Mission Impossible: 'A Deteriorating Global Economy'

By: CAPTAINHOOK / GOLDSEEK.COM

Ethan Hawk is not one to avoid danger, but he would never take this mission. He wouldn’t take it because it’s impossible. Because no matter how clever or how many gadgets he employs it won’t be enough. The job is too complex and formidable – too big even for the most optimistic of thinkers. What job am I talking about? Saving the human race. A mission to Mars. Getting the sociopaths in charge of ‘the system’ to do the right thing. Of course not. Only one of those things is possible. No, I am referring to saving our economy of course, because that’s what I write about; that and the financial markets. It’s the economy, and in turn, financial markets that are impossible, with most people either in denial about it or gaming them, or both – making the prognosis terminal.

And along this line then, in case you have not been following current events, things are unraveling rapidly around the world, which is becoming increasingly difficult to hide. This is certainly already the case in Europe; China’s manufacturing engine is only running on three cylinders; emerging market economies and markets are collapsing; and even though the status quo will never admit it, even the great US of A is crumbling from within, which will be evident to all sooner rather than later. The positively spun, but fraudulent, Employment Report for June is just the latest chapter in the establishments bullshit (BS) story that the ‘economy is strong’ in America, allowing for stocks, the dollar(s), and demand for debt (even though rates are rising) to keep rising.

The most profound consequence of all this has been to embolden the delusional into actually believing their own BS, with Bernanke apparently at the top of the list, not considering the unintended consequences of stringent policies applied to a completely hollowed out economy. What will happen eventually is both the BS stories and mechanisms by which the bureaucracy’s price managers keep the system going will meet reality (fiction and fraud will meet reality), and house of cards will come down. This is why Ethan would never take this job – because he’s ‘plugged in’ and is not falling for the BS. What he’s doing instead is buying gold and silver bullion and not telling anybody. True, this is not the ‘American way’, but who’s to say a bunch of the bureaucrats, politicians, and bankers that are screwing us aren’t doing exactly the same thing.

Because even the idiots in the belfries that have not had their own bells rung to the point they can’t think anymore know at some point the BS is not going to be enough to save their BS jobs, BS economy, and BS markets – which will leave those wishing to preserve their wealth with only one logical alternative – and that’s precious metals. What’s more, it will come fast when its happening and catch most people off guard with everything from crashing stocks, to bail-ins, to increasing violence of every variety. Because you can’t have decades of serial bubble blowing, with bonds the latest example, and not have something very nasty happen at some point no matter what central banks attempt to do in avoiding the inevitable. And just about everybody reading this article knows what that means these days, that being printing money – lots of money while at the same time having you believe the opposite.

The upshot of all this is if money supply growth rates are going up in order to pay for a deteriorating global economy (because it’s mission impossible), at some point this will need to be reflected in precious metals prices. Because of diminishing returns, currency debasement rates will need to be higher than previously witnessed to produce any illusion of inflation the next time things are so bad an expansion needs to takes place, which is a fact not lost on the Fed. So, you should know this would likely happen, with the Fed (and its international counterparts) increasing not only the quantities of existing QE programs, but also the scope of recipients. The thing about hollowing out an economy is in the wake of such an exercise you leave increasing numbers across increasing industry groups unemployed the longer loose money policies are allowed to proliferate. So, if the oligarchs and bureaucrats don’t want a revolution, they must find a way to feed the increasingly destitute, which is evidenced in actual rising core unemployment and food stamps program.

What’s more, the present QE will not be enough to prevent a bloated and increasingly inefficient system / markets from imploding soon (because of diminishing returns), which is what will eventually spark renewed interest in precious metals. Along this line of thinking, gold is definitely oversold and showing signs of bottoming, but may need to make trip towards $1100 if our studies hold water, so one should be looking to accumulate on any further spike lows if not doing so already. Because all this should gradually develop into a mania in precious metals, being the next in a chain of serial bubbles characterizing our decaying fiat currency economies, where it should be understood no mania in precious metals has yet taken place, making this a high probability based on the fundamentals and washed-out participation rates in the sector thus far.

Moreover, if the Fibonacci signature in the long-term monthly chart of retail stocks (thought to representing the ultimate reflection of sentiment in American consumerism) pictured below has any merit, both the stock market and economy (one and the same) should be topping out soon, which will bring a bid back into the inflation trade after liquidity / deleveraging jitters associated with the initial stages of a lasting sell-off sucks the air out of bubbles which have re-inflated since the 2009 lows. You should know retail stocks have not been rising not because retailers have been strong, or prospects for consumption (or consumerism) robust, but because of an almost inexplicable combination of complacency and pervasive denial that has gripped the masses (and money managers unfortunately) juxtaposed with dimwitted short-sellers (who view themselves as part of the few sane people remaining), setting the stage for a truly profound short squeeze, propelling prices to present heights. It’s an exercise in mass foolishness on both sides of the ledger. (See Figure 1)

Figure 1

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