THE WOLF STREET REPORT: Nobody Knows How to Ever Get Out of This Mess

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  236 comments for “THE WOLF STREET REPORT: Nobody Knows How to Ever Get Out of This Mess

  1. MonkeyBusiness says:

    Gold just broke through its previous resistance.

    The market knows that from here on out it’s not Brrrrr, more like Buzz Lightyear i.e. To Infinity and Beyond!!

    • BuySome says:

      Are you officially declaring the Battle of “Bull” Run is now on?

    • Ralph Hiesey says:

      Why are you all soo worried? This all has a very simple solution.

      Require that for ALL DEBTS in existence now, interest rates from now on shall be required by law to be changed to 0%.

      All debt agreements from now on shall have their required due date infinitely extended.

      GREAT NEWS!- Your wealth will be preserved forever. No money will be lost.

      For bonus points: The Fed will save the universe by agreeing to purchase any bonds you might happen to have. We could do that for $40T of computer produced money.

      • Fred says:

        Thats stupid. That is the ultimate extend and pretend because principal would never be repaid.

        • Ralph Hiesey says:

          Fred Please! I’m sorry my satire wasn’t evident enough! I”ll try to make it more obvious next time….but for anyone else: I DIDN”T REALLY MEAN IT! But, I guess ya never know what they will try to do next.

        • Nabi says:

          Tsk, tsk–you missed it. Shame!

        • Sit23 says:

          Does anybody honestly think that the US$550 trillion currently owed worldwide will be repaid?

        • No Expert says:

          It will not be repaid with currency but with blood. Just as the bank seizes the lenders house, so to the creditor seizes the debtors country.

      • BenX says:

        What do you tell the retirees who depend on the meager returns on bonds to survive? There’s never a simple solution.

        • JDGator says:

          Just like the cartoon in Grants: Young boy opens front door and man with briefcase says: “Young man, I am with the Federal reserve and today we’d like to buy your set of baseball cards.”

        • leanfire_Queen says:

          They will move to a place they can afford. The NIMBY recipe for everything.

      • Martok says:

        Excellent satire, have thought the same thing, well said!

    • Cruiser says:

      Indeed, central bank manipulation fails as soon as confidence in their increasingly junky IOUnothing currencies starts to collapse. However if they try to end accelerating debasement they will trigger a severe global deflationary collapse. There is no happy ending available in the real world. Lesson to be learned; don’t manipulate the most important set of prices in an economy…rates of interest.

    • polecat says:

      Don’t you remember .. Buzz couldn’t fly after all!

      Eventually, the cheap plastic flyboys and daredevils at the Fed, as well as other Central Bankster-rat-i, will find their thrusters empty.

    • M says:

      I predict that our economic free fall will only accelerate. Peak prosperity reported that a Texas panel is deciding whether COVID patients there get treatment or are sent home. That means that their hospitals are overwhelmed, as predicted.

      If this continues, panic will set in and more and more people from the states with infection spikes will flee to other states. Those other states will then get spikes, since there is no barrier in our interstate system to travel even now, as far as I know.

      This may have already happened in California, which was generally governed well, albeit many counties’ residents ignored mask-wearing and other recommendations. If this virus can infect persons twice, this will cause unofficial lockdowns if no official ones are ordered.

      Herd immunity is thus far away until a mass-produced, widely effective, vaccine or truly effective treatment is found. Given the gigantic harm that this virus has caused to our country, we must carefully gather and examine all evidence of its origins and its initial spread.

      • leanfire_Queen says:

        More people with COVID that don’t find a hospital bed will die, which will make more housing supply available and will lower consumption.

        Pandemics are deflationary at the end of the day.

      • Russell says:

        Don’t believe what you read about Texas. We are doing fine. The liberal media just wants you to believe we are falling apart. Still less than 10% of the deaths per capita of New York/New Jersey and plenty of space in most hospitals. Shouldn’t have opened for business quite as quickly as we did, but back in control now.

