
Karl, if you beat Byron Wien 2009 predictions you will be the man..
CuriousTOknow1 3 years ago
Fed is taking bailout money , leveraging up to 50-1 , taking that money and bailing out banks who are in turn using that money to drive down interest rates by buying US govt debt . What a ponzi scheme all on borrowed money from future generations !
brianinheaven 3 years ago
Ticker guy , The US bond market is by definition the world's greatest ponzi scheme.
brianinheaven 3 years ago
One problem with your explanation of creditor nations keeping their money at home and stimulating their economy is if they currently are buying our debt not only will they stop buying our debt but they will have to sell what they have bought to stimulate their own economies . That means the wholesale dumping of US dollars Who is going to buy them at the same time the fed /treasury is trying to raise (from whom)? record amounts of money ! From whom ? Good bye dollar !
brianinheaven 3 years ago
"Debt is inherently deflationary. The inflationary impact of additional credit creation is temporary; in the longer run debt always has a deflationary impact".
The opposite is true. Borrowing is always inflationary in the long term(and it's deflationary in the short term(you remove capital from the private sector), what the FED has been doing lately). Borrowing in the long term is more inflationary than monetizing because of the interest. you answered the question yourself in your last report.
CuriousTOknow1 3 years ago
Uh uh.
Better get out your calculator again. Debt is always deflationary in the long run because exponential systems always swallow all the resources (money) and collapse the supply.
You can never win playing this sort of game against an exponential function. Ever.
If you think you have, you're deluded and will soon be smacked upside the head by the mathematical reality of it.
Go read the most recent Ticker; it explains this quite clearly.
kdenninger 3 years ago
that would be true in a situation where the currency was linked to a gold standard.
in a fiat currency, borrowing will inflate it in the long run, because the senior currency debt from your exponential function can only be monetized.
a country would choose to default on its domestic debt instead of printing money to finance that debt if the cost of printing money exceeded the cost of default.
last 10 years, massive debt from borrowing. Are you smarter than gold in the long run ?
CuriousTOknow1 3 years ago
the answer is DEBT-FREE money like the money created by Lincoln
alby711 3 years ago
But how do we pay back those people we owe? America's debts, that is. The problem, is far more complicated.
Youanden 3 years ago
you decrease borrowing from others, others cannot lend to you, it's a reverse process on the borrowing side, but you monetize your debt by QE, inflating your senior currency and propagating inflation to the rest of the minor currencies, which also follow at the QE race. At some point(1-2year) inflation appears at the weakest link forcing rising rates/or devalue it's currency. It's a 2way race. The difference with japan's QE is the nature of the global QE led by the senior currency of the system.
CuriousTOknow1 3 years ago
Why are you replying to me again?
Youanden 3 years ago
How do we pay it back? Well instead of BORROWING printed money, we can CREATE money backed by the full faith and credit of the US (like bonds are) and we don't have to pay it back because it belongs to us. I know this would cause inflation but what we are doing now will cause inflation AND debt. Please watch this great vid about this very subject and the history of banking in general. Its about 3 hrs but skip if you like (tho i don't recommend so). Google "Money Masters"
alby711 3 years ago
Thank you, I have seen money masters one year ago. I understand how money works but with the amount of interest that will be generated from having to pay back 50 trillion dollars of our money to other countries, the inflation will be far too high even when creating it by our credit (and I know the U.S. is the largest supplier of credit). And I'm not too sure we can have great faith in the U.S. credit market now with the failed scheme of the Federal Reserve. limited to space...bummer youtube.
Youanden 3 years ago
Well our credit is shot thats for sure but we have no other alternative. If we denominate our currency in gold it will be monopolized by the same International banks like the IMF and World Bank who control the majority of gold reserves. I think that while we have this rapid increase in currency we should slowly raise the reserve requirements of all banks so the inflation will be subtle and maybe even think about silver instead of gold as a currency. We must do something and either way its bad.
alby711 3 years ago
"If we denominate our currency in gold it will be monopolized by...banks..."
IIRC, the banks' share of the world's gold is rather small since they've been selling so much for so long. Anyway, if they hoard it then it won't effect the purchasing power of gold currency much. Regardless, it would be pointless to have a gold standard without eliminating fractional reserve banking. Otherwise, gold is used merely as a prop for the same old pyramid scheme. Banking reform is essential.
