An Accountant Smells a Rat in Our Global Credit Bubble

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The inevitable unwinding, whether through inflation or debt write-offs, could create considerable misery.

By Peter Diekmeyer, Canada, for Sprott Money:

Twenty years ago Doug Noland was so worried about imbalances surrounding the dot.com boom that he began to title his weekly reports “The Credit Bubble Bulletin. Years later, he warned the world about the impending 2008 crisis. However a coming implosion, he says, could be the biggest yet.

“We are in a global finance bubble, which I call the grand-daddy of all bubbles,” said Noland. “Economists can’t see it. They can’t model money and credit. However, to those outside the system, the facts are increasingly clear.”

Noland points to inflating real estate, bond and equity prices as key causes for concern. According to the Federal Reserve’s September Z.1 Flow of Funds report, the value of US equities jumped $1.5 trillion during the second quarter to $42.2 trillion, a record 219% of GDP.

Noland’s Credit Bubble thesis

Noland may be right. A report by the International Institute of Finance released in June estimated that global government, business and personal debts totaled $217 trillion earlier this year. That’s more than three times (327%) higher than global economic output.

Adding to the complexity is the fact that not all debts are fully recorded. For example, according to a World Economic Forum study, the world’s six largest pension saving systems – the US, UK, Japan, Netherlands, Canada and Australia – are expected to experience a $224 trillion funding shortfall by 2050.

Noland’s warnings come during a time of exceptional public trust in governments, central banks, regulators and other institutions. Market volatility is trending at near record lows. In June, Federal Reserve Chair Janet Yellen spoke for many when she said that she did not see a financial crisis occurring “in our lifetimes.”

Unburdened by “econometrics groupthink”

So why would Noland, who during his day job runs a tactical short book at McAlvany Wealth Management, see things that government, academic, and central bank economists don’t?




One possibility is because Noland, who studied accounting and finance in college and began his career as a CPA at Price Waterhouse, is not an economist. He is thus not burdened with the “dismal science’s” limitations. Although Noland eventually completed an MBA and some doctoral studies, he was never forced to buy into the econometrics groupthink that plagues the profession. Noland is thus free to incorporate historical, financial, geographical and other data into his analyses.

Another possible reason is that Noland (unlike almost all professional economists who missed both major market implosions/recessions of the last two decades) doesn’t hide it when he makes a bad call.

Stepping away from the pack

Indeed, the Credit Bubble Bulletin web-site hosts issues dating back to the late 1990s. This policy of tracking how previous forecasts play out over time enables Noland to learn from previous prescient calls, but also from ill-timed projections or mistakes. It has also spawned a consistently-constructed narrative that identifies credit growth as the key metric surrounding systemic instabilities, which strengthened over time.

Noland’s ability to step away from the pack is far from unique. Indeed, almost all of the loudest and most eloquent warnings related to the global financial system come from non-economists. Jim Rickards, author of The Road to Ruin, The New Case for Gold and Currency Wars, also got his initial training as an accountant. Ian Gordon and Niall Ferguson both studied history. Robert Prechter, founder of Elliott Wave International studied psychology. Nassim Taleb, author of The Black Swan and Antifragile, did his Ph.D. thesis on the mathematics of derivatives pricing.

A $10 trillion Fed balance sheet, military confrontation?

So how will this all play out? Noland believes that markets will eventually seize up as in 2008. Interest rates will then rise sharply as the much ridiculed “bond vigilantes” finally appear on the scene.

The practical effect will be that the Federal Reserve’s balance sheet, far from shrinking as is currently projected, could actually expand, to as high as $10 trillion and possibly more. Noland’s track record in this respect is impressive. The last time the Fed talked about unwinding its balance sheet back in 2011, he inked a column titled “No Exit” which predicted that the policy would fail (it did), an article which remains on his web-site to this day.

The inevitable unwinding of the global credit bubble, whether done through inflation or debt write-offs, could create considerable misery, the kind of which most Americans living today have never seen. Noland fears that in a worst-case scenario, this could lead to war, as politicians seek to distract the public from their oversight failures.

Few constraints on credit growth

It all comes down to the massive explosion in system credit, says Noland, which has expanded far beyond the traditional fractional reserve system to include repos, reverse repos, government sponsored entities, and other shadow banking system products.

“Back in the old days, you had some constraints on the amount of credit in the system,” says Noland. “However, many of these institutions now have the ability to create literally unlimited leverage.”

Whether the ex-accountant will prove right is an open question. However, if Noland does turn out to have bungled his call, we will at least be able to study where he made his mistakes – by reading those old Credit Bubble Bulletin back-issues. By Peter Diekmeyer, Canada, for Sprott Money

People “mistakenly believe their pension plans, mutual funds, and other investments are safeguarded.” Read…  “Investors Are Being Swindled”: Canadian Accountants Slammed




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  111 comments for “An Accountant Smells a Rat in Our Global Credit Bubble

  1. John Doyle
    Oct 2, 2017 at 11:08 pm

    There should be no mistake that pension plans are safeguarded. Pitchforks at the ready if they are allowed to fail. But the federal government can bail them out with its non bank-ruptable facility to buy anything it chooses. Put away the pitchforks!
    When push comes to shove the reality of the fed’s power will be gladly welcomed.

    • Oct 2, 2017 at 11:35 pm

      Yeah, the Fed can just pay every American $1 million a month. No problem. The power of the Fed to dilute the currency and destroy the economy is truly unlimited, as we have already seen.

      • Nick Kelly
        Oct 3, 2017 at 10:33 am

        After Nobel laureates almost crashed the world system in 1998 in the Long Term Capital Management crisis, the discipline and the Nobel in economics came under scrutiny.
        As it turns out, the prize fields laid out by Alfred Nobel did not have a prize in economics. This was a last minute idea of the Bank of Sweden.
        Apparently some of the Nobel blood relatives want the prize for economics withdrawn.

        • Hiho
          Oct 5, 2017 at 2:17 am

          The nobel prize in economics is an exercice of public relations for financial industry (and those who state that there is no thing such a free lunch).

    • Frederick
      Oct 3, 2017 at 5:31 am

      Safeguarded? What are you smoking? A cost of living increase once in a blue moon would be beneficial I’m NOT seeing any safeguarding whatsoever John

    • Anon2017
      Oct 3, 2017 at 9:53 am

      About 20 years ago, Canada means tested its old age pension. Something similar could happen in the US.

      • Nick Kelly
        Oct 3, 2017 at 10:40 am

        The basic OAP is not means tested. The OAS supplement to the OAP is.

        Parenthetically, even it is not strictly speaking means tested.
        It is based purely on income as per your return.
        You can own millions of dollars worth of real estate and as long as it produces no income, you can be ‘poor’ and get the OAS.

        Perhaps this should read ‘no reported income’

        • robt
          Oct 4, 2017 at 1:44 pm

          From the government site:

          OAS CLAW-BACK Calculator
          Old Age Security (“OAS”) is a social insurance program that provides a basic level of pension income, on application, to anyone age 65 or over who meets residence requirements. The amount of Old Age Security pension must be included in taxable income. OAS is reduced for persons with high income through a recovery provision of the Income Tax Act.
          For 2017, the tax recovery applies to persons whose net income exceeds $74,788. For each $1 of income above this limit, the amount of basic Old Age Security pension reduces by $0.15.
          Repayment of “clawed-back” OAS is made through deductions at source. If net income is more than $74,788, one-twelfth of the total estimated repayment for the year will be deducted from your monthly OAS payments. The estimated repayment is based on your previous year’s tax return.

