The Fed is a patsy. It is a pathetic dependent of the big Wall Street banks, traders and hedge funds. Everything (it does) is designed to keep this rickety structure from unwinding. If you had a (former Fed Chairman) Paul Volcker running the Fed today 7/8— utterly fearless and independent and willing to scare the hell out of the market any day of the week — you wouldn’t have half, you wouldn’t have 95 percent, of the speculative positions today.
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When the real margin call in the great beyond arrives, the carnage will be unimaginable.
David Stockman
March 3, 2012
DAVID STOCKMAN: You’d Be A Fool To Hold Anything But Cash Now
[H/T to Rudy Kearney.
I’m not convinced cash and gold are the only thing to hold onto right now. Farm land, copper coated lead, and brass would seem to hold their value better than cash and probably gold. But I see his point about stocks and fully agree the carnage is going to be massive.—Joe]
I have about $200k in a 401(k), currently invested mostly in bonds. I’m giving serious consideration to just cashing it out and paying the penalties & taxes on it, because I can’t believe that in 12-18 months it won’t be worth less than half of its face value now, and that I shouldn’t use it to prepare for the coming economic collapse.
Kevin – if you have bonds in a short-term-only fund that keeps rolling them over, that *might* be OK, though it’s not what I’d hold. If it is mostly long-term bonds, particularly municipal or foreign bonds – sell them, and buy GLD, SLV, or TGLDX, which are A-OK for IRAs and a 401(k). plan on selling them around 2017, after the 2016 election when things hit their peak as the new administration stares the fiscal reality in the face, and is about to decide what to do.
You think things aren’t going to go pear-shaped before 2017? You’re far more optimistic than I am!
Oh, I’m sure things will get pretty ugly between now and then. But that is the time-frame when I think that the price of Au and Ag will hit their peak crescendo and the dollar and stocks (in inflation-adjusted terms) to hit their nadir. At that time, I plan on rotating my portfolio out of basic commodities and into other assets – I’m not sure exactly what, yet (dividend stocks, high tech, energy services, real estate, bonds, foreign currency, ag land, US$ cash, or what-not): it will depend on how the chaos unfolds and what the politicians do, which isn’t very easy to predict. But between now and then, conventional stocks and bonds are not a good place to store your wealth (on a risk- and real inflation-adjusted basis), and from everything I see Au / Ag and mining stocks are the only good values around. I might be wrong, but that’s now I’m betting.
Hard liquor keeps for a long time. It will retain it’s value and is excellent barter. I’m not talking about an investment, more like a small insurance position.
People keep forgetting, gold has no value. It’s a place holder used to track the value of actual wealth. Arable land, potable water, stout tools, viable grain and hale livestock are true wealth. Labor both the skilled and unskilled and knowledges of all types are true wealth. Gold cannot keep you warn, your belly full or your thirst slaked, nor can it keep you safe.
Put not your trust in gold or paper; rather invest in yourself first and your kith and kin second. Invest in people, invest in the nearest things to true wealth; Tools, food, weapons, and knowledge.
Do what you can for yourself and if you have to hire another to do for you, pay attention and learn what you can. It’s suprising the amount of trades that aren’t hard, just tricky.
Raudhbjorn – of course has value: exactly as much as anyone is willing to exchange for it. As for intrinsic value, in electronics, jewelry making, dentistry, some industrial applications, there is nothing betting than it. So to say it has “no value” is rather over-simplifying things. To be sure, it’s not the ONLY thing of value, and you can’t eat it… but then you can’t eat bullets or guns, houses, or most clothing, either. Land doesn’t keep you warm (directly). Etc. But you point is taken, and I do not mean to imply that Au and Ag are my ONLY possessions – merely the bulk of my retirement investments at this time. I also encourage people to have a good stock of “beans and bullets” as the saying goes, and why I have land and no debt. True wealth also lies in an active mind, a healthy body, good friends and family, energy production (high and low tech), transportation, and useful minerals… but not everyone has those, or can have them.
You’re all so Un-American! Where’s your total blind faith in government? Where’s your complete trust in fiat paper money and American Government bonds? Remember, the Stock Market has been with us for over four hundred years, and as the Motley Fool has pointed out, nothing short of Complete Societal Collapse is going to cause it to collapse completely! You all should follow my example, as a TRUE American, with no land and $100,000 of debt (70% of it student loans). Get with the program!
(And now that I’ve had my say, please ignore me while I craw under my desk, curl up into a ball, and wimper quietly, to wait out that Complete Societal Collapse that seems rather immenent at this moment in time….)