Conjuring Up Visions

Today’s a day for considering new hopes, new dreams, and new hallucinations.  The New Year is here, after all.  Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad.  But what else will happen?

 

Image of a recently discarded vision…

Image by Michael Del Mundo

 

Here we begin by closing our eyes and slowing our breath.  We let our mind role back into the gray matter of our brain.  We wait patiently for new neurological connections to open up.  Then, ever so subtly, visions of the year ahead come into focus.

Will stocks go up or down?  What about gold and Treasury bonds?  Will the economy expand or contract?  Are we fated for World War III?  Who will win the Super Bowl? These are the questions – and more – we intend to answer.

Obviously, conjuring up visions is more art than science.  But so is Fed monetary policy. Nonetheless, before we get to it we must first lean upon ancient Chinese Philosopher Lao Tzu for a full disclaimer:

 

Those who have knowledge, don’t predict.  Those who predict, don’t have knowledge.

 

Hence, what follows comes from a place of zero knowledge.  We know nothing.  Still we sharpen our pencils and face our limitations.  What follows, for fun and for free, are several simple conjectures for the year ahead…

 

Global Recession

To start, the animal spirits and optimism that greeted Donald Trump’s election victory will flame out not long after inauguration day.  Without a major economic crisis, it will be near impossible to get substantial – $2 trillion deficit – spending approved by Congress.  Moreover, even if massive fiscal stimulus is approved it won’t make much of a lick to the economy for four quarters or more – if ever.

One lesson of the 2009 American Recovery and Reinvestment Act is that throwing money at infrastructure projects is more complex than commonly appreciated.  Shovel ready projects don’t exist.  In particular, shovel ready infrastructure projects that could generate significant growth in high paying jobs are hard to come by with just the inking of a stimulus bill.

 

The surplus shovels from the last batch of shovel-ready infrastructure projects are still in the process of being dumped…

Cartoon by Bar Bee

 

No doubt, this lesson was quickly forgotten when the sky stopped falling just after the darkest days of the Great Recession.  So, too, it’ll be quickly remembered.  Soon enough, the realization that stimulus spending won’t provide an immediate lift to the economy will spread across Wall Street and the post-election stock market rally will reverse.

Similarly, the Fed’s efforts to ‘normalize’ interest rates will be tabled.  The economy simply can’t afford higher rates.  This isn’t Trump’s fault, of course.  He’s been handed a badly damaged economy.

Quite frankly, there’s really no way to fix it.  Decades of economic degradation are irreversible.  Adding new debt based stimulus will only further the overall divergence between debt and GDP.

Specifically, the debt will grow larger while GDP slouches forward.  On top of that, larger deficits will eventually ignite a level of consumer price inflation that hasn’t dramatically flared up since the early 1980s.  A scenario of slow growth and rising consumer price inflation will emerge at some point.

But first something else must come to pass.  By mid-year it will become all too apparent that the global economy, including the United States, Europe, China, and Japan, are in a full blown recession.

The Fed will quickly return to zero interest rate policy.  Ten Year Treasury yields will again slip below 2 percent as investors blindly plow their capital back into the ‘safest investment in the world’ at precisely the most dangerous time.

The S&P 500, presently near its all-time high, will rapidly descend to 1,200.  And, only then, when fear has reached its extreme, will Congress be ready to go along with Trump’s massive fiscal spending program.

 

The interesting Wile E. Coyote moment of blissful weightlessness shortly after passing the all time high…

Cartoon by Raeside

 

Other Visions for 2017

That’s when things will go really haywire.  By then the effects of infrastructure stimulus will be considered too slow to save the economy from itself.  Calls for a direct economic jolt will be made by Larry Summers as he lobbies to replace Janet Yellen as Fed Head.

Direct monetization of the debt in the form of ‘tax rebate checks’ will be mailed out to every working age citizen whether they have a taxable income or not.  Alas, any temporary boost to the economy these efforts encourage will be overwhelmed by rising price inflation… and higher interest rates.