        • Nick Kelly
          Oct 4, 2017 at 4:50 pm

          Good point Robt. I didn’t know there was any claw back of the basic OAP. Haven’t done all the math but you’d have to be at about a hundred grand INCOME before you lost the whole $550 or whatever it is.
          I capped ‘income’ to reiterate: it’s not a strict means test ( which do exist) You could have millions in capital gains and not lose a dime.

    • Valuationguy
      Oct 3, 2017 at 10:01 am

      Tell that to the Catalonians…on whom Europe is currently balanced on a the head of a pin.

      The separatist movement is going to continue despite any military actions being taken by the current gov’t of Spain….to the point where no taxes are going to be flowing into the Spanish treasury. The currency and derivative markets are already pricing this into Spanish bonds…which in turn will need to INCREASE issuance in light of the deficits in receipts. This will create a crisis of confidence in both Catalonian and Spanish bonds which through contagion will flow to the French, Italian, Greek banks (i.e. the weakest banks in Europe) and eventually a SECOND domino will collapse…..causing a major panic which the ECB will be unable to contain without the active help of the Fed….which WON’T happen this time (unlike in 2008 where the Fed bailed out European banks willy-nilly with its extension of nearly unlimited credit lines).

      • Nick Kelly
        Oct 3, 2017 at 10:54 am

        The ECB heads an economy larger than the US.

        At the heart is Germany that has the world’s largest trade surplus (50 percent larger than China’s at 300 billion per year)

        Germany has virtually no debt (70 billion as against the US 22 thousand billion)

        The Fed has got too many problems right at home to go riding to the rescue of the ECB, which Germany could rescue if it had to.

        The Fed’s latest problem, of still unknown dimension, the instability of the US executive branch.

        • Smingles
          Oct 3, 2017 at 12:01 pm

          “Germany has virtually no debt (70 billion as against the US 22 thousand billion) ”

          Which is deeply ironic considering that the only reason they are, economically, in the great shape that they are in today is because they never repaid any of their significant historical debts. They’d still be repaying WW2 debts today if the rest of the world demanded of them what they demand of nations like Greece.

        • Oct 3, 2017 at 2:45 pm

          Correction: The German gross national debt is €2.13 Trillion with a “T.” That would be about $2.5 Trillion.

          I think you’re confusing your “70” with the percentage. Germany’s gross national debt is just under 70% of GDP (68% as opposed to over 100% for the US).

          Germany’s debt is declining at the moment due to a surplus and low borrowing costs.

          However, German states and municipalities are heavily indebted and some of them are in trouble. This may be similar as in the US.

        • interesting
          Oct 3, 2017 at 4:33 pm

          “instability of the US executive branch”

          well with almost the entire body of congress and every media outlet working against it one would be hard pressed to find any stability in all 3 institutions.

          I’ve never seen the media act this childish in my lifetime. According to them the world is about to end and it appears you’re buying into the mess.

        • Nick Kelly
          Oct 3, 2017 at 6:52 pm

          Thanks WR: guess I misread the 70. I’m pretty sure of the trade surplus, 300 billion.

        • Nick Kelly
          Oct 3, 2017 at 6:57 pm

          I’m buying into: ‘one would be hard pressed to find any stability in all 3 institutions.’

          Since this includes the Executive branch I’m not sure which side of the debate you wish to take.

        • Kraig
          Oct 3, 2017 at 9:57 pm

          Larger economy and could be rescued, but no debt and political integration like the us. Moving towards it could set off sparks that make Catalonia look like small fry. Though their are eurofederalists. Still agree us should stay out of it

  2. Oct 3, 2017 at 12:03 am

    It’ll be 10-11 years since the heart of the GFC that things go pear shaped.

    1987 – Global Stocks Crash – Black Monday.

    +11

    1998 – LTCM & Russian debt bubble

    +10/11

    2008 (October) – 2009 (March) – The heart of the GFC. March 9, 2009 was the day the patient officially stabilised wasn’t it?

    +10/+11

    2018-2019-2020

    Somewhere in that date range I’d suggest – which also happens to be a great time to take down Donald Trump if he’s still in the White House and blame him.

    Narrowing it slightly I’d say October 2018 – October 2020.

    These things often kick off around now (ie September – October – November).

  3. Oct 3, 2017 at 12:24 am

    There will be no debt collapses allowed. Fed will buy all paper. All citizens will be paid in government script. No dissent allowed.

    OTOH, Lagarde says bitcon is in, central banks are out. I don’t know who or what to trust.

    http://www.zerohedge.com/news/2017-10-02/imf-head-foresees-end-banking-bitcoin-surges-above-4400

    • Frederick
      Oct 3, 2017 at 12:59 am

      So now we know who is behind Bitcoin George

    • d
      Oct 3, 2017 at 1:19 am

      If you read in Detail Christine “The Corrupt Hypocritical” Lagarde says “Blockchain” has a future in “international Banking”, and it does.

      ZH is nowhere near as, reliable, informative, or accurate, as it first was.

      • Dos Tacos Mas
        Oct 3, 2017 at 4:48 pm

        “ZH is nowhere near as, reliable, informative, or accurate, as it first was.”

        I used to appreciate some of the thoughtful comments on ZH, but of late it seems to be a platform full of overt racism and political name-calling. Precious little value-added. Don’t go there much anymore. Sad.

    • Gershon
      Oct 3, 2017 at 4:53 am

      Lagarde, like her two predecessors as heads of the IMF, is a convicted criminal. Trust her “advice” at your own peril.

    • Rusty Brown
      Oct 6, 2017 at 2:32 am

      Or “scrip” perhaps?

  4. Truth always
    Oct 3, 2017 at 1:00 am

    I am sorry but the article does not clearly articulate misery for whom and how?

    It just is a long rant against economics. And yes everyone knows that too much debt is a bad thing and that credit is spiraling out of control. But please articulate the scenario on how misery would be inflected to whom?

    I have come to the conclusion that the asset holders would still come out far ahead and the naysayers (like I previously was) would be punished. For example, take the case of the homeowners. If a majority of homeowners start defaulting on the debt do you expect all of them to be forced out of their homes?

    They will never be forced out. Even in the previous Great Recession a lot of home owners left mortgage and rent free for a couple of years. This played out very well for them in non-recourse States like California. They just simply default and since there is no one else to buy the distressed properties who else would step up and buy those houses. The political class will they’re not to throw a majority of homeowners out of their houses especially in Super Bubble States like California.

    Let us take other examples for example commercial real estate. If those drop in value and the backs start to foreclose who else again would step up to buy them. No one. This charade has gone on to such great lengths that that anything but the continuation of it would cause great social upheaval.

    So The Show Must and Will Go On.

    If you think it will not please lay out a few scenarios on how it will play out or else hold your peace

    • Bobber
      Oct 3, 2017 at 10:40 am

      I don’t think that’s accurate. Only about 10% of the crowd are avid real estate and bond speculators, in over their heads.

      The scenario is this. The Fed continues to raise rates gradually in its attempt to deflate the bubble, which threatens financial stability. The Reckless borrowers and stock speculators will go bankrupt, and they are a small minority of the population. A recession starts which deflates real estate and stocks. Asset prices come back down to Earth.