OgeronimonominoregO 3 years ago
"IIRC, the banks' share of the world's gold is rather small since they've been selling so much for so long."Where did you get this piece of information?A central bank releasing its gold stock is usually an event because it is rare.
Gold is a limited commodity on the Earth. We have not yet reached the point when all gold has been extracted from the Earth but it is in good way.This reminded,how can you say that hoarding wont affect purchasing power?
By the way, purchasing power is a weak concept
TheCZMan 3 years ago
The question concerned monopoly. CBs obviously hold gold as reserves to protect their fiat money. That gold is no more a threat than the trillions of "dollars" or whatever they also hold as reserves.
You can google: central bank gold sales, central bank gold agreement, gold leasing, etc. Australia sold 2/3 of its stock in '90s.
Euro banks have sold 400 tonnes/yr or so. It keeps gold price in check vs their currencies. Slowing CB gold sales and lease rates (hoarding) are very bullish for gold.
OgeronimonominoregO 3 years ago
So I don't see how CB gold is a monopoly. When they hoard, it makes it harder to keep the gold price down. And in a gold-money world, the effect would be similar. Until it's spent, it doesn't much effect the purchasing power of gold money in the marketplace. A common misconception is when people say "there isn't enough gold". There's always enough. CBs could inflate gold money by dishoarding, but can't CREATE gold out of nothing. We'd trade in denominations of gold by weight set by the market.
OgeronimonominoregO 3 years ago
Ummmmm... Well, I dont like much the concept of purchasing power but apparently, you only consider that effects on purchase power when they move it down because I dont see how a risning price in gold does not increase the purchasing power (which is a concept I dont like)
TheCZMan 3 years ago
Purchasing power is merely the effect of the law of supply and demand on whatever is being used as money.
Obviously, any medium can either gain or lose purchasing power .
OgeronimonominoregO 3 years ago
Ummmm, well, you state it well. Personally, I prefer to think of goods. Purchasing power derives from the medium used to exchange goods. This is why I stay away from it.
Whatever, you did not answer if hoarding gold has any up or downwards effect on purchasing power.
TheCZMan 3 years ago
You apparently missed the answer when you read my posts. Look below and see what I said about the effect of hoarding by central banks on gold.
Dishoarding gold in a gold-money system would cause some downward pressure on purchasing power of the medium, but it is physically limited to the amount of stock they have.
They could monetize that gold with redeemable gold certificate currency and lend it out. But you'd have to have bank reform first with 100% reserves.
OgeronimonominoregO 3 years ago
Well, I did not miss the point since I suggest that you seemed to consider only the downward side. I talked about hoarding and you respond by the effect of dehoarding.
Would have been more straightforward to answer with the effect of hoarding.
TheCZMan 3 years ago
Good to see that we can write with opposing views and not be too textually violent:)
Central banks will do what their traditional function is, to print currency.
This is bad for people who arent owning corporations or banking loans books.
But as the credit supply circulations are secured by intervention in relation between (banks) & (corporations/retailers) the real economy will be insulated from the debt crisis during 2009.
Despite all the past gloom, rises in unemployment will be halted.
CivysCare4Soldiers2 3 years ago
USA is doomed... And $ is doomed...
Until someone (?) decides to fix the debt problem with huge tax raises and huge spend cuts... Hmmmm not going to happen soon.
Melpheos1er 3 years ago
This whole economic fiasco reminds me a bit about a tale by Beatrix Potter, The Tale of Ginger and Pickles. It's about a general store that goes under because the eponymous owners provided unlimited credit.
Desmaad 3 years ago
America lives!
... until they come looking for Denninger.
p.s. He's developing a bit of a mullet there - always good to get a haircut just before Christmas.
Shtove 3 years ago
but about other banks and commercial institutions. Those CEO's should be prosecuted, that for sure..
But like here in the Netherlands they are also not prosecuting the CEO of Fortis and ABN Amro.
In the times there was profit, it all went to the CEO's, now they are losing we as the people have to bail them out. >:(
AzowRagbak 3 years ago
I can answer that one for you.