The strong dollar trend will also reverse in earnest by the second quarter.  About this time gold will once again glitter.  Consequently, the first three months of the year will be a fantastic time to accumulate and add to your physical gold hoard.  By mid-April gold will be back above $1,350 per ounce.

Indeed, the coming year will be one of great distress.  As the global economy slips and slides into recession, world politicians will look to distract blame from their own bungles.  They’ll seize any diversion afforded to them to channel the discontents of their masses.  They’ll blunder outward in search of a new mission and greater purpose for their young and idle.

Global factions are on a collision course for war.  We wish this weren’t so.  But, unfortunately, ongoing territorial disputes between China, Malaysia, Philippines, Taiwan, and Vietnam over the Spratly Islands in the South China Sea will continue to escalate.

Likewise, ancient territorial disagreements between Japan and China over the Senkaku-Diaoyu Islands in the East China Sea will deepen.  These disputes, and a burgeoning arms race, could provide the perfect diversion for China and Japan as their debt fueled economies unravel.

On a high note, we start the New Year hopeful that a lasting ceasefire has been reached in the proxy Syria war – in spite of the failings of the United Nations and the Obama administration.  In addition, there are numerous other reasons for optimism as we enter 2017.

For example, right now, in cities across the globe, brilliant minds at the fringe of scientific propriety are but one experiment away from the big energy breakthrough humanity’s been waiting more than 45-years for.  Unfettered by academic zealotry, this new scientific discovery will not come from a leading research or government institution.

Like all great discoveries in our time, it will come from a small team of eccentrics operating out of a garage on a shoestring budget. What we mean is, in the words of the late Gordon MacKenzie:

 

“Orville Wright did not have a pilot’s license.”

 

What is this? Flying without a license?  Obviously, the pre-world war age must have been pure chaos… not enough regulations, as Ben Bernanke would say!

 

Lastly, the Dallas Cowboys will win the Super Bowl.

Happy New Year!

 

The best part of the Dallas Cowboys. In late 2015 the team became the most valuable sports team in the world, surpassing Real Madrid – with its estimated net worth reaching $4 bn.

Photo via pinterest.com

 

MN Gordon is President and Founder of Direct Expressions LLC, an independent publishing company. He is the Editorial Director and Publisher of the Economic Prism – an E-Newsletter that tries to bring clarity to the muddy waters of economic policy and discusses interesting investment opportunities.

 

 
 