      The modest deflation has little impact on the real economy, but an out-sized impact on asset prices. Expect the opposite of what happened when the bubble expanded. The expansion of the bubble showed us that the wealth effect isn’t as powerful as you would think.

      The Average Joe loses 30% of his stock portfolio, but he moves on, like always.

      • Beard681
        Oct 12, 2017 at 7:52 am

        Problem is all the CEOs start throwing overboard assets and employees in a vain attempt to keep their stock prices (options) up. This will result in widespread unemployment and recession/depression.

    • Kent
      Oct 3, 2017 at 10:52 am

      As always, it will be a disaster for those who bought in late. And for those who work for companies that require frequent provisions of credit to make payroll and buy stock.

      The rest will muddle along. Good comment.

    • Smingles
      Oct 3, 2017 at 11:22 am

      “They will never be forced out. Even in the previous Great Recession a lot of home owners left mortgage and rent free for a couple of years.”

      Uhhhh

      So “a lot” of home owners left mortgage and rent free, eh? How many is “a lot,” exactly?

      About 7-10 million (depending on which estimate you use) Americans lost their homes in the Great Recession. Less than 1/3 of them will ever own a home again.

      Your post amounts to nothing more than a rant based on a poor recollection of what happened 8, 9, 10 years ago.

      “If you think it will not please lay out a few scenarios on how it will play out or else hold your peace”

      Explain to me how pensions– which are so dramatically underfunded the numbers literally sound made up– will escape misery? There’s only three ways out of that hole: (1) inflate the heck out of everything and screw everyone, (2) raise taxes enormously to cover the shortfalls (won’t work and will accelerate the problem), or (3) cut benefits dramatically.

  5. d
    Oct 3, 2017 at 1:14 am

    Noland understands when you take on credit you are borrowing you future earnings and reducing them, by the interest due on the loan.

    He also understands as I do that we have passed the point where as a Capitalist group of nations, we owe more than our combined citicens will earn in their lifetimes.

    At some point that will become a huge problem for the peopel that have to handle it.

    I dont see that as a shorting opportunity, as when that goes off. There will be nobody capable of paying, on the other side of the trades.

    As an accountant who worked in a bank you dont lend anymore, to somebody who has committed his projected life earnings.

    International Defaults have been causing wars since the first recorded western one one by Athen’s (Greece Again) in the Forth century BC causing War.

    Wars have also been known to destroy old debts, due to the inflation that occurs during and after them.

  6. Richard
    Oct 3, 2017 at 1:30 am

    Excuse me. Doug Noland’s track record is impressive??? He can see things other can’t???

    I have lost a lot of money, in part, because of Noland. The man has been WRONG, spelled W – R – O – N – G, since 1999. I notice that that small detail is omitted from the article.

    See, that’s just the problem with these people. Hold onto a position for long enough and eventually you’ll be right. Then people will say, “he called the top!”

    What absolute, unmitigated, utter codswallop.

    • d
      Oct 3, 2017 at 2:38 am

      WE arent wrong If like Meredith Whitney we had put a time on it we might be wrong.

      We haven’t.

      A good when is when chian implodes I fteh west ha snot strenghtend its situation Particularly teh Eu and insulate ditself fromthat when.

      China is taking on more foreign debt and Dollar denominated debt.

      Depending on their plans this is ominous, for them and possibly the West as well, as the rest of Asia outside Japan is snapping up this chinese Dollar Debt.

      How do they pay it in a chinese correction, or as I suspect, do they intend, not to.

      • Anon2017
        Oct 3, 2017 at 10:08 am

        I was on the other side of Meridith Whitney’s faulty prediction of the coming collapse of the California bond market and did very well with my purchases. Sure the whole system may come tumbling down in a few years. But I won’t think about that today or even tomorrow.

    • Peter Diekmeyer
      Oct 3, 2017 at 6:56 am

      Good point. Forecasting is tough.

      Don’t forget not a single major investment bank (that I could find) called the 2001 and 2008 stock market crashes, during which equity investors lost have their money.

      While institutions and wealthier investors were able to hold on and make it back, much of the public got wiped out.

      Only now (at the worst time) do they appear to be coming back.

      I got no dog in this fight. But I’ll include views of guys like Noland, in my weekly economic reading any day of the week.

      Thanks for your comment.

    • illumined
      Oct 3, 2017 at 4:00 pm

      Wrong since 1999? Ok, while timing might have been off are you saying that we weren’t in a credit bubble? Or that we weren’t in a credit bubble in the early to mid 2000’s? Or now? No one can always be right about when these things blow up, once in a while there are cases where someone pulls it off, but what ultimately matters is fundamentals. That’s the point of his thesis, fundamentals. Are the markets really so controlled by Federal Reserve policy and scattershot ETFs that we don’t believe fundamentals matter anymore? Amazon right now has a P/E of more than 240, we’ve seen this kind of thing before……

      • Richard
        Oct 3, 2017 at 6:30 pm

        I’m not saying we weren’t in a credit bubble. But Noland’s ANALYSIS was designed to make one believe that it was going to burst ‘any minute now’. And it hasn’t! FOR EIGHTEEN YEARS!! Yes, he started this fearmongering nonsense EIGHTEEN YEARS AGO!

        He was W – R – O – N – G.

        I speak five languages. I can spell the word WRONG in any of them if you don’t understand plain English.

        • illumined
          Oct 3, 2017 at 9:05 pm

          But the credit bubble DID burst 17 years ago, remember the dot com bust? The economy in the area I lived in was smashed for years because of that. The second bubble burst 10 years ago with catastrophic consequences for the entire global financial system, or have you forgotten the bailouts, the millions of home foreclosures, etc? He never said they were the same bubble, though they all originate from the same source, central banks, kind of like how waves in a wave pool come from the same place. Only these waves keep getting bigger and bigger and bigger. The bubble we’re in now should have burst after QE3 in America ended but it didn’t because other central in the world took similar “stimulus measures”. Barring additional stimulus yes this thing could collapse at any minute, one of the problems is that they are unpredictable.

  7. Cashboy
    Oct 3, 2017 at 2:37 am

    Robots and Software will make more and more people redundant.
    If you have no income, you cannot buy anything from the corporations and they would have no customers.
    You will already see more and more western governments paying out state benefits to people on low salaries; in effect subidising corporations wage costs. In theory the corporations would make more profit and pay more corporation tax to the governments and be able to pay more dividends to the rich with shares. However we know that most of the big Corporations are either moving their manufacturing in the East or Latin America or have ways of moving their profits for tax offshore.
    You can hear more and more about a “Living Income” from governments and is in effect guarantted state benefits to keep the fiasco going. The government can just create more debt because in effect that liability belongs to the tax payers (people) anyway. That is the reason that interest rates are so low and will remain low I would guess.

    • economicminor
      Oct 3, 2017 at 9:52 am

      as for the pension crisis not being a crisis.. it doesn’t matter until it matters and when it matters it matters a lot.. just ask the retirees in Dallas/Ft Worth.. Or in Trinity County, Calif or anywhere pensions have already failed. It appears to me the only pensions that may not be at risk are the ones who are federally guaranteed.

      • Bobby Dale
        Oct 3, 2017 at 12:00 pm

        Which of the federal guarantees are you referring to: PBGC, Social Security, Federal Employee Retirement System, the VA supplements or all of the above?
        FERS is probably safest, in my opinion, as the people who make the rules rely upon it.