The FED was given the assurance that they would NOT be prosecuted for any of the things they do.
This was one of the rules in the first 700 billion bailout.
AzowRagbak 3 years ago
They are not being prosecuted because we can't even manage to get 1/3rd of 1% of America pissed off enough about this to show up in DC and shut that city down.
1/3rd of 1% of the population, by the way, is 1 million people.
kdenninger 3 years ago
Same thing here in Holland. I'm one of the few people on my working floor of 60 people. Who's upset about the situation.
Alot of them didn't care, and said I was crazy when I predicted this crisis would come to us in Europe.
Ofcourse, tv didn't tell them that yet.
Also my government knew that things were doing bad with Fortis, but they never took action untill it was too late.
AzowRagbak 3 years ago
What about the fact that many politicians are former businessmen?
Desmaad 3 years ago
What about the fact that many citizens are brainless shopping zombies?
0PsycoDad0 3 years ago
I dont share all this pessimism going around, because due to technological advancements in cybertrading & internationl cybernetic supply chains between players. This will cause the real economy to level off in 2009 as consumers are still buying the products that they need in the real retail economy.
Credit supplies have been secured by worldwide government injections which have created stable circulating credit systems.
Employment wont be severely affected in this stable real economy.
CivysCare4Soldiers2 3 years ago
Watch my favorites and grow a brain. Or plug yourself back into the matrix.
Gilgamesh73 3 years ago
The Story of 2009 is Debt, you are completely correct. This is a level of Atrocity to a Nation, that purposefully is used to profit off peoples' expenses, and use them for target practice, like in China under the CCP or North Korea, under... The CCP, or Russia, Burma, Africa, etc... All Under the safeguard of the CCP. America's worst enemies are bankrolled by the CCP.
Anyway, back to the Story...The Greatest Depression we have ever seen as human beings in terms of Economy is coming.
mitchee009 3 years ago
Money is not Created when credit is extended, Debt is created. Credit=Debt. Therefore Paperbill, namely "Money" is Debt, created to enslave the populace and make them into Debt Slaves forever being controlled by an interest and tax rate.
Please consider reading "The Nine Commentaries on the Communist Party". If you think the Price System is evil, read the lectures... I sense you would take the Red Pill and go down the rabbit hole.
Cheers Mate, Happy New Year.
Mitch
mitchee009 3 years ago
It will be Heaven on Earth, when the day comes when an "Economist" understands the real VALUE of Money and Real Wealth, instead of toxic corporate profit, and catastrophic bailout schemes. Let me ask you a question, If Bernie Madoff, (Former Chairman of the NASDAQ) and former Chair of the SEC, the Elite of Elite, have orchestrated this $50B ponzi scheme, how Rotten do you think the Market has gotten?
Time is running out. Gold has Value and comes from the Earth, but Stock up on Food FIRST.
mitchee009 3 years ago
There are NO enlightened Leaders, No Courageous Human beings yes, who can bring order to what will occur, as of now. Obama, Mccain, a Politician? a Businessman? Where are the Leaders who fulfill the Duty to the Nations' people? America is the International Police and will not rest until their is Peace and Stability, but now is very weak within and our people are ANGRY. The Denial has not gone away yet, and Panic has not set in, But We are In for the Worst to come.
mitchee009 3 years ago
The Inflation is coming,just a matter of time. How can we used Debt for Real Wealth? How can we put our faith in a Federal Reserve that Manipulates the citizens by firstly stabbing them in the back and then now cutting their throats? The average American, which accounts for 90% in this country, (probably higher) has no idea how the money is distributed and into whose pockets...i mean do you, does Karl? NO! These vile Corporations have never been for the Workers. The sole motivation is Profit.
mitchee009 3 years ago
Yeah the farmer is in big trouble but he can eat his products. What is going to eat the financial guy? in exchange for what finncial whatever product? Dollars? Wait the farmer is going to make his family suffer from hunger to keep exchanging his products for the financial guy products. Problem solved.
