[Homestead] depression - hyperinflation
cayadopi at yahoo.com
Sun Jan 11 12:31:57 EST 2009
Skip this email if not interested in the macro economic stuff....
Bob, we've been having a bit of conversation about depression - hyperinflation....
Yesterday, I got a phone call from a city friend asking me to look something up in one of my books. A book I read about 4-5 years ago (Conquer the Crash/ Prechter).
I decided to speed read it again - some highlights:
Prechter thought the depression was going to occurr starting in 2003 - but also thought that there could be one more blow off top in the making to complete a Wave 5 SuperCycle.
Other than he really leaned towards it starting in the 2003 timeframe - 95% + of everything else in his book is already happening (2008).
He accurately identified what steps the Treasury and Fed would take as the real estate/credit bubbles popped - including the massive money printing and bail-outs, foreclosures etc.
Depression - asset values across the board go down, including metals.
There have been 3 depressions in the US, each lasting approximately 3 years (I'm starting the clock ticking 2009 as a depression era beginning FYI)
Manias - all manias wind up with prices lower than where they start.
Stocks - he has them going below the 1929 low (wave 4 of the super cycle). Seems hard to believe...
Real Estate also in a mania - but he didn't identify where the beginning of the mania is.
Real Estate - lost up to 90% of price in the 1930s depression (confirmed by my dad/grandfather).
Metals - also depressed - but then lead the way out.
Commodities 90% losses until recovery.
He also talks about US Treasuries and one method the US Gov't will default on them - by changing the rules out of the blue and saying one day that the short term notes due, can't be cashed in for 10 years.... i.e. an effective default. He also believes the gov't will seize the pension plans in a similar manner. (Many others also believe this.)
He talks about Japan - Japan crashed economicall in the 1990s, BUT because the rest of the world was still strong, Japan was able to trade with trading partners and not crash as bad as it could/'should have been.
Current crash - he predicted back in 2002 (or ealier) that this deflationary crash would be different as it would involve multiple countries, and that there would be no strong trading partner to pull the deflationary countries out. (Which contrasts with Schiff's video you linked today - as Schiff implies that Asia will be the strong trading partner). (It is true that a number of countries are going thru a recession/depression now.)
Prechter says after the depression phase, that hyperinflation is imminent and will be part of the next supercycle.
Prechter also says that we will really be in a bear market for 100 years.... with a number of market ups/downs, including a hyperinflation phase. with hyperinflations always ending in a currency collapse and depression. He also noted that people will resort to using other things as a "currency" (barter, silver/gold coin, etc) for the things they need (i.e. cannot produce themselves), as they always have resorted to in history when government has destroyed the currency.
He also talks about food and supply shortages, personal safety (i.e. weapons, being outside of cities, etc)
I am much simplifying Prechter's work here, btw..
So my take now is..........
If history repeats, the depression phase of 3 years is another thing that collides into the 2012 time frame.
1) The defaulting mortages should have pretty much all gone thru the legal process and the properties repossesd/owned by the banks by then.
2) That clears the way for lenders to start lending again with all the virtually free UST's they are currently acquiring via the Pull Peddler's bail-out money. The bail out money represents trillions,,, not only in bail-outs but in the Fed taking on all the toxic waste onto their books (bad mortgages, bad car loans etc.)
3) Obama's plan calls for X number of job creation over the next 2 years. That will be a slowing increasing number of jobs, as it will take a while for government bids to go out, designers & engineers to be determined, designs to be made/approved, and eventually contractor bids awarded, and eventually worker bees hired........... so the way I see it that is when the economy starts the false "recovery" and the deployment of the hyperinflation dollars begins.
4) At that point, the masses will be conned into believing that the Obama plan worked, as we work back towards full employment.... Then as hyperinflation gets underway, more and more people have to work to keep up with rising food & goods prices.... and people won't see at first the horrors of hyperinflation.... that side that Schiff predicts... hyperinflation, collapse of the dollar, food & supply shortages and on and on etc.
As far as I'm concerned the hyperinflation phase has never been a matter of IF, but a matter of WHEN. So I've been looking for little hidden puzzle pieces to the when part. Maybe some of the above are clues towards that.
(And I didn't even mention supply destruction about oil.....which is another puzzle piece that can't be excluded.)
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