by Egon Von Greyerz, Gold Switzerland:
Will the autumn of 2021 be the end of the everything bubble?
Are investment markets very soon coming to the end of market insanity?
Since there is very little sanity left in markets or the in the world economy, we have now reached a point where we must accept madness as sanity, as George Bernard Shaw said:
“When the world goes mad, one must accept madness as sanity; since sanity is, in the last analysis, nothing but the madness on which the whole world happens to agree.”
TRUTH LIVES on at https://sgtreport.tv/
Investment markets today are all about instant gratification and getting rich quick.
“Stocks always go up” and so does property in the everything bubble. Even the normally boring bond market has had a 40 year rise. And then we have the supercharged tech stocks, many of which have gained 1000s of percent in this century
And we mustn’t forget the SPAC stocks (Special Purpose Acquisition Companies) or Blank Cheque Companies where shell companies are used to acquire existing companies to inflate their share price.
None of these things are new of course. During the South Sea Bubble in the 1720s for example, companies were formed and capital raised with just the purpose of “Making Money”.
We mustn’t forget the cryptocurrencies which are now
worth valued at $2 trillion. They were just over $1 billion 8 years ago. Is that the bubble of the century like tulip bulbs in the 1600s or is it the money of the future. Well, most readers know or can guess my opinion on this!
VALUE INVESTING & WEALTH PRESERVATION IS FOR “WIMPS”
In a world where everything is based on “get rich quick” neither value investing nor wealth preservation enters the equation. Why worry about preserving your wealth when you could have made 14x your money on the Nasdaq since 2009 or 5,000x your investment on Bitcoin since 2011.
Calling tops is a mug’s game. Some of us who look at risk have been worried about the everything bubble economy for quite a while. To us, since the end of the Great Financial Crisis in 2009, the world economy and asset markets have been an illusion.
It is as if we are watching a virtual reality game in which some people automatically increase their wealth by millions or even billions of dollars every time they pass GO.
But as the rich are getting richer, the masses are just getting poorer and more indebted.
Although we see the wealth that has been acquired by many as an illusion that will soon evaporate, for the ones who have benefited, this is all very real.
Anyone who believes that these gains are real and sustainable will have the shock of a lifetime in coming years. As I showed in a recent article about the End of the US Empire, the wealth of the 400 richest Americans has gone from 2% of GDP to 18% in the last 40 years.
This concentration of wealth is of course spectacular but also very dangerous for the world. Trees can always grow taller but they never grow to heaven!
AT THE END OF AN ERA – FALLS OF 90%
So as Shaw said, we are now in “the madness on which the whole world agrees”.
As I have often stated, I believe that we are at the end of a very major economic cycle. Not only are markets insane, but so are deficits, debts and currency debasements.
But also moral and ethical values have now vanished into thin air and been replaced by lies, deceit and the golden calf.
We are now in a very critical period for the world since excesses of the magnitude we are now seeing must be corrected.
Exponential moves in one direction are always corrected. And the corrections will be of a similar magnitude to the rise but happen much quicker. We are talking about falls of 90% or more in all major asset and debt markets.
Nobody believes such moves are possible with central banks and governments standing by with unlimited money printing combined with new Central Bank Digital Currencies that will save the world.
ILLUSIONS ARE JUST ILLUSIONS
We must understand that illusions cannot rescue the world economy. This despite whatever concoctions central banks or Schwab (World Economic Forum) and his billionaire cronies come up with.
Virtual illusions in the form of fake money or empty promises can never repay debt, nor can they change the laws of nature.
Clearly all these “evil forces” will use their power to orchestrate fake resets to “save the world” in an attempt to tighten their grip on the world economy and the financial system. But a heavily indebted and fake system can never be reset in an orderly manner.
In my view, any artificial or fake reset will only have a very limited effect. It is just not possible to solve a debt problem with more debt whatever way the PTB (Powers That Be) try to dress it in sheep’s clothing.
So an orderly reset is bound to fail very quickly. A new digital Fiat and thus fake currency will not solve the world’s debt problem.
Writing off the debt is just another illusory act. If you write off the debt, the assets on the opposite side of the balance sheet will also implode in value. And since the debt is leveraging the assets, they will have a very long way to fall.
This is why asset implosions of 90-100% are very likely. Few people believe this to be possible but with debt collapsing so will the bubble assets which are all inflated by worthless debt.
We must remember that the big stock market crash in 1929-32 saw the Dow lose 90% of its value. It then took 25 years for the Dow to get above the 1929 high. And today 92 years after that peak, debts, deficits, and asset bubbles are far greater than at the end of the 1920s.
Below are a number of graphs that all point to the everything bubble.