Ibilaemash 3 years ago
A farmer produce something and sell it to a wise financial guy in town. The frmr gets money save it and buys financial Whatever from the wiseguy. The smartguy is in trouble spent malinvest and loose the farmers money, then ask the farmer for more money. The farmer plays for some time, in the end the guy from town buys some of his products. One day the farmer gets in trouble, the guy don´t buy much else and the frmr needs money.
Ibilaemash 3 years ago
I see what you are saying but I still do not see how money is 'destroyed' in your examples.
For example, if suppliers do not get paid. How does that equal money 'destruction'? Or if an invenstor doesnt get his expected returns on an initial investment? How is that destroying money? Or when a company goes into bankruptcy. How is money destroyed?
sublimetrance 3 years ago
I can see what you are saying in the short-term leading to lower prices.
However, how will all this new money creation from all the bailouts NOT equal a massive rise in prices once the economy recovers and all this new money injected into the money supply eventually filters its way throughout the economy?
There are more than a few economists now saying in there is a long-term inflation risk stemming from these bailouts.
sublimetrance 3 years ago
How exactly is the money 'destroyed' in your example resulting in deflation?
How is money 'destroyed' when the competitor goes belly up?
sublimetrance 3 years ago
I don't understand how gold can not go up?
Why won't all commodities go up due to the inflation caused by all these bailouts?
I know you said that the dollar wont go lower because of other countries are in worse shape. What do you mean by that? Other currencies are in worse shape?
But how will that still not stoke inflation from these bailouts???
sublimetrance 3 years ago 2
Because the value of services is increasing. because so many people are motivated by the Obama Campaign, or are realizing the problems with the debt, they submit to working harder therefore making more money and offsetting the visibility of inflation.
Youanden 3 years ago
They are trying to solve an exponential collapse with a linear printing press.
It cannot work. All they are doing is transferring the leverage to the Federal Reserve's balance sheet instead of forcing it into the open and destroying it (and who holds it), which would clean the system.
It didn't work in 00-03, and it won't work now.
kdenninger 3 years ago
It didn't work when we bailed out Mexico in 1994 or that capital bank or whatever in 1998 either!!!!
ohio1998 3 years ago
There will be plenty of suffering here. Americans are accustomed to going to the store any time and picking up what they want. When that is no longer possible, they will freak. People in third world countries are more accustomed to a hardscrabble life.
This is going to be a very tough year. Stores will close, layoffs will continue; bankruptcies, defaults and foreclosures will continue unabated.
gunnerrat 3 years ago
What do you think about the current trend of shorting REITs in the very near future?
a012345 3 years ago
REITs right now are being held up by their dividend payouts. Pay close attention to their leverage - the levered ones (most of them) will be in serious trouble within six months if not outright bankrupt.
kdenninger 3 years ago
There's quite a few that already cut dividends. I still don't know how REITS like GGP are staying afloat. I don't think they will be included in the bailout even though they begging pretty hard right now like VNO.
a012345 3 years ago
I browsed through the article, a lot of sexual terms being used. Does it mean something?
TheCZMan 3 years ago
NBER dating is irrelevant. You said the slowdown would be evident in Jan. or so. It was not. Unemp was just about at 5 when you said it would go north of 5. Not much there. Also, your predictions are redundant (GDP is jobs, housing, rec. spend., etc.). You really made one prediction weak economy. Then, your magnitudes and specific sectors were off the mark (autos were worse than rec. spend., e.g.). Ditto on markets pred. ok on direction; off on magnitudes and specific names or sectors.
maximizeutility 3 years ago
Always enjoy listening to your thoughts Karl. Scary how similar they are to my thoughts. And I agree that the number one problem at this point? Is the HIDING of the problems. The lack of transparency.
I read over your predictions for 2009 on your site. As a trader, I'm more of a 'reactive' guy, than a 'predictive', but I'd have to say that I agree with the liklihood on nearly all your points for 2009; including the dollar.
AirelonTrading 3 years ago
Not to sound Keynesian (which I can't stand the mercantilistic ideals of Keynesian economics) I wouldn't mind the debt so much if it was actually fueling growth. Infrastructure, real growth, etc.
But the debt is being used to pay for debt, that was .... brought on by debt. That's the problem.