      • Saylor says:

        Not really a data point but in SoCal I saw a family sitting in a mini mart parking lot eating take out food (not from the mini mart) Mom, Dad and two daughters…, the SUV was loaded up with a travel pod on top and Arizona plates. Saw another mini van loaded up with AZ plates also. Just made me wonder what the back stories were. It is pretty damn hot in AZ at this time so I can understand the need to flee. Calif got screwed by the food processing industry. Corporations made all sorts of promises to protect the workers and…, faii. Plus we also re-opened too early .

    • paul easton says:

      The goods supply is roughly stationary. As the money supply goes to infinity the value of the money unit goes to zero. As the money supply goes Buzz the money unit value goes Zapp.

    • GaryGary says:

      Instead of bailing out the big banks and Wall St who are the root cause of these problems bail out consumers ! The REPO bail outs started last fall well before the CVB-19 issues. I suggest all US citizens over 21 yrs. old be given say $20 K ! No more big $$$ to bail out the guilty ones, let them FAIL !

  2. Javert Chip says:


    You scared the crap out of me.

    Just realized it was time to click the beer mug & donate again.

    • Wolf Richter says:

      Thank you, Javert Chip!!

    • Engin-ear says:

      Indeed, nobody knows how to maintain our model of an endless growth on the limited ressources of our Planet.

      What would really help us is discovering some truly new sources of energy proving that the ressources of Earth a bigger than we thought.

      Unfortunately we hadn’t science breakthroughs for about a century.

      Apparently there is a increasing consensus that the cake has reached its peak, and we either keep our shares constant or start an unpredictable shares review.

      By the way, our cake is smaller than the used to think last decades: the illusionary part came from the “borrowing from future”.

      • Old-School says:

        It’s not that hard to get out of the mess if society is willing to focus on the long term. If you focus on short term only as our political system does you end up in a bad place with too much debt and a welfare/warfare state that is too much for the economic system to support.

        • Engin-ear says:

          “In October 1976, the government officially changed the definition of the dollar; references to gold were removed from statutes. From this point, the international monetary system was made of pure fiat money.”

          (Source : wiki)

          It is actually very hard to change when nobody remembers the alternatives to fiat thinking.

        • JK says:

          Society can’t get out of a mess if people are too lazy to work, don’t want to learn new skills, get rewarded for bad decisions, crime is not punished, and government believes it’s an empire and spends money abroad when it should be spent at home. There are more factors, but what I suggested is a good start. Watch out for China!!! Those people work like ants and have a mission.

        • paul easton says:

          JK the only mission of the Chinese people is to get rich. I don’t think they can all get rich. They will soon find themselves to be no different from US.

        • paul easton says:

          Which is to say, JK, that those who are already rich, which in this case is the same as saying the political elite, will arrange the system of financial flows so that they continue to get richer. Those who are not already rich, who were not invited to the Party, will be increasingly hard put to keep their heads above the water. Entirely the same as here, except that here the Party is bifurcated.

        • paul easton says:

          Oh God I’m sorry. I wish there was an edit button. It is not the same as here. The American and Chinese systems are converging but they are coming from different places. In China the Rulers made themselves onto Owners. In US the Owners bought the Rulers.

        • JBird4049 says:

          For the Chinese and American elites, it’s the same as it always has been: Greed rules, money talks, people walk, and the poor can go away and die. Everything else including the particular empire’s ideology is not only just window dressing, it’s complete, high grade manure.

          It’s worse than that when senators bloviate over the debt when debating to support the tens of millions out of work and the tens of millions who are likely to lose their jobs soon, yet spend money for unnecessary and evil wars, and bail out major corporations with hardly any discussion.

          It’s a large club and we ain’t in it.

        • 91B20 1stCav (AUS) says:

          Old-you missed corporate business’ ‘next-quarter share-price increase’ main driver as a major component, here-of course if you consider it’s undue influence on ‘society and the political system’, then it all meshes.