  8. Phil
    Oct 3, 2017 at 4:02 am

    “Noland’s warnings come during a time of exceptional public trust in governments, central banks, regulators and other institutions”.

    The public is flipping right now from trust in government to the private sector. Here in the UK they have borrowed so much that most of their income goes to service existing debt and they still grows daily, western governments are in a debt spiral and there is no way out here.

    You can see it in your everyday life, roads are not being repaired, they have started to turn street lighting off at nights, A&E departments are being closed down in certain area and many hospitals are under special measures. Our courts are offering plea deals to save money and that never happened before.

    Last week the Police Force was the only part of the civil service that was offered a pay rise but no extra budget was found, it had to come out of the existing budget. Keeping the Police Force sweet….. is the state expecting trouble ahead! They have put up council tax to the max 4.99% because if they went 5% they have to have a referendum and as we saw in Catalonia they don’t want any of that pesky democracy getting in the way.

    When an Empire\State begins to collapse, from what I have read historically there are definite markers, firstly the state will begin to debase their own currency to stay in the game, then you will see taxes rise to eye watering amounts and then the state will become increasingly authoritarian.

    Greece is the petri dish of the west and if you want to see your future, look no further than Greece. What we are moving towards is not a market crash but and economic crash. Noland is very right that when politicians get themselves in these situations they will try and take us to war. They will divide and conquer like what is going on in the USA but I suspect it is global.

    During the BREXIT referendum, what surprised me was the language they were using was exactly the same as the anti Trump supporters, you would think these guys had the same hymn book. I voted to leave and was labelled a racists and bigot which surprised me because my very first girlfriend at school when I was 14 was black and I have dated many black ladies since, I have also dated Dutch girls was married to an Austrian and am currently married to an eastern European and have been for over 10 years. I suspect a single source of this propaganda. Antifa and Remoaners are the same breed, some journalist needs to follow the money.

    • Smingles
      Oct 3, 2017 at 11:37 am

      “During the BREXIT referendum, what surprised me was the language they were using was exactly the same as the anti Trump supporters, you would think these guys had the same hymn book.”

      There’s a lot of overlap, demographically and culturally, between Trump voters and Brexit supporters, as well as nationalists in general. And there are a lot of racist/xenophobic undertones to the arguments of many nationalists. It doesn’t make you a racist, but it shouldn’t surprise you to be grouped in with racists.

      Hate crimes skyrocketed in the UK after the Brexit vote. Do you really think that is a coincidence?

      “Antifa and Remoaners are the same breed, some journalist needs to follow the money.”

      Antifa is a non-issue. You’re grasping for straws there.

      • Ali
        Oct 4, 2017 at 11:43 am

        Careful with labels; depending on who’s in power, pejoratives change.

        Correlation is not causation. Provide evidence that hate crimes came at the hands of the voters for Brexit.

        His argument was “Cui bono?” You’re misdirecting.

  9. Jack
    Oct 3, 2017 at 4:31 am

    Absolutely agree with Richard, above. Noland and his financial buddies, The Daily Reckoning, are grifters of the worst kind. I have been following their tripe from a distance for 20 years,at least. Always wrong, always taking credit for something never predicted, etc etc. what horse manure. Anything from these guys should NEVER appear on Wolfstreet.com.

    • Peter Diekmeyer
      Oct 3, 2017 at 6:51 am

      This is an excellent, yet troublesome point.

      You are of course right, that many of these forecasters have been warning doom for some time.

      But timing these things (Kondratiev style implosions) particularly during a time of unprecedented government interference in the economy, is near impossible.

      One course of action would be to consider their reasoning and their choice of facts and make your own calls.

      But I am not sure that ignoring them is the answer.

      • economicminor
        Oct 3, 2017 at 10:11 am

        The Power of Positive Thinking along with Group Think has disabled the ability of many to critically analyze. Yet when something can not continue, it does eventually stop. There will be an end to our current farming practices because they are depleting the soils, killing off the pollinators and generally producing food that has more carbohydrates and less real nutrition. When the financial system makes no sense to those who step back and analyze it, can it continue forever? Only those Group Thinkers who believe that TPTB are omnipotent.

        I don’t see many people writing the name Kondratiev. As ole Samuel Clemens said, history doesn’t repeat, it just rhymes. Kondraieff was sent to Siberia because his boss didn’t like his research. Talk about Group Think taken to its max..

      • will
        Oct 4, 2017 at 3:29 am

        Seth Klarman illustrated the above brilliantly in his (now) overpriced book. Clients that “invest” in bubbles will be happy with their brokers the vast majority of the time. While prudent money managers will be consistently answering to unhappy clients who consistently leave for “better” agents. Most prudent money managers get fired or quit the business long before their prudence pays off.

        This is termed the “institutional imperative” and gets talked about endlessly by Buffett, Montier, et al.. And this is exactly what one sees above with people who are unhappy with Doug Noland. It’s a very unfortunate aspect to the human psyche that for the vast majority of people prudence and happiness are more or less mutually exclusive. This is /why/ the institutional imperative works, and this is /why/ the bulk of the population can be perpetually fleeced by scams and frauds perpetrated by the powers that be, and not just in the here & now, but throughout history.

        I got out of the 2007/8 crash without really losing anything (I was not fully invested at the time, but mostly by selling into the chop and owning things to begin with that didn’t suck), and I even made some good money on some asymmetric bets that paid off. From this I learned a couple of things:

        1) When the value guru’s say “wait for the fat pitch” – I actually understand what that means, and the corollary is that you simply aren’t invested most of the time.

        2) When I look at the stock market over the course of my adult lifetime, I’ve literally seen it go nowhere for something like 20 years. Sure it goes up and down and it’s a little bit more up than down over the past few years, but I really took a step back and said “why play at all?” Because all of the up and down just stresses me out, a whole lot more than the FOMO ever will. And quite frankly, it’s just not worth my time to keep up with or even care about. Sure, as a curiosity I find it interesting (which is why I’m posting here), but not as a mainstay to my economic survival, no.

        3) “the market” is a game, and like a casino the decks are stacked against people like me. Everything is so dominated by shenegans, insider trading, other frauds, etc. that “playing the stock market” is just that – I’ll “play,” but it’s really not the bread and butter of saving. Which brings me to:

        4) “saving” and “investing” are conflated in American (especially retirement) terminology. If you want to have enough for retirement you work for 40 years, save 1/2 your income in something that will retain value (hopefully easy to figure out things like bank accounts or UST’s), then live off your savings for the ~40 years you plan on being retired. Fundamentally this is how the math works. And the only way it works. All of the other “ways” involve you winning and someone else losing which, by definition, doesn’t work for everyone. On a related note, letting Wall Street gamble with your money for 40 years will not help you retire because the ‘great inflation’ of the past 40 years was a very unique moment in history that will not be repeated again in our lifetimes (if ever, but this is a different discussion).

        I really hate to say it, but trying to convince people on the merits of these points… well, I’ll just say that I don’t really seriously try anymore. It’s like trying to convince people that (their particular flavor of) God doesn’t exist – they just have to figure it out for themselves the hard way – most never really will, and most of the rest will learn it too late.

        I applaud Noland – it’s a thankless task. Speaking truth to power (or ‘truth to crazy’ as the case may be). It’s way easier to just throw client money at the bubble and move onto the next bubble with new client money after your prior clients are all wiped out.

