The Atlantis Report
Nov 11, 2021
Stocks, bonds, and real estate are at all-time highs. Household income is at an all-time high. Government spending is at an all-time high. Consumer demand is so strong the supply chains can’t keep up. We’re either in the greatest economic boom ever or the Mother Of All Bubbles.
A dangerous situation is brewing here.
We have shortages of energy, shortages of labor (in certain sectors), shortages of all sorts of goods, shortages of housing (at least at the low end in what is supposed to be the affordable bracket), snarled supply chains, and political leadership hell-bent on making it worse.
We’ve had a very high standard of living for the past century or so. I suspect that’s being challenged now. It can drop fairly significantly without feeling like a complete crash. But our lifestyle depends on cheap energy, and lots of it. If we really get significant inflation in food and fertilizer prices (which looks quite possible) and farmers get squeezed on their margins (perhaps squeezed out of business), there could well be widespread starvation.
What has kept this world economy propped far longer than anyone thought it could be is a testament to the incredible level of modern productivity…
We have been living off of that productivity for the past forty years and we are using it up…
When the crash comes it will be sudden… and it will be catastrophic…
The Fed and other central banks’ ability to manipulate markets will likely temper any crash. If markets were truly allowed to function then they would never have gotten to the levels they are at now.
We have been in a Recession since the last Recession.
Hyperinflation is inevitable.
The US dollar is no longer a proper measuring stick. As it’s being inflated away, stock values will continue to rise. Moreover, since gold is valued in dollars, and stonks are measured in dollars.
Gold is inevitable.
Stocks can no longer find the appropriate price because of this endless Fed put. Corrections in valuation are not allowed, so PEs keep expanding.
If the kid down the street had a lemonade stand that earned $1 a year, would you buy the business from him for $45, $80, $100? That is what the market is doing.
Taper is really a tenuous construct. If the stock market goes down 5%, they stop the taper. Down 10%, they restart QE. Everyone knows this. The question is how large does the bubble gets and how much inflation do we have before things get ugly.
Rates are what really matter and everyone knows they can’t do much there or they can’t pay the interest on the debt. They are painted into a corner.
They thought by creating a little inflation they could slowly manage the debt over time. All they really did was make politicians realize that they don’t have to stop spending money and can increase the debt massively because rates will never be allowed to rise and money will be printed to pay the debt…
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