Red Flags Lying on the Grave of the American Dream

This one will be a lot to take in.


Red Flag Group 1: Short Term Signs, Recession Indicators

Senators Sell Stocks Ahead of Corona Virus Crash

and to follow up… DOJ Drops Case Against Senators


Unemployment claims since 1967…

Irrational exuberance leads to euphoric imbalance… and cycle tops.

Aggressive rotation of stocks happens at peak cyclical points…

Technical tops since the lows in March…

Money “hoarding” (as they call it in the US) is detrimental to money velocity, economic activity, and asset values.

Media outlets have moved on from COVID to riots, but has COVID gone away?

The US Dollar Index indicates that we may be reaching the extent of our stimulus. The dollar has lost 2% of it’s value in the last week relative to other currencies.

Do people need jobs for an economy to work?

Historically at the peak of cycles, longterm losers will lead, and longterm leaders will lose. This is currently the case of the 500 largest companies in America.

The majority is often wrong in markets, most data points to 2-4 years of recession.

Red Flag Group 2: Long Term Macroeconomics and Society

Does anyone remember when bread was less than $1?

Why is this happening?

Supercycical metrics such as wealth inequality haven’t been at such a disparity since the 1930’s.


The issues from 2008 remain and are at historical extensions.

The Long-Term Debt Cycle in Summary

For thousands of years there have always been three types of monetary system:

  • Hard Money (e.g., metal coins)
  • “Paper Money” claims on hard money
  • Fiat Money (e.g., the US dollar today)

Let’s start with the basics.

1) It Begins with No or Low Debt and “Hard Money”

2) Then Come Claims on “Hard Money” (aka, “Notes” or “Paper Money”)

3) Then Comes Increased Debt

4) Then Come Debt Crises, Defaults, and Devaluations

5) Then Comes Fiat Money

6) Then Comes the Flight Back into Hard Money (Could this be Bitcoin? Gold? A Digital Currency?)

Bitcoin is hard money.



Red Flag Group 3: The Federal Reserve, Central Banks, Debt, and Corporate Socialism

The Fed has destroyed all semblance of monetary anchors, banking regulations, free-market actions, and economic consequences. The Fed has absorbed billions of junk bonds, bad debts, and increased its balance sheet to historical levels all in the name of creating ‘liquidity’, which has summed up to be about 80% of total stimulus to hold up markets and banks. This action translates to furthering the slew of problems listed above, and as the central bank reaches its limit; so will the value of stocks and the economy. The debt expansion is unsustainable, and is witnessed by continually lowered interest rates that have now hit 0 yet again, except this time at the beginning of a recession instead of coming out of one. Obviously, when central banks lower the ultra-short-term interest rate by about five percentage points at every recession and are unable to raise them back to previous levels (which has been the historical pattern), simply lowering interest rates as a tool to soften the blow of economic shocks or cyclical downturns can only be done so many times. Eventually, interest rates approach zero. The reality becomes a world where debt is increasingly unproductive, only adds to stock buybacks, is destructive to economic growth, increases socioeconomic inequality, and an increasingly unstable country and economic system.


The Fed cannot go on buying assets forever. When it pulls back, the markets will take it hard, as we’ve seen from past “taper tantrums.” And the longer it waits to take the markets off of their IV drip of gasoline, the worse it will be in the future. Prices will have even farther to fall, and the economy will be that much weaker because money that could have gone into productive activity instead will have gone to feeding ill-considered speculation.




To end, here is an interesting before and after video of a major street in Manila.



This being said, the next article will be entirely focussed on Bitcoin and how it will fit into the world economy in the next ten years.

1 Comment found


    You haven’t taken into account that none of it is real and it doesn’t matter. If you’re the leader, you make up the rules as you go and can avoid consequences.

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