        • Peter Diekmeyer
          Oct 4, 2017 at 9:00 am

          Great post Will.

          I particularly like your point about investors ditching their prudent advisors and heading for the “hot” managers.

          In fact, the more I think about it, the more I wonder if we are anywhere near a market top (despite the lousy fundamentals).

          Because the general public still has not bought into this market.

          Right now there are tons of Investment Advisors showing their clients charts of the S&P 500 starting from the 2009 lows and pointing out how the index has quadrupled since then.

          I suspect only when the “dumb money” is more fully invested will be have hit a top.

          Martin Armstrong (a bear) thinks the market might still double again… I too wonder….

        • will
          Oct 5, 2017 at 12:38 am

          Thanks.

          Yea… the market keeps getting stupider and I agree that it’s impossible to predict in which direction (which is why I’m much happier sticking to things that I can predict..)

          The updated introduction to later editions of Graham’s Intelligent Investors are excellent reads on how “hot” money managers move from bubble to bubble whilst perpetually wiping out their clients. Similarly, it’s always the same bunch of jerks that are always out there doing it, they never really go away. Perma-bears get a bad rap and perma-ass-hats do not, it’s strange. I suspect it’s because all right right people are making money off the latter but not the former – but that’s just me..

          (Klarman’s book is excellent too, btw – but you’ll have to find a .pdf copy of it, for obvious reasons)

  10. Gershon
    Oct 3, 2017 at 4:46 am

    Yellen has no intention of tapering these Ponzi markets. Any suggestion that Fed will act like a responsible central bank, instead of what it is – a criminal private banking cartel and the oligarchy’s chief instrument of plunder against the 99% – will be shown to be erroneous. Sure, Yellen has managed three piddly interest rate hikes of .25% each – while real inflation continues to outstrip this faux Fed “tightening.” Her fellow Keynesian fraudsters at the central banks continue to increase their balance sheets by at least $200 billion a month – robbing future generations of the ability to buy a home, earn a living wage, or enjoy the kind of fulfilling lifestyle their middle and working class grandparents could aspire to before them.

    The global financial system will eventually collapse under the weight of its own fraud, mark-to-fantasy accounting, and artifice, but the central bankers, despite their incessant jawboning, will never be anything other than what they are: the oligarchy’s bankster racketeers for concentrating all wealth and power in it’s own venal hands at the expense of everyone else.

  11. Gershon
    Oct 3, 2017 at 5:06 am

    All of the Keynesian counterfeiters and racketeers running the central banks in the US, UK, Europe, China, and Japan have the same playbook: creation of printing-press “stimulus” out of thin air to juice “the economy” – by which they mean our rigged, broken, manipulated “markets” and the insane asset bubbles created as the deranged money-printing by these gold-collar criminals sloshes around in hot-money flows seeking more “yield” while the purchasing power of the hapless 99% who are being screwed over by this monetary madness continues to decline and their children are saddled with immense, unpayable debts.

    Read Adam Fergusson’s classic “When Money Dies” to see what’s in store for us as the Fed, ECB, etc. hurtle us down the road to Weimar 2.0.

    • MD
      Oct 3, 2017 at 10:13 am

      They’re not Keynesians…

      Keynes’ theory was that you taxed and saved during the boom times to invest in stimulus during the bad. Which makes sense.

      What we have now has nothing whatsoever to do with that theory…it’s just printing money to hand out to financier friends who have malinvested in order to bail them out in perpetuity.

      There’s an investment bank tick that needs to be rooted out from all aspects of governance, but it’s now so imbedded – and offers great riches to politicians that play the game – that it’s going to take another big crash and real, genuine anger (anger that’s currently mollified by a manipulated housing boom) for anything to happen.

      Apart from in Iceland – they actually did something. Kudos.

      • Kent
        Oct 3, 2017 at 11:08 am

        Thanks for this regarding Keynes. Keynes always thought very little of monetary policy. I always find on different sites people of Libertarian persuasion ranting against Keynes as the instigator of current central bank policies.

        I suspect that is for one of two reasons. Either they can’t call out the real instigator, Milton Friedman, who was an avowed Libertarian. Or because bankers propagate the idea among Libertarians so that they won’t begin to question their own beliefs and will support policies that benefit bankers.

        Or maybe its just group think. Don’t know, but it is so common and so wrong that it can’t be coincidence.

      • Nick Kelly
        Oct 3, 2017 at 2:10 pm

        I wouldn’t waste too much time on the above rant. There should be an app where every time the word ‘Fed’ appears, an automatic comment about criminal banksters, Keynesians and oligarchs is delivered.

      • Maximus Minimus
        Oct 3, 2017 at 6:00 pm

        “Keynes’ theory was that you taxed and saved during the boom times to invest in stimulus during the bad. Which makes sense.”

        It somewhat made sense in Keynes’ time when one member of the British educated class bemoaned the puerile form of American democracy.
        The trouble is that government have no clue when times are good; they spend in good times or bad. Their electorate demands it.

      • Kraig
        Oct 3, 2017 at 10:27 pm

        Norway might be Keynesian exception at least their good times taxes went into the sovereign wealth fund. UK. Poltcos amongst others forgot the tax and save during good times bit.

        • Nick Kelly
          Oct 4, 2017 at 12:21 am

          Norway is a HUGE exception. Something like Saudi Arabia, but harder working.
          It sits on major oil and gas fields with a small population.
          (however it develops its own off shore fields)

          It really is such an outlier in these debates that it’s irrelevant. It doesn’t have the problems of boom and bust that Keynes addressed.
          With the down tick in energy it just goes from wealthy to not as wealthy.
          Being the Norwegian central banker is a very easy job.

        • Maximus Minimus
          Oct 4, 2017 at 12:58 pm

          Here is the national debt of Norway: http://www.nationaldebtclocks.org/debtclock/norway. One would think only the government surplus would go to the wealth fund, but some economic groupthink guru figured the sun will always shine.

        • Nick Kelly
          Oct 4, 2017 at 4:42 pm

          I clicked on ‘Norway debt’ It’s 129 billion. At the bottom of the screen it says: ‘The government is in a net asset position’

          Is it ever. The sovereign wealth fund just hit a trillion. So why does Norway have a debt that is 13% of cash available?

          The bottom of the screen continues: it can borrow money at rates below the return on investments. The 129 billion portion of the fund earns more invested than the payments on it.

          Imagine if the US or Japan or the UK could just retire their national debts, not by printing a bunch of money, but with assets on hand. Norway is an extreme exception, unique in the Western democracies.

          With Saudi spending huge on defense, Qatar may be one of the few, if not the only wealthier, country per capita.

  12. interesting
    Oct 3, 2017 at 5:22 am

    “whether through inflation or”

    damn, if inflation really kicks in i’m screwed. The “low inflation” we have now is killing me so any “real inflation” and my life is toast.

    • Harambe
      Oct 3, 2017 at 1:49 pm

      Amen, brother. Currently enjoying a 60% rent inflation over the past 5 years in Florida. Can’t wait to see this so-called “real inflation” crossing the event horizon…

  13. marco
    Oct 3, 2017 at 5:24 am

    Surely the Fed has all of our best interests at heart.

    • d
      Oct 3, 2017 at 8:19 pm

      “Surely the Fed has all of our best interests at heart.”

