Nov 14

As The World Rolls Over:

Brutal news is pouring in from pretty much everywhere.

US retail sales are flat and wholesale prices are falling. Big retail chains are missing on earnings and seeing their shares plunge.

Chinese nonperforming loans are soaring while imports, car sales and steel production are way down.

Oil is flirting with multi-year lows as tankers wander the ocean with nowhere to offload their crude. Other commodities like aluminum and copper are back at 2009 levels and still falling.

A general strike has paralyzed Greece and a far-left coalition is taking power in Portugal. Middle Eastern refugees keep pouring into Europe and no one seems to know where to put them. Eurozone growth is sliding back towards zero and the once-bulletproof Scandinavian countries are now the “sick men” of the region.

Argentine inflation is 35%, Brazil’s political/economic crisis is threatening to topple the government, and a giant copper mine just dumped millions of gallons of toxic sludge on some Brazilian villages.

Equities in Asia, Europe and the US are getting whacked as the sheer volume of bad news swamps the hope that European and Chinese QE programs will keep the asset price party going.

The world, in short, is rolling over. Debt monetization on the scale so far attempted has failed to stop the implosion of tens of trillions of dollars of bad paper, growth has stalled and geopolitics has begun to resemble the parking lot of a British soccer match, with scary people doing random, incomprehensibly violent things and no generally recognized authority able to impose control. Elections are now fearful rather than hopeful prospects and anti-status quo parties in France, Britain, Italy and Spain have become serious contenders.

And none of this is a surprise. It’s just what you get when you put monetary printing presses in the hands of governments and/or big banks. That is, soaring debt, increasing corruption and inequality as newly-created currency flows to the already-rich, political instability as the have-nots of the world decide they’ve got nothing to lose, and uncomprehending paralysis among sitting leaders who have only ever known easy money.

It’s time for us all to go back and read Friedrich Hayek’s Road To Serfdom and to pay renewed attention to the relative handful of people who got it right, such as Ludwig von Mises…

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

…Hyman Minsky…

Stability leads to instability. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.

… and of course Ron Paul:

You cannot print money forever and deceive the markets forever. Eventually, the markets will rule and it’s only a question of when that will happen. Gold is your defense against the policies of the Fed.

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