Chris Martenson's Blog

by Richard Heinberg

This article ran for our enrolled users last week and is one in a series from respected guest commentators while Chris is vacationing with his family and working on his new book. Enjoy the fresh perspective.

The mainstream theoretical tools now commonly available to central bankers and government economic managers are worse than useless for addressing current global economic and environmental crises.  This sweeping statement is amply borne out, not only by ongoing economic data but also by the history of the economic ideas that have shaped the modern world.  That history is of course complex, but it can be summarized briefly to some advantage.

While economic philosophy can be traced back at least as far as Aristotle (382-322 BC), little of real substance was added to the discussion during the next two thousand years.

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by machinehead

This article ran for our enrolled users last week and is one in a series from respected guest commentators while Chris is vacationing with his family and working on his new book. Many of you will recognize today’s author from his insightful comments that appear frequently across ChrisMartenson.com. Enjoy!

Since early April, the yield on 10-year Treasury notes has dwindled from 4.0% to below 2.5% on August 24th.  Meanwhile, the 12-month change in the Cleveland Fed's median CPI has hovered feebly between 0.5% and 0.6% since March.  These abnormally low interest and inflation rates are fanning fears of renewed GDP contraction, a plunge into price deflation, or both.  Boardrooms and blogs are humming with rumors of a 'QE II' (Quantitative Easing II) program to counter a chilly deflationary dip.

One reason fears are so acute is that the Federal Reserve's main policy tool, the overnight interest rate on Fed Funds, is flatlined at zero.  Moreover, via 'extraordinary measures' beginning in September 2008, the Federal Reserve added some $1.4 trillion of securities, including $1.1 trillion of MBS (mortgage-backed securities), to its balance sheet in a stimulus bid.  Yet despite these heroic efforts, economic leading indicators have turned weak this summer, as sinking Treasury yields add to the disquiet.

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Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Graduates of the Crash Course series emerge aware that, economically speaking, the next twenty years are going to be completely unlike the last twenty years.  This invariably leads to the question, "How do I prepare financially?"

We have entered some truly treacherous investing waters, where we must question everything and accept nothing, even (and especially) the base assumption that any given currency, be that the US dollar or euro or Yen, will retain its value.  Is a ‘double-dip’ recession coming?  Nobody knows for certain, but all the warning signs are there.  Our view is that it’s best to start thinking about preserving and protecting your wealth now, while you still have that opportunity.  The bottom line here is that you should not be taking your cues from what your neighbors seem to be doing, but instead being sure that your own house is in order.

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by Charles Hugh Smith

This article ran for our enrolled users last week and is one in a series from respected guest commentators while Chris is at work on his new book. Please welcome them to the ChrisMartenson.com community and enjoy the fresh perspective.

At some point, economic recessions trigger social recessions.  Individual expectations and behaviors slowly gather the momentum to change cultural values, social relations, and the way entire generations think about key issues such as opportunity, security, prosperity, government, family, and the relative importance of money in life.

Those of us who know people who experienced the Great Depression have some glimmerings of how social recessions change people's attitudes and values.  Two examples come to mind:  My grandmother had small savings accounts in multiple banks; clearly, she didn't trust the idea of having one's nest egg in one bank.  And my uncle said that just having a job with a steady paycheck after World War II seemed like heaven.  (He'd served in the 8th Air Force in Europe, surviving a 50% casualty rate for B-17 crews.)

But we don't need to turn back the clock 65 years to view a social recession; there is a real-time one playing out in the world's second largest economy:  Japan.

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by Ilargi of The Automatic Earth

This article ran for our enrolled users earlier this week and is one in a series from respected guest commentators while Chris is at work on his new book. Please welcome them to the ChrisMartenson.com community and enjoy the fresh perspective.

From a purely political point of view, it’s a simple story.  Existing homeowners are a far more powerful force at the voting booth than potential owners, homebuyers, are.  It’s therefore very much in the interest of the incumbent government to keep home prices as high as it can.  Let them slide too much and you will pay for that at the next election.  For potential buyers, you can devise plans that lower interest rates and down payments, but that's all.  More affordability simply through lower prices is not on the political table.

Still, in the "listening conference" on US housing policies - Fannie Mae and Freddie Mac in particular - that started this week, it's not voters who have the biggest say.  That is reserved for the financial industry, and how could it not be?  Not that the Obama administration has to hear the truth from the bankers anymore:  Washington has long since realized that truth.  Which is that without Fannie and Freddie and the 80% stake the US took in them in 2008, as well as the unlimited financial guarantee issued by Tim Geithner at the end of 2009, it's not just the housing industry that would instantly collapse.  The banking industry would, like a shadow, rapidly follow in its footsteps.  read more »

Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Heat, Power, and Communications

Being warm, having instant access to electricity, and being able to connect with anyone anytime, anywhere, are so integrated in present-day life that we often forget just how much value these luxuries offer us.  My town has experienced four weather- and usage-related power outages in the past year (for a total of eleven power-free days), which provided a useful reminder of just how dependent we are on the miracle of steady, uninterrupted energy.

