cfdxprt just had to invoke the Mogambo, didn't he? Coincidentally, the Mighty One mentions the same article on inflation I hit on last week (he being a weekly* publication), and after reading him tonight, I realized I had not done a good "sky is falling" post in a while. Maybe I never have unless you like that sort of thing. But anyway.
I mentioned something about 2 years ago which I think we are seeing again, but rather than in one place, it's all over every place:
If there's one word that describes the current government fiscal situation it's "acceleration." The problem is not simply that debt is increasing (though that IS a problem) but that it is increasing at an increasing rate. As El Presidente finds more and more critical problems at which to throw borrowed and newly-printed money, the fiscal condition of the US spins, frankly, out of control.Gold crossed $800 an ounce today (up 10% in 3 weeks), and if you click over to Mogambo and take a look at the yearly chart, you'll see the same thing you see on the debt chart at the above post, acceleration. Oil finally crossed my nightmare threshold of 90 a week ago. Tonight it's trading above $95. The monthly chart going back to 1999 shows not just a rise, but acceleration. The dollar chart above needs little** explanation as I've contused that supine equine enough. But look at the moving averages (those three colored lines that move together), they show acceleration.
It was only last freaking month that I wrote this:
But stocks up or stocks down, here are the important numbers of the day: The dollar chart...is again within half of 1% of the line-in-the-sand at 80, gold is up $15 to near $700, Oil is up $1 to $76, just off its all-time high.In those few weeks the dollar has fallen to 76, gold is up $100, oil up $20. Acceleration.
Some months ago, a fellow I don't know (and who never returned) asked in the comments, "When?" When is this going to happen? When is the sky going to fall? All you bears, everything you say was said before yet here we are. And I didn't have an answer then and I don't have an answer now except for this:
I've had three SHTF tests for better than a decade, and I have mentioned all of them here as long as I've had a blog. Two of them I mentioned last in July:
80 has always held. Maybe it will hold again. So long as oil does not cross $90, I don't think we are close to panic time.Both of those lines are now crossed. The third test is gold closing above its all-time high. To be honest, I always that that the most inevitable and that it would be first. It's not yet. We have about 10% to go, the amount of ground we covered this month alone.
The Fed lowered rates again today. That's dollar-negative, it drives people out of dollars (lower rates means less reward for owning them). That will accelerate the dollar's fall*** and gold's and oil's rise. They had no choice: being a political creature they have to do what they can to delay the pain. And they will do more, much more.
I don't think we are in panic time, but we are closer to panic time than we were a month ago. Much closer. The bad numbers are increasing at an increasing rate. Debt: accelerating. Dollar drop: accelerating. Oil price: accelerating. Gold: accelerating. Retirees: accelerating. Mortgage lender bankruptcies: well, that would be accelerating if the market still existed. The house price drop will begin accelerating very soon, replacing the "wealth effect" with an offsetting "poverty effect."
So when? When do we get to live through a period we will preface with "The Great" and speak of to our grandchildren only in hushed tones?
Too soon for too many. Save your nickels.
* As opposed to my "weakly" by comparison, which is why I don't spend my weekends being flown all over the world to tell investors that WE'RE ALL FREAKING DOOMED(tm) like Mogambo.
** For those who like footnotes, I will just mention that 80 on that chart has been a floor going back as long as there have been free-floating currencies; we are now 4-5% below that.That said, in all fairness, like the Dow (and the CPI), the Dollar Index does not mean the same thing over time, because items are constantly substituted. But lines often measure sentiment as much as anything, and every nation that has dollars (and there are a lot of them with a lot of dollars) knows that 80 has always held. Until now.
*** Though I do suspect (but would never bet) we may get one more monster rally that could last for months and take us up 10-15% - with everyone this negative, it's a perfect time to burn the shorts.