      It is not possible for the FED to take actions that help everybody.

      Asa what helps one sector, will frequently be at lest Neutral, if not negative to another.

      This is a Basic in Monetary and Economic policy.

      • A
        Oct 5, 2017 at 3:16 pm

        So why intervene? Let the market do its work. Oh wait… that would cripple campaign contributions. Can’t have that. The proles don’t have enough disposable income to purchase our favors.

        • d
          Oct 5, 2017 at 8:17 pm

          And in 1929 you cried as they didnt intervene.

          Various of the QE programs Trap etc worked. What went wrong was QE infinity when peopel could see that the money was moving to the wrong places.

          At that Point the Administration which had already failed to assist the FED heal the Economy. Failed even further to assist the FED to move the money to where it was needed the bottom

          Mainly as doing so would aid the white middle class, and the sitting president hated them. Hated them so much, he sought to destroy them. So prevented help flowing to them.

          Had the FED not acted as it did in 08, the event would have made what we experienced seem like child’s play.

          Perhaps you would have prefered that.

          Monetary Policy alone can not resolve all the economic issues.

          Particularly when the Administration does not also play it’s part correctly, for whatever reason.

          The FED is one of those entities that can not ever be wright. For everybody at the same time. It does not have the evil agenda atributed to it by the FED, Bank, Wealth, and Success, Haters.

          This is something People need to learn to accept.

          In a modern world, with a modern financial system, some sort of FED is a necessary part of that system. As a re FED interventions in tim eof stress in teh Economy.

          The FED will do some sort of QE again. when needed. I guarantee you it will be different to the last Exercise. In an attempt to tune out the faults discovered in the last exercise. It was the first time the FED had ever done QE like that. Yet so many expected perfection.

          Just like may others the FED, lives and learn’s.

          Trying to do something has to be better than doing nothing. Except watching the ques at the soup kitchens.

        • Beard681
          Oct 12, 2017 at 8:08 am

          The crash of 1921 when the FED didn’t intervene, the markets corrected themselves. Government interference in 1929 stretched a recession out to a depression, with the worst part of the crises hitting in 1932.

          Crashes and corrections are a part of capitalism, without which oligarchs and institutions like Goldman Sachs get ever bigger when they should be relegated to the dustbins of history (as was Lehman Brothers). FED interference is apolitical expedient to keep the 0.1% the 0.1%.

  14. Marty
    Oct 3, 2017 at 6:56 am

    “Noland’s warnings come during a time of exceptional public trust in governments, central banks, regulators and other institutions.”

    ?!?

    Ja, ja, ja…

    • Peter Diekmeyer
      Oct 5, 2017 at 7:35 am

      Marty – I realize that statement goes against what you hear in mainstream media.

      In fact I knew someone would pick up on it when I wrote it.

      Yes there has been some griping and whining. But there is always griping and wining.

      But show me one G-7 country where a newly-formed party has taken power and moved the country in a different direction.

      May, Merkle, Macron and Trump, recent election winners, are all proponents of the same old Big Government policies of their predecessors.

      Same stuff with regulators, central banks and other institutions.

      I can’t think of one, that has experienced major changes in decades – unless you count bigger budgets and more regulations as changes.

  15. Paul
    Oct 3, 2017 at 8:04 am

    Noland and Rickards….Harry Dent…and many more have been wrong as much as they have been right…the real question will be “what” will cause the beginning of the melt down? Since 2009 everyone was boohooing the ZIRP of the fed and the inflation that was coming and easy credit would create deflation…then inflation…and we would all lose our retirements…at the end of the day the cost of Health insurance will be everybody’s albatros since the cost of Health insurance will continue to take away spending power of the consumer driven economy

    • will
      Oct 4, 2017 at 3:40 am

      I have a lot of respect for Noland, less so for Rickards or Dent (in descending order). I’ve been reading Dent for years and have been perpetually impressed by his inability to adequately articulate his idea(s?), or his methodology (or lack thereof?) for arriving at this idea.

      Noland writes on “bubbles” which is a much more dynamic concept (something for which there is still vast disagreement about even their definition) and always has insightful writings on current events.

      Like most things – things aren’t going to change much in the day-to-day so the conclusion is always the same. And all & all for the average lay-person, I suspect that all of these prognosticators will turn out to be ‘equally right’.

  16. mvojy
    Oct 3, 2017 at 8:16 am

    Let’s just wipe the slate clean and forgive all debt worldwide. Set the debts to $0. Maybe THEN we can all afford to meet our obligations rather than be beholden to those at the top of the money mountain.

    • Gershon
      Oct 3, 2017 at 8:42 am

      As the oligarchy and its central bank accomplices escalate their financial warfare against the 99%, more and more young people are going to turn “anti-capitalist” until they realize who the true culprits are behind their blighted lives and futures. Taxpayers, too, at some point are going to push back against being forced to cover the banksters’ gambling debts and pay for the reckless and irresponsible choices of Wall Streeters and other social parasites.

      http://charleshughsmith.blogspot.com/2017/10/what-if-tax-donkeys-rebel.html

    • Importunio
      Oct 3, 2017 at 10:14 am

      What a great idea, let’s reward irresponsible behavior.. So what will stop people from loading even faster with irresponsible debt, if they see the thieves being rewarded? – Everyone likes to quote the debt Jubilee of the bible. Pay attention – all parties knew of a 7 year cycle of Jubilees, as such, everyone made allowances within a 7 year cycle, i.e. land was “leased” dependent on where in the cycle they were… So, responsible “lending” was a part of the system – Just declaring a retroactive debt “Jubilee” without prior consent, is THEFT.

    • Paulo
      Oct 3, 2017 at 10:59 am

      I often hear the call for a debt jubilee, (and I noticed your comment was sarcasm), however, I wanted to speak to that topic. People borrow with a promise to repay. People lend with an expectation they will be repaid with a service premium. If debts were simply forgiven it would already be too late to salvage anything. Certainly, each and every case of bankruptcy is unique and often there has been real manipulation by lenders to fleece others and take over their assets. This is in reference to the banks and land companies who bilked the farmers for their land during the ’30s. In cases like that, or robo-signings of mortgage investment tranches, then jail looks like a good remedy. I believe I saw a news article of a banker shot in Thailand for being a crook. But to simply forgive the debts of people who buy and live beyond their means is an absolute injustice.

      I certainly expect to see a real mess start to unfold in the near future. There will be many hurt and our System might not recover. There are consequences for all our decisions. This concept is taught in elementary schools in Canada under the topic, ‘rights and responsibilities’. It is posted in every classroom and the smooth running of every class and school is founded on this principle. (My wife was an elementary school teacher and I often saw how her classrooms worked).

      What happened?

      Those who live prudently have a chance to survive an upcoming economic calamity. Those who do not, will most likely struggle far more than they expect, or what thery think is fair.

      My own opinion is the best course going forward is to have hard assets and skills. Plus, (first and foremost), no debt. Just my 2 cents worth. hah

      • Frederick
        Oct 3, 2017 at 11:40 am

        I’d say those comments are just plain old fashioned ” common sense” and I couldn’t agree more Paulo

      • Smingles
        Oct 3, 2017 at 11:47 am

        “I believe I saw a news article of a banker shot in Thailand for being a crook.”

        Might not be the same thing, but Vietnam just convicted about 50 bankers and politicos of fraud and corruption, with at least one of them receiving the death penalty for said crimes.

