Martenson Reports

In this report, I explore a remarkable article by Mr. James Grant that appeared in the December 20th edition of the Wall Street Journal.  This article is remarkable because Grant correctly identifies the Fed as the source of current economic troubles and makes the case that, under a gold standard, we might have a different set of troubles, but we wouldn't be facing an extinction-level event for finance.  With the deft use of historical examples, he makes a strong case that our current ills stem from very common mistakes that have plagued central banking ever since it was first invented.  I expand on several of his arguments to steer towards the conclusion that inflation lies in wait.

Executive summary:   This report looks at the latest move by the Fed to drop interest rates to zero and to print massive amounts of money as part of a quantitative easing effort. It looks at the most recent Fed statement that accompanied the rate decision in some detail and closes with an exploration of what this could mean to the dollar (hint: not good) and our financial future.  I offer my view on the dollar, stocks, bonds, gold, and real estate.

The Fed has begun a very aggressive program of money printing (that goes by the fancy name “quantitative easing”) and shows every indication of continuing this program into the indefinite future. Chances are that the Fed will err to the inflationary side with this program, raising the prospect of serious inflation emerging at some point over the next year.

Executive summary: 

The Fed has engaged on a path of “quantitative easing” (defined in Part II of this report), which has only been tried by Japan, where it was met with limited success.  Success rests on the hopeful, but possibly flawed, assumption that cheap money will lead to renewed borrowing. 

In this Martenson Report/Alert, I detail the breakdown in the stock charts of several very large banks and insurance companies, relate these breakdowns to their past use of accounting shenanigans (Level III assets) and derivatives, and make the case that we are closer than ever to a financial breakdown. This is only my third alert ever and is warranted by the companies involved and what they signify.

The credit bubble has burst.  Twenty-five years of spending more than we've earned has finally caught up with us.  Now that the continuous expansion of credit has ceased, it is no longer possible to finance the carrying costs of the prior debt, and collapse is the inevitable outcome. But how will it play out?

In this report I will review the advice and predictions I made on May 27th of 2008 (exactly 5 months ago) in a report entitled Charting a Course Through the Recession.

In striving to be accurate, fair, and complete, and in the spirit of constant improvement, it’s important to review where we went right and where we went wrong.  I’m pleased to say that many of my predictions were right on target.  I didn’t anticipate such an aggressive dollar advance, but now I see this trend continuing for awhile.  I am continuing to recommend some of the same prudent actions as always.  Stay out of debt, keep cash close by, get some money out of the dollar (gold), and know your neighbors.  And stay tuned for more from me in future reports.

One of the most emailed stories at the NYT website today is an Op-Ed piece by Warren Buffett entitled Buy American. I Am.

I think this piece deserves some closer attention because Warren Buffett is so influential in the world of money. Let's examine his ideas closely.

In this Martenson Report, I cover the importance of the credit markets to the smooth functioning of our just-in-time economy.  If the credit markets fully seize up, it is not a stretch to state that most businesses and the flow of many goods will also seize up.

In fact, this has already happened, to a limited extent.  Should this extend further, there are a few basic precautions that you should consider as a means of mitigating the impact of a potential banking/credit lock-up.

The text below is from a past seminar.  It is a very loose adaptation of the Kubler-Ross "Five Stages of Grief" framework.

Often a broad new awareness results in a series of emotional responses that mimic the grief associated with loss.  I have termed these the Six Stages of Awareness.

Each of us here is somewhere along this progression.  Most of us will inevitably pass through all six stages, each at a different speed, not always in order, and some will skip a few stages.

While we read each others' comments at this site (and elsewhere), my hope is that we can find acceptance and understanding of the fact that each person is at a slightly different stage of acceptance and awareness. 

Each person needs to process the stage they are currently in and that is perfectly okay with me (within normal bounds of civility and appropriateness, of course).