AirelonTrading 3 years ago 2
Keynesian economics never works in the real world because the part of the theory where you bank supluses and pay down debts during boom times never happens. There is no political will to do so, ergo, the entire theory is fatally flawed as it can never be practiced.
kdenninger 3 years ago
'no political will to do so = the entire theory'...
hmmm...I see that as a problem far beyond economics...how about social issues...
but this is a finance webblog...ergo, Ill hold my tongue.
Artorioux 3 years ago
Hey dan! Well, supposidly with Obama he will spend more on infrastructure. We need to start making things in this country and stop consuming so much.
ohio1998 3 years ago
Heyya man ... :^)
Yeah. Thing is, that one of the cornerstone of Keynesian economics states that to avoid Depression, when that cycle starts, the government should stimulate the economy with infrastructure improvements.
Whether that will help or not ... well, you know me and predicting the future. But it does let you know where their mind is at ...
:)
AirelonTrading 3 years ago
Oh, I'm in complete agreement.
But when the administration in power starts talking about "infrastructure stimulus to avoid Depression", it's obvious that they are taking the Keynesian route.
Or will at least attempt to.
AirelonTrading 3 years ago
YOu people need to RESPECT Denninger. Get control of yourself and embrace the horror. This man is GOD. Everyone else is a pee-on including Pissy Shiff. Funny how Pissy himself posts on this thread and try to talk himself up under a different name. SHAME
DENNINGER IS GOD
mejt223 3 years ago
Are you feeling ok?
hugolp 3 years ago
"The problem is that if the unconventional monetary policy works, and the economy picks up, the Fed will come under pressure to normalize rates and reduce excess liquidity to prevent a rise in inflation. The resulting rate rises will inflict massive losses on anyone who bought bonds at today 2.25 percent rate." Quote from Reuter´s John Kemp
0PsycoDad0 3 years ago
The Bond and treasury markets are the problem.
The gold hype is just a minor "place of action".
Another great vid!
0PsycoDad0 3 years ago
Yep. That's the bad news.
The worse news is that if it DOESN'T work then the bond market dislocates anyway and you still lose :)
The long end of the bond curve has become yet another momo play by hot money. Many people think you only buy bonds for coupon (current income.) Wrong. Most bond trading is in fact done for capital gains, and that market is several times the size of the equity market.
The bond market IS the credit (debt) market, and it, along with FX, is the "real deal".
kdenninger 3 years ago
you are pointing to hot long bond momo play but at the same time you are saying that gold/pm will fall. you do not make sense.
"world is screwed WORSE" this becomes a bit of a tiring moto. just check the starting fiscal and external position of each participant to the QE race and think again about currencies.
CuriousTOknow1 3 years ago
The truth is the truth.
Evidence? All around you. We just had a far-eastern nation print a DEPRESSION-level contraction in GDP (>10%). China, according to some reports, has had 20% of their factories close - already - due to lack of demand. Britain's currency has imploded, losing 30% of its value against the dollar in less than three months, and their banks are on the edge (again). The ECB's banks are more levered than ours and hiding more.
Just watch....
kdenninger 3 years ago
GBP was the first to go in the QE race, that's why. Second coming is the USD due to the need to attract capital inflows to
finance external deficits. the truth is that if you stimulate too much, bond yields rise, the currency plunges, or inflation rises. there is no free dinner. In general, the more effective the policy in generating inflation, the bigger the FX negative. But the weird is you expect long bond to implode and gold to fall, just no sense there.
CuriousTOknow1 3 years ago
Precious metals prices don't move, it's the currencies around them. A gallon of gas was 30 cents in 1960. Dimes were made of 90% silver at that time. Those same 3 dimes made in 1960 can still buy you a gallon of gas today. All precious metals do is help you retain your savings today. Inflation steals away your "dollar" savings in the future, especially with a pathetic savings yields at banks.
ohio1998 3 years ago
Comment removed
dconjar 3 years ago
so what do you suggest as a good short term investment?
Guns? Gold? Education....
CardsDefense 3 years ago
Comment removed
dconjar 3 years ago
Karl lives! Excellent ticker and video as always, keep up the good work.
WelfareRobot 3 years ago
love the sine-wave hairdoo. Happy New Year!