        Obama did nothing to the bankers. Now the tentacles of the vampire squid (Goldman Sachs) are firmly embedded in the White House. Heck, might even get one to head the Fed itself. Then it will be candy and rainbows.

      • William81
        Oct 3, 2017 at 1:24 pm

        “It should be noted that White has voiced many of these concerns for some time, in January of 2016 the Telegraph reported White said, “The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.” He then made it clear a major task awaiting the global authorities is how to manage debt write-offs – and therefore a massive reordering of winners and losers in society – without setting off a political storm.” http://brucewilds.blogspot.be/2017/09/former-bis-chief-system-dangerously.html

      • Kraig
        Oct 3, 2017 at 10:43 pm

        What will stop people from loading with irresponsible debt?? Easy criminal charges for the executives of irresponsible lenders. We had usury laws before and now data on debtors is easier to collect.

        Of course that means that all these debt issuing companies won’t make so much money.

        Also a pretty good idea for third world countries

    • d
      Oct 3, 2017 at 8:22 pm

      So punish the prudent and reward the imprudent.

      Is your default position.

    • Nick Kelly
      Oct 4, 2017 at 12:29 am

      Then all pensions go bust. Pensions essentially are the old receiving the return on lent money they contributed in their working life. Similar with lifecos.

      • A
        Oct 5, 2017 at 3:19 pm

        THere’s always a counterparty, people. YOu willing to impoverish them? It’s gonna happen though, regardless of what we want for the pensioners who trusted the pension managers… who they never met. Never investigated…

  17. Drango
    Oct 3, 2017 at 9:15 am

    The problem with predictions is that there is so much leverage and debt, it’s hard to know what will snap first. But judging by the last major sell off in August of 2015, China is the weakest link. China’s currency problems just keep getting bigger and bigger the more it tries to hide them. When the day comes that China can no longer afford to hold off the inevitable, no amount of QE will bring back the Fed’s Humpty Dumpty asset prices.

  18. QQQBall
    Oct 3, 2017 at 9:39 am

    Yes, what if they do that? What if the FED were to buy all or almost all USTs and simply cancel them out? If the USD more risky with the high debt and $20T in USTs outstanding, or is it less risky? What if there was …. wait for it… a balanced budget rider to these actions.

    • Kent
      Oct 3, 2017 at 11:18 am

      The United States has been running ever higher budget deficits since Reagan with a brief interlude under Clinton. We’ve been warned for almost 40 years now that our taxes will be increased to pay for this. And yet our tax rates keep getting cut. Then we’ve been warned that federal borrowing will “crowd out” private sector borrowing and interest rates will have to go into the stratosphere. And yet interest rates are at historical lows. And all of this borrowing will pump money into the economy and cause hyper-inflation, yet inflation is also at historical lows.

      My guess is that we’ve been very fundamentally lied to about the nature of the economy and federal spending. I also suspect that if we had a balanced budget amendment, the economy would go into an unrecoverable depression.

  19. Oct 3, 2017 at 10:17 am

    I read Noland every week. He has the facts and a paranoid is a man with all the facts. The ability of the investor to leverage collateral with credit is really at issue, when you can buy a Treasury bond on 10% margin and then leverage that collateral to buy stocks, you have to ask when is it the terms of that working agreement begin to breakdown and restrict leverage.
    It’s generally thought that the credit collapse on the other side will be self feeding, but its entirely within their power to freeze markets and indemnify the players and the players know this, and continue to leverage up.
    So the creation of private credit becomes a problem for the Fed, and they periodically drain the swamp to restrict private credit creation. We are near such a moment, as the Fed prepares to raise rates no matter what. It’s the Volcker moment. These things never die a natural death, not even in 2007. The global economy is a Frankenstein monster, you have to kill it.

  20. RangerOne
    Oct 3, 2017 at 10:22 am

    I would guess that mainstream economists do know what they ate talking about and are capable of making insight full predictions. However you can probably always predict how things can go right and like a home owner, no one heavily invested in the systems success wants to publically entertain ways it can all go to shit.

    The Fed has been trying to mitigate the boom bust cycle for at least 100 years and it is still debatable whether they haven’t simply made things worse.

    If I were an economist I would look at any market force or government action leading to rapid growth as a precursor to a crash simply because there is a historical boom and bust cycle.

    It is also interesting to analyze what kind of pre-bust conditions lead mainstream economists and business leaders to speculate about a crash. There are always hold outs but generally people get nervous towards the end.

  21. raxadian
    Oct 3, 2017 at 12:14 pm

    *Chair Janet Yellen spoke for many when she said that she did not see a financial crisis occurring “in our lifetimes.”*

    So, can we call her Undead Yellen from now on?

    I don’t think the same “fix” they used in the previous crash would work. Interest rates are still really low, so the only option would be for the government to take even more debt.

    But who knows what the US government will do.

  22. Maximus Minimus
    Oct 3, 2017 at 12:19 pm

    Doug Noland had it right all along. It does not matter if he got the timing right, or not. The theme of his column has been that runaway credit, and subsequent bailout of the market (stock, housing,…), a post crisis mop-up, by Greenspan/Bernanke FED will end in tears. And those who caused it, prefer war to revolution. Sound analysis.

    • Richard
      Oct 3, 2017 at 5:31 pm

      The analysis doesn’t matter. You’re confusing ‘analysis’ with the power of prediction. The purpose of ‘analysis’ is presumably to assist in the corresponding power of prediction. If your predictions are all wrong (yes, there’s that word again, W – R – O – N – G!) what’s the point of the analysis? Why do you people keep making excuses for Noland?

      • Peter Diekmeyer
        Oct 3, 2017 at 6:16 pm

        Let me chip in:

        One point of any global macro analysis could be to consider it for what it is: a rough assessment of the probabilities that trends will unfold in a certain direction.

        So far example if you read a bearish analysis, like Noland’s and many others out there (Schiff, Dent, Faber et al) you could assess a probability it would unfold (in my case I use 10-15%) and hedge your portfolio accordingly.

        • Richard
          Oct 3, 2017 at 6:24 pm

          You’re not getting the point. Just because what you say may be true (it is) doesn’t mean that if the conclusions are wrong, the analysis is valid anyway.

          The analysis from Noland cannot possibly be valid if people use it to make decisions which are WRONG because the analysis they used to make those decisions led them to make the wrong decisions.

          Noland’s analysis was designed to persuade you that things were going to go pear-shaped EIGHTEEN YEARS AGO. We have been waiting for EIGHTEEN YEARS for Noland’s analysis to bear fruit.

          I know I’ve been saying the same thing in several different ways and repeating myself in the process. But how can I get you to understand the nonsense of this man’s screechings for EIGHTEEN YEARS otherwise.

          To say that his analysis is valid anyway is unthinkably stupid. Sure, I can say the world is flat, too. It doesn’t make it so.

        • Oct 3, 2017 at 9:12 pm

          But wait, Richard… If I recall correctly, in those 18 years, we had two MASSIVE crashes — including a Financial Crisis when credit froze up as the credit bubble imploded. It was so bad and so global that central banks around the world experimented with enormous market interventions just to keep the system from collapsing, and they’re still experimenting with it. Wasn’t that enough?