Being able to see when it is dark, cook food, and heat your space should an outage occur in the winter are first-level needs to prepare for.  Remaining in touch with those you depend on (and those who depend on you) is also a primary need, especially in any prolonged outage situation.

Even more significantly than with food and water, there are major cost differences between preparing in an ideal or long-term sort of way using totally self-sufficient alternate energy systems and preparing in a good-enough stop-gap way for temporary outages.  There is certainly value in planning and investing to accomplish both, but do not let concerns that you will not have the perfect long-term system impede you from preparing for some of the more likely problematic wrinkles that may come your way.

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Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

The Future of Your Health

Like our “just in time” food system, our modern medical infrastructure is highly complex; it functions well only under controlled circumstances and with abundantly available specific resources.  As with food, the ease with which we’ve accessed medical services over recent decades has invited us to reduce our health self-sufficiency.  We've become so sheltered from the health risks our forefathers faced that we're especially vulnerable if we're ever forced to live without easy access to professional care.

Taking on a bit more responsibility and a few more preventive steps in one’s personal health is crucial; a must-do in the process of becoming resilient.  Some of the steps recommended for beginners are universal; others depend on your personal needs.  But in all cases, a good dose of foresight and practicality is in order to build some security into the future of your health.  You should plan ahead for the things you know you’ll need: are there medications you take regularly?  Do you wear contact lenses or glasses?  What supplements, hygiene products, or nutritional supplies would you be hard-pressed to live without?  read more »

There were a number of quite interesting developments in the market today (Wednesday, August 11th), and I want to focus on those instead of my usual macro view.

The stock market sold off heavily today, presumably in response to the Fed’s recent statement, which admitted two things:  (1) US economic growth is weaker than previously thought (dollar negative), and (2) the Fed is going to renew its efforts at monetizing US government paper (dollar negative).

Anybody following today's nonsensical markets knows what happened next:  The dollar rallied.  A lot.

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Note:  This article was written on May 28, 2010 and is an example of a Martenson Report available to enrolled members, albeit a relatively short one.  My service to enrolled members can be likened to an information scout who provides thoughtful analysis of current data while always remaining clear about the difference between facts, opinions, and beliefs.

Executive Summary

• Asking whether gold is in a bubble or a bull/bear market misses the point.
• Better questions to ask involve fiat money management, government responses, and financial market risk.
• Gold is not in a bull market; rather, faith in our decision-makers is in a bear market.
• Trust is hard to come by these days. 
• As for whether or not to buy gold, there are a number of factors to consider.

I'd like to clarify my views on gold, because I approach this topic from a unique perspective that I think has value.

For most, the idea of investing, or even speculating, is a matter of placing one's money somewhere with the anticipation of getting more money back out at a later date.  Naturally, the footnote to this expectation reads, "...assuming money is worth the same."  In this idea of investing, 'more money' is assumed to be synonymous with 'greater purchasing power,' because devalued money may represent a significant loss.  The shifting target in this story since 1971 has been the untethered value of the currency itself.

For many investors, it has been a useful frame of reference to define various asset classes and markets in terms of being either "bull" or "bear" markets, where prices for investments have risen or fallen over some period of time, respectively.

Sometimes, when a bull market ramps out of control and then crashes, it is said to have been in a "bubble."

Recently, the WSJ asked the question of whether or not gold is in a bubble, which is an important distinction for many investors, because if the answer is "yes," then the next question is, "So when will it crash?"

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Note:  This article is part of a series on personal preparation to help you answer the question, "What should I do?"  Our goal is to provide a safe, rational, relatively comfortable experience for those who are just coming to the realization that it would be prudent to take precautionary steps against an uncertain future.  Those who have already taken these basic steps (and more) are invited to help us improve what is offered here by contributing comments, as this content is meant to be dynamic and improve over time.

Increasing Your Local Food Sources

For us, the next step after getting some food stored away was to increase our local sources of food.  Our primary local sources include the farmers who produce our meat and raw milk and the community-supported agriculture (CSA) vegetable operation to which we belong.  Our local demand translates into more local food—a worthy outcome by itself, but we also happen to get superior food as part of the bargain.

And there's more.  Our CSA is run by two fabulous young farmers whom we adore, it employs a crew of young local people, and they grow everything organically.  We are getting tastier and healthier food, increasing demand for local food, and supporting our local community, all in one fell swoop.  If you do not yet belong to a CSA and have the opportunity, it is well worth pursuing.  And if a CSA is not available or affordable to you, then at the very least, make connections with local farmers and food producers and purchase food from them directly whenever possible.

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