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| I'm a curious person, as I think you are. I have no formal training in economics either. It is such an interesting field, however.
One caution I have here is that, about this time in the last corn cycle, Paul Volcker *was* appointed. And by a Democrat, no less. This is, IMHO, the nature of psychology - things swing in cycles. So far, this time does not feel all that different than the 70s, although I can sure argue that it is much more serious. I do, however, have to wonder why we won't swing back - at least for a time - long enough to experience a wrenching correction. And this could easily get out of control, at least for a short time. This is why I like having some cash, even though I've always hated holding cash. Like you and gold, it is a hedge.
Right now I'm watching the S&P500 - it is doing something very much like what it did in 1986. At that time, it got so bullish it could not put in a decent four year cycle low, and that is one of the strongest cycles I've seen in any market. It roared to a high the next year - and crashed. This is exactly what it feels like right now to me. If so, I would expect a blow-off top is ahead. After that - maybe we get the crash - and then, how will the Fed handle it? Things could get out of hand very quickly, IMHO. If we do get the blow-off run, do we see another Volcker? Unfortunately, I see no good solutions to this, as I have said, I believe the only solution is a major corrective low - and I do mean major. The psychology needs to be "re-set" - and that cannot be done without substantial pain. I have speculated that the banks might swing this way - *if* they have printed enough money that they think they can weather the storm. I am only guessing here.
From a post below - I think the problem with a static money supply is one where, at times, it simply disappears from circulation. I believe this was the case in the 30s. My memories are from conversations I had with my dad. I remember him saying that there was no opportunity because there was no money. No matter how hard you were willing to work, or how smart you were, there was no money. We all know the problems of a system where we follow the Left to its logical conclusion - a lack of incentive and depression. We have recent examples of this. But, what about if we allow capitalism to work without some kind of controls? My theory is that we end up, for most of us, in the same place - a lack of opportunity due to no money available. A relatively few people end up with all of the marbles, and the rest of us end up renting from them. Think about the old Tennessee Ernie Ford song about the "company store." This, IMHO, also leads to depression and a lack of opportunity.
Yes, the Fed should be abolished. Maybe put them in jail?? After all, when the market moved against them - after they were so greedy - they simply stole enough money from us to avoid the necessary accountability.
Like I have told my wife (for years) - if they made me emperor, I'd fix this s***. It ain't rocket science. | |
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Not a good day for the gold market.