        • Richard
          Oct 3, 2017 at 9:26 pm

          Apparently not. It was a band aid , wasn’t it? What’s the point of saving the system if it’s going to break again less than ten years later. What you don’t get, Wolf, is that the central banks’ ploy was not executed to save the people, it was executed to save THE FINANCIAL SYSTEM. The two are NOT synonymous. Remember how Hank Paulson promised Congress that the money would be used to save those with mortgages when he failed in his first attempt to get Congress to sign off. HE DID NOT DO WHAT HE’D SAID HE WAS GOING TO DO. He turned around and saved the banks instead. By that time it was too late to complain. They had their precious money.

        • Oct 3, 2017 at 10:51 pm

          I never said the central banks did anything for the people. On the contrary, they did it to the people. I totally agree with you. When I say “…experimented with enormous market interventions just to keep the system from collapsing,” it’s obvious that this means the financial system.

  23. Quite Likely
    Oct 3, 2017 at 1:53 pm

    Interesting stuff, but really loses some credibility with me by citing buffoons like Rickards and Ferguson as examples of people we should be listening to.

    • Peter Diekmeyer
      Oct 3, 2017 at 6:19 pm

      I am not so sure.

      Much of the data outlined in the article suggests that the US and world economies are in uncharted territory.

      It was the serious people who got us there.

      I’d suggest it will be un-coventional investors will be the ones that perform best on the way out.

    • Richard
      Oct 4, 2017 at 12:27 am

      In which case, I apologize, Wolf. I understood “the system”, such as you referred to it, to be the entire economic and financial system, not just the financial one.

      The point is that Noland’s analyses are worthless if “the financial system” was able to mock and trash him and point us all in a completely different direction from that which he espoused. After 18 years of his weekly bleatings which led nowhere, how can one take him seriously?

  24. Anon1970
    Oct 3, 2017 at 4:25 pm

    If you want to read about how various investments fared in various countries during the 20th century, I would recommend “Wealth War and Wisdom” by Barton Biggs. It was published in 2008.

  25. Sound of the Suburbs
    Oct 4, 2017 at 5:46 am

    Under the Emperor’s new clothes of neo-liberalism, was an old economics, neoclassical economics, that was last used in the 1920s.

    The 1920s roared with debt based consumption and debt based speculation, this then tipped over into the debt deflation of the great depression.

    No one fixed any of its problems before rolling it out again globally and it still doesn’t look at private debt.

    What was supposed to happen?

  26. Gershon
    Oct 4, 2017 at 8:12 am

    What is going to happen to confidence in the financial sector and bond markets when leaders declare they are going to “wipe out” debt? Usually, in our crony capitalist wonderlands, that means non-performing loans will be transferred to the public ledgers, but what happens if those debts are simply repudiated instead?

    http://www.marketwatch.com/story/puerto-rico-bonds-tumble-to-record-lows-after-trump-says-debt-has-to-be-wiped-out-2017-10-04

  27. Nick Kelly
    Oct 4, 2017 at 7:17 pm

    Re: all the comments along the line of: he predicted it 15 years ago and it hasn’t happened yet.

    The financial strength of empires, absent war, can take centuries to drain away. In the case of the US, at the present rate, it will take less than one century. Possibly much less.

    I suspect that some of the comments come from the young. No one who recalls the gyrations of the early 80’s, when the Fed raised rates 4 % in a few months to 18 percent, believes that these low interest rates will go on forever.
    Or even much more of this century.

    • Richard
      Oct 4, 2017 at 7:42 pm

      Someone else making excuses for Noland…

      All the facts you mention subsequently were or should have been known to Noland when he was busy making his predictions 18 (not 15) years ago.

      Sorry, ‘fraid that one won’t work, either.

      • Peter Diekmeyer
        Oct 5, 2017 at 7:42 am

        Richard – is your beer just with Noland?

        Or is it with all non-mainstream analysts (Eg. Jim Rickards, David Stockman, Raoul Pal, Grant Williams, Alasdair MacLeod etc….)?

        Also, are we missing something? Who would be two or three analysts that you have been able to rely upon during the past two decades (since LTCM?)

        • Richard
          Oct 5, 2017 at 7:58 am

          All of them. Each and every one of them. WRONG, WRONG, WRONG, WRONG… and not an ounce of humility from any of them. A disgusting spectacle. Like they were never brought up to admit their mistakes as arrogant and overbearing children, Momma’s little boy.

          UGH!

        • Peter Diekmeyer
          Oct 5, 2017 at 8:04 am

          Well, hats off to you my friend.

          Because Lacy Hunt is in a class by himself.

          But I wouldn’t stop reading those alternative thinkers, nor the mainstream economists.

          These are tough times to call right now.

          And don’t forget that Lacy is pushing his book too…

        • Richard
          Oct 5, 2017 at 9:37 am

          “And don’t forget that Lacy is pushing his book too…”

          Oh man, that REALLY takes the cake. You can’t even be right for 35 years without someone casting aspersions about your ‘rightness’.

          I give up.

        • Peter Diekmeyer
          Oct 5, 2017 at 9:57 am

          Sorry Richard…. now you are overstating things.

          As good as he is, Lacy totally failed to call the 2000 and 2008 recessions when he was at the Dallas Fed….

          Nor did he predict any major market crashes during his time at HSBC.

          As good as he is, if you relied on him exclusively for your investment advice, you would have been wiped out twice…..

        • Richard
          Oct 5, 2017 at 2:04 pm

          That is a total misrepresentation of his avowed expertise. If you’d simply bought bonds in 1980-82 when he recommended them and just held on without doing anything else until today, you’d be sitting on a fortune following his advice.

        • Richard
          Oct 5, 2017 at 8:00 am

          The ones who were right? The only one I can think of is Lacy Hunt, right on the bond market for 35 years. A spectacular achievement. Kudos.

      • Nick Kelly
        Oct 6, 2017 at 12:59 pm

        Actually I’d never heard of the guy. My point is that the timing of the largest macro- events is on a different scale than the timing of changes in hemlines.
        The time between the two largest events in history WWI and WWII was incredibly short, but it was still 20 years. Does 1997 (20 years ago) seem like the distant past? And this was only because WWII was really the second round of the same struggle.

        Compared to the post WWII period, near- catastrophic financial events are happening very frequently. For the 2008 crash to happen a mere ten years after the near- miss of 1998, is remarkable.

        The main reason bears have been wrong so far: they never dreamed that the FED would double down again and again like a casino addict. It has been cutting rates for those 18 years until it had no more to cut.
        So now we find out what happens without free money.

  28. DV
    Oct 16, 2017 at 7:35 am

    Since the productive capacity of the US economy is far from keeping pace (shale is one thing that helps) with the Fed’s printing speed (unlike in Europe, where ECB has been easing against some industrial slack), those freshly printed dollars will have to go somewhere. So far they have been going to China (3 trillion plus from the start of QE) and elsewhere in Asia (oil exporters too until the price collapse). If there is a collapse, one can probably extrapolate what happened in the prior decade. Meaning that whatever is added to Fed’s balance sheet is likely to go where the industry is located these days, while the US industry is likely to keep shrinking and the US GPD is likely to grow at a pace even lower than that relative to overall debt growth in the past decade (certainly not 1:1) and it is unclear what is going to underline that growth (maybe just another spike in healthcare costs relative to already astronomic levels). How long can this go before war starts? Maybe for a few years, Steve Bennon says it will actually become irreversible in five years time. Well, it does look already that were close to it.

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