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EmailHow This Will All End
Wednesday, January 12, 2011
Executive Summary
- The inevitable market correction will be triggered by a forcing event, and which one is most likely
- The US has too much debt
- State bailouts signaled by Fed's denials?
- "Not enough oil to repay the debt"
- Why the cost of debt service will drown us, even if interest rates remain low
- Bond market will lead the way
- The key signs to watch for that will signal the endgame is playing out
- Recommended investment classes for preserving wealth
Part I
If you have not yet read Part I of this report, please click here to read it first.
Part II - How This Will All End
In Part I of this report, I laid out my reasoning for why the game has managed to continue on as long as it has. Where a massive financial dislocation should have happened by now, in practice the impacts have been relatively minor compared to what many people had expected to happen.
But we cannot escape the fact that entirely too many debts and liabilities exist to pay off in current dollars. Either those debts will have to be defaulted upon, or they will have to be inflated away.
Even more important than the question of which one it will be is the question of when. That's what we will explore here.
Your faithful information scout,
Chris Martenson
Copyright 2011, Chris Martenson. All rights reserved.
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Comments
Chris I have asked you before but for an American that has PM's, land, no debt and trying to get away from the US dollar and believing in Peak Easy Oil would you call Energy say Canadian O&G. I am unaware of another way to invest in Energy w/o going out to buy mineral interests that I have no knowledge of and would probably have my head handed to me...
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Chris
This is your best report yet. I'll need some time to fully digest it. It is very helpful that you have more clearly defined the likely outcome, its causes, triggering events, and possible timing. This has clarified the picture very well and helps me decide what actions to take...
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Chris,
Thank you for the excellent analysis.
I was wondering how the current situation in commodities, particularly food related, plays into your thoughts. Energy and food are obvious necessities for the general public and will consume a larger share of their budgets...
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Thank you Chris, especially for the tables that show how our debt service burden will respond to the (inevitable) interest rate increases... this is a dramatic story for anyone who wishes to open their eyes.
I'll have to admit you had me worried at first though...
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Wow Jim, that's one heck of a post. I'm hedging my bets : paying down some mortgage (asset deflation) & stocking up on commodities (hyperinflation on all basic necessitites). I've speculated on a miner stock and I'm not trying not to follow it on a day-by-day basis...
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Thank you for another great report.
How can there be a failed Treasury auction? Wouldn't the Fed just buy up all the leftovers?
M.E. wrote:
Thank you for another great report.
How can there be a failed Treasury auction? Wouldn't the Fed just buy up all the leftovers?
Lots of great commentary to respond to in this thread, so I'll start with the easiest one...
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cmartenson wrote:
<snip>
In fact, we've seen more than a dozen auctions where the bid-to-cover was 'strong' (over 2.5) and described as such by all the media but where one or more individual CUSIP offerings were then largely bought up by the Fed a few days later...
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mobius wrote:
Wow Jim, that's one heck of a post.
Second that!
excellent report!
I don't think, that there is out there only some sort of a complex, self guiding, self reinforcing net of webbed dynamics driven by chaoswise coincidences and Ben and "all the men who are involved".
If you were one of them, one of the really big players, would you wait up and watch your business model sliding towards dumping? Never ever!
If "the empire" does as usual, there is a master plan - started decades ago...
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