Emigrate While You Can... Learn More

 
 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

3 Responses to “Global Recession and Other Visions for 2017”

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Gold Sector Update – What Stance is Appropriate?
      The Technical Picture - a Comparison of Antecedents We wanted to post an update to our late December post on the gold sector for some time now (see “Gold – Ready to Spring Another Surprise?” for the details). Perhaps it was a good thing that some time has passed, as the current juncture seems particularly interesting. We received quite a few mails from friends and readers recently, expressing concern about the inability of gold stocks to lead, or even confirm strength in gold of...
  • Incrementum Advisory Board Meeting, Q1 2017 and Some Additional Reflections
      Looming Currency and Liquidity Problems The quarterly meeting of the Incrementum Advisory Board was held on January 11, approximately one month ago. A download link to a PDF document containing the full transcript including charts an be found at the end of this post. As always, a broad range of topics was discussed; although some time has passed since the meeting, all these issues remain relevant. Our comments below are taking developments that have taken place since then into...
  • Trump and the Draining of the Swamp
      Swamp Critters BALTIMORE – The Dow is back above the 20,000-point mark. Federal debt, as officially tallied, is up to nearly $20 trillion. The two go together, egging each other on. The Dow is up 20 times since 1980. So is the U.S. national debt. Debt feeds the stock market and the swamp. What’s not up so much is real output, as measured by GDP. It’s up only 6.4 times over the same period. Debt and asset prices have been rising three times as fast as GDP for 36 years! Best...
  • Gold and Silver Divergence – Precious Metals Supply and Demand
      Gold and Silver Divergence – Precious Metals Supply and Demand Last week, the prices of the metals went up, with the gold price rising every day and the silver price stalling out after rising 42 cents on Tuesday. The gold-silver ratio went up a bit this week, an unusual occurrence when prices are rising. Everyone knows that the price of silver is supposed to outperform — the way Pavlov’s Dogs know that food comes after the bell. Speculators usually make it...
  • When Trumponomics Meets Abenomics
      Thirty Year Retread What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks? [ed. note: when we edited this article for Acting Man, the meeting was already underway]   Japan's prime minister Shinzo Abe, a dyed-in-the-wool Keynesian and militarist, meets America's...
  • The Great Wailing
      Regret and Suffering BALTIMORE – Victoribus spolia... So far, the most satisfying thing about the Trump win has been the howls and whines coming from the establishment. Each appointment – some good, some bad from our perspective – has brought forth such heavy lamentations.   Oh no! Alaric the Visigoth is here! Hide the women and children! And don't forget the vestal virgins, if you can find any...   You’d think Washington had been invaded by Goths, now...
  • Receive a One Percent Gift When Buying or Selling a Home
      How to Save Money When Buying or Make More When Selling a Home In your professional capacity and perhaps also in your private life, you may be closely involved with financial and commodity markets. Trading in stocks, bonds or futures is part of your daily routine.  Occasionally you probably have to deal with real estate as well though – if you e.g. want to purchase an apartment or a house, or if own a home you wish to sell.   The people who took this photograph probably want to...
  • Unleashing Wall Street
      To Unleash or Not to Unleash, That is the Question... LOVINGSTON, VIRGINIA –  Corporate earnings have been going down for nearly three years. They are now about 10% below the level set in the late summer of 2014. Why should stocks be so expensive?   Example of something that one should better not unleash. The probability that a win-lose proposition will develop upon meeting it seems high. It wins, because it gets to eat... Image credit: Urs Hagen   Oh,...
  • Silver Futures Market Assistance – Precious Metals Supply and Demand
      Silver Is Pushed Up Again This week, the prices of the metals moved up on Monday. Then the gold price went sideways for the rest of the week, but the silver price jumped on Friday.   Taking off for real or not? Photo credit: NASA   Is this the rocket ship to $50? Will Trump’s stimulus plan push up the price of silver? Or just push silver speculators to push up the price, at their own expense, again? This will again be a brief Report this week, as we are busy...
  • Boondoggles for the Swamp Critters
      Monster or Mozart? BALTIMORE – Investors seem to be holding their breath, like a man hiding a cigarette from his wife. It’s just a feeling, and it’s not the first time we’ve had it... but it feels as though it wouldn’t take much to send them all running.   Actually, they're not going anywhere yet... but there is a lot of overconfidence by those who were very worried when prices were a lot better - click to enlarge.   Meanwhile... we’re coming to a deep...
  • The Art and Pseudoscience of Monetary Policy
      Definitely Maybe Everyone’s got a plan for sale these days.  In fact, there are so many plans out there we cannot keep up with them all.  Eat celery sticks and lose weight.  Think and grow rich.  Stocks for the long run.  Naturally, plans like these run a dime a dozen.   All social engineers who get to impose their harebrained schemes on the rest of the world through the coercive powers of the State, as well as all armchair planners regaling us with their allegedly...
  • California, Nestle and Decentralization
      Goodbye, Socialist Paradise Nestle USA has announced that it will move its headquarters from Glendale, California, to Rosslyn, Virginia, taking with it about 1200 jobs.  The once Golden State has lost some 1690 businesses since 2008 and a net outflow of a million of mostly middle-class people from the state from 2004 to 2013 due to its onerous tax rates, the oppressive regulatory burden, and the genuine kookiness which pervades among its ruling elites.*   There has been a...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com