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Gold. We are in a 6 year bear market and the fed just did a total 180 freezing interest rates. Interest rates will probably never normalize because of high debt

Gold. We are in a 6 year bear market and the fed just did a total 180 freezing interest rates. Interest rates will probably never normalize because of high debt loads and this could cause pressure on the dollar. Furthermore we are at year 10 of the bull market and the yield curve just inverted signaling a recession is likely in the next few years.

panarky 8y ago
The probability is increasing that US Federal Reserve will become a much more politically motivated institution, biased toward accommodative monetary policy, low interest rates, a large and growing balance sheet, and more private debt. At the same time, US government deficits are setting records highs for peacetime. And it's not just the US, with other major economies like China and Japan also racking up public and private debt at astonishing rates not seen outside of war economies. This is essentially a trade-off between juicing current GDP growth at the expense of long-term stability of price levels and ability to respond to inevitable crisis. It's impossible to predict what will happen or when, but if the probability of economic catastrophe increases, the value of precious metals, real estate and the largest, most stable cryptocurrencies should increase.
- dehrmann 8y ago
  > US government deficits are setting records highs for peacetime. Sorta. It stabilized around 2013. https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
  - panarky 8y ago
    Your chart shows the US national debt, not the budget deficit. The deficit for the first four months of the current fiscal year increased 77% compared with the prior fiscal year. Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion. Source: https://www.bloomberg.com/news/articles/2019-03-05/u-s-budget-deficit-widens-77-percent-as-revenue-declines https://www.bloomberg.com/news/articles/2019-03-05/u-s-budge... All this during peacetime and economic expansion. What will this look like in non-ideal conditions of war or economic recession? My point is that fiscal recklessness will increase as the Federal Reserve becomes more politicized. This will make the economic system more fragile and raise the probability of a catastrophe. When the odds of financial catastrophe increase, the rational response is to allocate more capital to precious metals, real estate and two or three cryptocurrencies with the greatest hash power.
    - dehrmann 8y ago
      > Your chart shows the US national debt, not the budget deficit. No, it shows debt as a percent of GDP. The idea is to normalize debt so the numbers are more meaningful. Context is everything. > Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion. I'm not especially concerned if also GDP went up, but the data's not out, yet. > What will this look like in non-ideal conditions of war or economic recession? See 2008-2015? That. That should worry you. Also fun: https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&met_y=gd_pc_gdp&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=gd_pc_gdp&scale_y=lin&ind_y=false&rdim=country&idim=country:uk:es:lu:el:de:fr&ifdim=country:country_group:eu&hl=en_US&dl=en&ind=false https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&...
justinzollars 8y ago
Let me clarify what I mean. I realize what I said is not clear. * Gold is in its 6th year of a bear market. * The stock market is in its 10th year of its bull market.

panarky 8y ago

The probability is increasing that US Federal Reserve will become a much more politically motivated institution, biased toward accommodative monetary policy, low interest rates, a large and growing balance sheet, and more private debt. At the same time, US government deficits are setting records highs for peacetime. And it's not just the US, with other major economies like China and Japan also racking up public and private debt at astonishing rates not seen outside of war economies. This is essentially a trade-off between juicing current GDP growth at the expense of long-term stability of price levels and ability to respond to inevitable crisis. It's impossible to predict what will happen or when, but if the probability of economic catastrophe increases, the value of precious metals, real estate and the largest, most stable cryptocurrencies should increase.

dehrmann 8y ago
> US government deficits are setting records highs for peacetime. Sorta. It stabilized around 2013. https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
- panarky 8y ago
  Your chart shows the US national debt, not the budget deficit. The deficit for the first four months of the current fiscal year increased 77% compared with the prior fiscal year. Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion. Source: https://www.bloomberg.com/news/articles/2019-03-05/u-s-budget-deficit-widens-77-percent-as-revenue-declines https://www.bloomberg.com/news/articles/2019-03-05/u-s-budge... All this during peacetime and economic expansion. What will this look like in non-ideal conditions of war or economic recession? My point is that fiscal recklessness will increase as the Federal Reserve becomes more politicized. This will make the economic system more fragile and raise the probability of a catastrophe. When the odds of financial catastrophe increase, the rational response is to allocate more capital to precious metals, real estate and two or three cryptocurrencies with the greatest hash power.
  - dehrmann 8y ago
    > Your chart shows the US national debt, not the budget deficit. No, it shows debt as a percent of GDP. The idea is to normalize debt so the numbers are more meaningful. Context is everything. > Revenues fell by 2 percent to $1.1 trillion, while spending rose 9 percent to $1.4 trillion. I'm not especially concerned if also GDP went up, but the data's not out, yet. > What will this look like in non-ideal conditions of war or economic recession? See 2008-2015? That. That should worry you. Also fun: https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&met_y=gd_pc_gdp&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=gd_pc_gdp&scale_y=lin&ind_y=false&rdim=country&idim=country:uk:es:lu:el:de:fr&ifdim=country:country_group:eu&hl=en_US&dl=en&ind=false https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&...

justinzollars 8y ago

Let me clarify what I mean. I realize what I said is not clear. * Gold is in its 6th year of a bear market. * The stock market is in its 10th year of its bull market.