OmarThePug 3 years ago
i used to trust this guy but after this shit at the end about the euro--hes a spinster--total propoganda--check out peter schiff and jim rogers
bitchcreekz1 3 years ago
What kind of logical is this that the dying US (the addict) is better than the temporarily-layoff China (the drug pusher)? Peter Schiff's argument is more sound. The end of WWII with all the returning soldiers did not collapse the US war-time weapon-manufacturing economy back then. US adapted to other things. The end of consuming US will not collapse China's export driven economy either. China will adapt. But the US will have nothing left but its own hyper-inflationary economy.
nemnaisa 3 years ago 3
There seem to be two schools of thought on China. Some see inherent instability in the nation due to the ethnic tensions (100's of different ethnic groups) and disillusionment. Also, much of China still lives a third world life. No opinion, myself.
kkob 3 years ago
The coming imminent Collapse of the Chinese Communist Party, will bring an Unprecedented freedom and Liberty to China. You see Karl, is right when he says that Overseas will be affected FAR worse than us, especially China because The Free Market System compared to the Tyrannical Communist Controlled system in China is like comparing Apples and Skyscrapers: completely different.
China's Fundamentals are Destroyed, while America's fundamental are alive and well but buried underneath Corruption.
mitchee009 3 years ago
what is he saying at 8:48 - 8:50?
Caitanyadasa 3 years ago
back inward
nemnaisa 3 years ago 2
"Cheap plastic crap" shows the kind of attitude leading the down fall of US. Manufacturing tangible things are not crap. 70% of the economy driven by consumption based on credit expansion is crap. Fabricating pieces of financial papers to con the world for trade settlement is even criminal. The US is on a downward path to beyond third-world status. This kind of arrogant comments and tone do not help in begging from the rest of the world. But soon you will learn how to be a beggar.
nemnaisa 3 years ago 2
Comment removed
dconjar 3 years ago
Treasury Market peaks them dumps, due to lack of foreign investment moving forward. Fed has to print money to buy Treasuries. How is that not terrible for the dollar?
longbeachtrust 3 years ago
I'm tired of optimism, it's short sighted! We need to create authentic long-term solutions. I understand their are obstacles ie congress, treausry, fed, etc. I want to pull back the curtain in 2009 to reveal the corruption and arrogance that is raping our country.
becauseicare2 3 years ago 2
Karl, keep up the good work. i respectfully disagree w/ Gold. we are paying premium to get physical gold and silver. some vendors experiencing delay in delivery. all the best in 2009.
whong819 3 years ago 2
i think the fact that the us has NO industrial infrastructure creates a very big problem in that we cannot produce the things we need as the countries that produce those items melt down and go into chaos...its a bad deal all the way around...
centervilletn 3 years ago 2
a piece of puzzle left out of the picture is Mexico..as oil prices continue to decline the and the US job market dries up Mexico loses its two biggest sources of revenue...then the united states has a third world country with millions of refugees on its southern boarder...we already know that investment in developing markets is dead...we could have a very very serious problem by the end of 2009.
centervilletn 3 years ago
is it possible that the country is under martial law with out a public anouncement? that would open the door for the 'president' to order the congress to "pass" whatever is put infront of them...and keep their mouths shut...
centervilletn 3 years ago
You're nuts. Keep it up and you'll be finding somewhere else to comment.
kdenninger 3 years ago
I don't get it kdenninger, you seem smart
Tell me, What is the legal instrument they use and attach to us for these transactions?
You say raise taxes... they must charge against something... How?
How are they legally taking this money, from what fund?
Who's pool of Credit/Debt/Future-tax? Ours?
Who makes Wall-Street function? Is it not the Faith and Credit of the American People? How? What instrument?
Is it not Pre-paid? Do we not, "Float" everything?
come on kdenninger use that brain
Signzit 3 years ago
Raise taxes to 30% of GDP, or devalue the dollar?
disasterpastor45 3 years ago
This comment has received too many negative votes show
Sorry, my Denninger, I tally your predictions a little less favorably. Recession was not evident in Q1. Unemp. was not north of 5%, but north of 6% - that may not be a big difference to an amateur economist, but to pro it is. No hyperinflation - doesn't say much. Gold, also, held up okay. You said government will meddle - that is like telling me there is oxygen in the air. You did not say how much; rather, you said if it meddled a lot, it would be bad.
maximizeutility 3 years ago
It wasn't? When did the NBER say the recession began? That call was SPOT ON.
