Precious metals demand

That last bit I agree with, don't put all of your eggs in one basket. Contrarians have had a bad run, but having said that, gold hasn't been this high (adjusted for inflation), since Silver Thursday or thereabouts. Gold bulls are definitely not eating their proverbial hats.

But just because something is unprecedented, doesn't mean a Black Swan won't happen. US debt is at absolutely unsustainable levels. Commercial RE is one of the many domininoes yet to fall. Why are China and Russia flexing their muscles? It is because the US is hamstrung in debt and division.

You say that they have exported their issues, but I visited the US recently and I can tell you that prices at restaurants are on par with AU, but in USD! Some of those buggers are being eaten alive by inflation. The working poor... those who will never own property, or remain hand to mouth until the inevitable end, like medical bankruptcy, are a thing. USians on here may agree.

Human arrogance is something that will always replay. I've been reading a lot about Titanic lately. The perfect example of human arrogance. Everything is impervious, unsinkable, unfathomable... until it actually happens. Did anyone predict the fall of the USSR? Not a single one. It's hard to comprehend (or predict) the unprecedented.

 

We are still living through central bank intervention ripples from Lehman/Bear Sterns almost 20 years out. Enron caused significant dislocations (and interventions) in the financial economy. Every intervention (problem deferred) requires greater and greater responses. If the Fed manages to get it's balance sheet back to the normal growth line level pre-Lehman without the world economy imploding, I'll concede your point, but I seriously do not believe that to be possible. We're not even going to see the Fed QT back to pre-Covid levels. The towering heights you referred to is built upon the lie of fiat money. That lie is unsustainable and really starting to show it's colors. $.02

Some fun (related) reading:

https://www.telegraph.co.uk/busines...-face-horrible-choice-warns-bernard-connolly/

https://wolfstreet.com/2024/03/23/t...f-the-balance-sheet-without-blowing-stuff-up/

You and I must read different financial media.

 

Thanks for chiming in here @pmbug

Overall, I am glad to throw out some ideas and banter. It is something that SS hasn't had in a while. I hope everyone is doing well.

Whatever I say, (FYI) don't get offended as I often throw around unpopular or contrarian opinions. But I guess that that is something in the West we can still celebrate. Increasingly, the unelected status quo really do control the official (and unofficial) narrative.

 

Your Contrarian ideas are most welcome on SS. Your polite input is very interesting as are the other posters here who also don’t name call or abuse. It makes for an interesting discussion.
I have learnt a lot from this thread,

 

Lehman/BS -> TARP -> QE -> ZIRP -> today's mess

BTW, WRT Basel III:

https://www.americanbanker.com/news/feds-barr-working-with-powell-to-find-consensus-on-basel-iii

 

The banks will get endless bailouts anyway and a total collapse is not an issue for them. The Fed can and will buy it all. Powell is the man with the credit card and the gold stackers hero this time.

Even if everyone loses everything they can still claim a soft landing, as long as their system survives which always does.

 

More "not crying":

https://www.americanbanker.com/opin...y-disadvantage-international-banks-in-the-u-s

Note that this "not crying" isn't coming from the small or regional banks - it's being driven by the G-SIBs.

 

I remember reading a very old article talking about when the FED was being established. The article talked about all the negative press being written by the big banks apposing the implementation of a central bank and how it was done as reverse psychology. The big banks in reality wanted the formation of the FED and understood if they made it seem like they didn't want it, it was more likely to get government and public acceptance. The formation of a central banks gave the bigger banks (inside club) an uneven playing field from the smaller banks and ensured their dominance.

 

UK is cooked, their massive drop in living standards are constantly in the news. The almost had a "Black Swan" with Liz Truss' budget.

Granted, the USSR is not a great example, mainly due to its centrally-planned command economy. My point is that systems and nations collapse, even advanced capitalist ones. Germany's Weimar Republic was an advanced economy. Even Blind Freddy can tell you that the USA (and arguably the UK/AU) have been on a bumpy, yet steady downward trajectory since September 11, 2001. Sure, it is bad to pick a specific date, but it sticks out; how much has the world changed since then! Or maybe the March 2003 invasion of Iraq. WE ARE NOT IMMUNE TO HISTORY. To think that economic collapse, war, thuggery, religious fundamentalism, homophobia, savage nationalism, hyperinflation are things of the past are delusional. Politics and economics are intertwined, and it's pretty much 1939 right now; gold prices are reflecting this. The question is not if but when something horrible is going to happen. I believe most people, deep down, don't feel too good about the direction of the world.

Regarding the USSR, sure it was, well, pretty close to what Russia is today with what you say: "a system of government that utilised murder, owned the means of production, was completely opaque on matters of governance and adopted a system of law that offered no protection of property rights". If you are not connected over there, you are nobody. There are millions in that nation that never really made it out of Tsarist peasant-style poverty. Western Russian fanboys have never been outside of any major city in the nation, and most have never actually set foot in the country.

 

It's good to have a positive Yin to my pessimist Yang.

The Weimar republic didn't collapse due to being war-ravaged (most of Europe was after the war), it was due to massive debt due to war reparations and monetary debasement.

Regarding the US, I always think of Michael Douglas' character in Wall Street. A very misunderstood speech, mainly because not many people know much about it:

"Well, ladies and gentlemen, we're not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!

All together, these men sitting up here [Teldar management] own less than 3 percent of the company. And where does Mr. Cromwell put his million-dollar salary? Not in Teldar stock; he owns less than 1 percent. Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents, each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated.

I am not a destroyer of companies. I am a liberator of them! In the last seven deals that I've been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. (Gecko was a corporate raider)
The point is, ladies and gentleman, that greed -- for lack of a better word -- is good.
Greed is right.
Greed works.
Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.
Greed, in all of its forms -- greed for life, for money, for love, knowledge -- has marked the upward surge of mankind.
And greed -- you mark my words -- will not only save Teldar Paper, but that other malfunctioning corporation called the USA."

The film seems dated as Gordon Gecko would turn over in the proverbial grave if he saw the "debt, deficit, disaster" of 2024 (the film was 1987). It really is survival of the unfittest with inefficient corporations, the woke, the autistic, as well as the LGBTI+ supporters thriving. All parasites. Gecko He would've broken up zombies like Qantas, and inefficient duopolies like Coles and Woolworths. Not saying that he was a nice guy, but he represented unbridled laissez faire economics.

In these times, double digit interest rates would cause a Soviet Union style collapse, mark my words. Any US politician would go back to that balance sheet in a nanosecond. I read that there is a big furore about fast food employees in the USA getting 20 dollars an hour, this is 30.79 AUD. Even our minimum wage is lower here, but it goes to show the monetary debasement that has gone on; USD is worth a lot in AU, but it doesn't go too far in the actual USA; like I said, I recently visited there.

And when I mean debt, it is private debt that is IMO the biggest drain on economies, not just gov't debt. It just grows and grows and grows. Imagine where all that money could be going in this country instead off paying off massive interest rate bills?

 

I don't understand the sturdiness you see unless you mean our ability for endless Fed bailouts?
That's not sturdiness by traditional standards.

 

So you mean yes. Endless bank bailouts are sturdy haha. I'd agree.