And "north of" is just that - greater than.
kdenninger 3 years ago
Missed ya, Karl. Glad ya posted again.
newutubejunkie 3 years ago 2
Ditto.
penis101010101 3 years ago
i think the united states will be hit much harder than the rest of the world on average. other markets/nations/systems just dont have a bubble. maybe you only get the worst depressions where the biggest bubbles are imploding, and maybe all the bubble-free zones only get a recession or a mild depression. or at least i hope for this, it would be fair if this global crisis causes most damage in the markets that have the biggest bubbles.
kurtilein3 3 years ago
The Asians will stop buying our shit. Plan and simple. Game over.
ohio1998 3 years ago
They already have. What happens when they stop loaning us money to buy their shit?
DavidCJensen 3 years ago 3
Well, we print money to allow for the easy credit over the last 10 years. No one has to work and you could buy a house or a car no problem. People have to BUY credit bonds which backs up this credit. When foriegners and other people with bonds realize that their yields are negative because of defaults, no one will buy bonds! I wouldn't!
ohio1998 3 years ago
The biggest problem is where the 'debt money' comes from - the privately owned Federal Reserve. The Federal Reserve and it's corrupt fractional reserve monetary policy amasses more and more debt due to INTEREST.There is not need for the INTEREST if congress goes directly to the Treasury without INTEREST.
End the Federal Reserve and fractional reserve lending at interest and we can begin to recover once again. Not to end it, is only to continue to down the same path.
Prohoridzo 3 years ago
wanna know my 2009 prediction. complete collapse of the dollar within 6 months. all their parlor tricks are barely keeping the dollar afloat now.
callieland 3 years ago
People are so stupid that they won't notice. They'll just blame it on oil companies and other people.
ohio1998 3 years ago
Good luck with that. Please short the /DX.
kdenninger 3 years ago
Comment removed
dconjar 3 years ago
Great video Karl! Your logic, and firm articulation here on youtube means probably more than you may imagine.
GildedTermite 3 years ago
Thanks for the video. Been wondering where you are.
I think people like your vids because we get to hear you speak and we can watch it while we might be working on something else. That is what I do. So that is why I prefer the vids to a blog.
scutterbear 3 years ago
The vids are only 10 minutes, and there's no way I could get the Year In Review ticker, as one example, into a 10 minute video.
kdenninger 3 years ago
I lot of people break their videos into 10 minute segments. Eg. you needed 30 minutes to do a YIR, do a part 1, 2 and 3.
gunnerrat 3 years ago
Thanks for the video Karl. Your website is great - but really enjoy the video blogs.
You are correct about us in the UK. We are royally screwed.
We have a housing bubble just as big (if not bigger) than in the US, financial services is on its knees (which is our biggest industry sector), retailing is on its deathbed (watch how many of our retail chains go bust in January alone) and to top it off we have an unelected clown as PM trying to bankrup the country.
UK IMF bailout by 2012.
mattd49 3 years ago
australia and nz same boat but IMF bailout 2013
charlie4114 3 years ago
As long as Karl think keynesian economics works he will be wrong more times than he is right.
The truth is cold and hard to swallow, it's that government will not do the right thing until they are forced to.
Karl is forgetting the the dope dealer is not just one person it's 1 billion people. And maybe just maybe the dope (debt) will be consumed by the dealers?
Nah that's crazy only Americans know how to spend.
davincij15 3 years ago 4
Karl doesn't believe in Keynesian economics, and you haven't read a SINGLE THING I've written on that topic in the blog.
Comments here are fine. Intentional falsehoods are not, and will be removed.
kdenninger 3 years ago
My apologies then but you videos make you out to be a believer in Keynesian economics. I guess I should have asked you first.
So I retract my statement, Karl is not a Keynesian.
You are just a believer in government, fiat, and spending will solve our current economic problem? (I'm asking)
NOTE: I know it would work if we could, the problem is we can't so it won't. <- strange statement I know but that's how our monetary system works, a gigantic riddle.
davincij15 3 years ago
Please go to the ticker site and you will find that you are misreading KD 100% if you think he believes spending will solve our problems.
gmfutube 3 years ago 3
You haven't read a damn thing.
Become educated or be ridiculed.
kdenninger 3 years ago
Karl you said:
"You haven't read a damn thing."
I apologize for calling you a believer in Keynesian economics and you insult me with a blanket statement that applied to anyone reading this post would be false? :) lol
I don't mind being "ridiculed" for my false statements, it makes me go validate my belief and correct them.
BTW: I noticed you did not answer my question and responded in anger, it makes one assume your answer would not conflict with my original assumption.
Please correct me.
davincij15 3 years ago
well done
wrathmaster 3 years ago
sorry Karl i couldnt quite make you out when you said why you thought gold wasnt gonna go that high and the dollar sink. Could you explain it?
And i hear you when it comes to the pound. Ive still got a basic understanding of economics but im hating all of these so called "solutions" Borrow more money and using it for government spending!! Keynesian economics is retarded!
NicosMind 3 years ago 4
also its good seeing you again. Ive favorited your video site so i can check on it
NicosMind 3 years ago
Sure: The "Goldbug" game is all about the imminent destruction of the dollar.
I don't buy it. Its not that we aren't screwed - we are. Its that the rest of the world is screwed WORSE.
kdenninger 3 years ago
Love the blog. Pls post more videos in the new year. Your help is sincerely appreciated.
blue42421 3 years ago
This guy is freakin' awesome. End of story.
JackNeedles 3 years ago
excellent,as usual.
gazric 3 years ago
Great video again, always so informative. I like the videos more then reading the site because your commentary on the subjects help make it a little less depressing, even though it doesn't ever seem to go away (the problems i mean).
What to say, have a good year! Cant wait for more videos.
TruestShadow 3 years ago
Karl, I don't think PETER SCHIFF is wrong? Sorry man! That's why they are building FEMA Camps in USA becauze the real shit will be there! Listen also Gerald Celente, who has great track record and is talking about civil unrest in USA!
SolitonPL 3 years ago 2
Bah.
Peter Schiff's recommendations have not only been wrong, they've been ruinous. I'll put my record up against his any day of the week.
If you did what he recommended at the start of last year you saw the entirety of the Asian market (where he thought you should be) gutted AND the dollar went higher. You got rammed twice.
So much for his prognstications.
kdenninger 3 years ago
Peter Schiff has acknoledge that he didnt predicted such a strong dollar rally serveral times.
But its not only Peter Schiff that is predicting a rise on comodities (specially precious ones) and a big fall on the dollar. Jim Rogers and Marc Faber are also predicting exactly the same. They agree with you with England "going down". Can you explain more why you think the dollar will hold and why commodities will fall?
hugolp 3 years ago 9
Denger. Deflation in the US will never happen. I can't believe you've bought hook, line and sinker the gospel of the MSM. The stocks Europac buys are still giving ridiculous dividends. Your portfolio may be down, but you are still getting ridiculous dividends and yields. People who have opened up accounts with Peter's company within the last three months are now up 30 percent. Remember he's the one who has called everything that has been going on. Not you.
bdc03 3 years ago 4
Comment removed
dconjar 3 years ago
Ha, if you think the Austrian school is wrong. You might actually research Keynesian economics. Or move to China, and live it. Perhaps try Iceland...see how that one went.
bdc03 3 years ago 3
We're living Keynesian economics right now and for the foreseeable future (deficit spending in time of a recession). Did it work in the 1930s?
DavidCJensen 3 years ago
We didn't have a deficit in the 30s.
bdc03 3 years ago
If by "we" you mean the US, we did indeed run budget deficits continously from 1931 to 1946.
DavidCJensen 3 years ago
I don't think so. But this is where we are headed. Hold your hands out!!!!!
ohio1998 3 years ago
My source is the US office of management and budget. That is what the stats show. What's yours? The debate about Keynesian economics came about due to the great depression. This lead to the expansion of the federal government, the Supreme Court's reversal of decades of jurisprudence limiting federal govt powers under the Commerce Clause, etc.
Check it out before you comment.
DavidCJensen 3 years ago