          (Sidebar: imho, the real retreat from long-term thinking began in the stagflationary late ’70’s/early ’80’s. or, two generations ago. Wages flatlined as inflation destroyed the average person’s savings, and those children grew up in families who then no longer saw a rational reason to save (the core of ‘long-term’ thinking) when plenty of easy revolving credit became available to offset savings destruction and maintain a previous, moderately prosperous, item/asset-based lifestyle. Thus it was unsustainably baked into the cake at an early age for many now entering their forties. I don’t excuse older generations, either, i’m 68 and made the decision to swear off credit after my wife’s business was destroyed by fraud when we were both on the easy-credit train. My cosigning of her business Amex took us both into three years of Chap. 11. It’s been a difficult, but never impossible road since, having paid off, homesteaded, and never bet the ranch (family home) through subsequent real-estate runups and rundowns). I totally admit to (though not apparent at the time) a modicum of good fortune through it all. (Or, as we said in my years in motorbike racing: “…if you can choose talent, or choose lucky-choose lucky. The counterweight of course, is Kenny Roberts’ observation: “…I’ve been very lucky in my career. But, you know, the more I practice, the luckier I get…”).

          Stay well, and may we all find a better day.

      • Joe says:

        The greed factor surpresses any good technology to keep the gravy train of green technology that is actually worse than fossil fuels as they are useless trying to incorporate to the grid when they actually are working.
        When far superior technology is introduced to large corporations, they are quite satisfied with their current customer base. So, this technology is never introduced to the public.
        Current hydro turbines have a fatal flaw, the housing acts like a breaking system due to centrifugal force and can only be used in a slow flow setting.

        • Marc 60 says:


          Fixed it for you.

          “In October 1976, the government officially changed the definition of the dollar; references to gold were removed from statutes. From this point, the international monetary system was made of pure fantasy money.”

        • Ed C says:

          Sorry Joe, don’t know where you picked up that mis-information about hydro turbines. The only significant braking force is the back-emf presented by the grid that the generator is working against. Your slow flow setting is flat wrong. The following quote is from a web-site I googled using ‘hydro turbine efficiency’:

          “The conversion efficiency of a hydroelectric power plant depends mainly on the type of water turbine employed and can be as high as 95% for large installations. Smaller plants with output powers less than 5 MW may have efficiencies between 80 and 85 %. It is however difficult to extract power from low flow rates.”

          Hydro power rocks. Only flaw is lack of water.

        • Beardawg says:

          What does this have to do with “extend and pretend” lending ??

      • andy says:

        How about nuclear energy, antibiotics, internet, machine learning? Should I go on?

        • wkevinw says:

          Andy- exactly right.

          Finite resources is of course always a correct statement.

          However, innovation “creates” or finds more “resources”.

          Fracking for natural gas has created double the reserves in the US that were there in 1970. How did this happen? innovation

          If you look at a chart, the amount of “finite” gas has increased- confusing the finite resources crowd .

          There’s enough gas there for decades or centuries.

          Another one is silicon- made from sand. There’s a lot of sand.

          Silicon as a semi-conductor didn’t exist until about 70 years ago.

          People “create” valuable resources.

        • Engin-ear says:

          You confuse cute civil applications of fundamental science with the science itself.

          So-called machine learning is based alot on the mathematics of 18th and 19th centuries.

          Nuclear was born in 1930s.

          What we need is neo nuclear and machine learning etc.

          Something better then 100 years old theories.

        • Lisa_Hooker says:

          @wkevinw – fracking didn’t “create” any gas or anything else. Fracking brought forward gas that exists in limited amount. Think of tapping your line of credit. You bring money forward to spend, but the credit line doesn’t get any bigger. Hopefully you can pay back the borrowed money. We can’t replace burned hydrocarbons cost effectively.

      • Appie says:

        We dont need more resources, we need to adjust lifestyle and manage the resources we have better.

        • leanfire_Queen says:

          EXACTLY! I trained myself to save about 75% of my income while becoming a remote worker to run away from Denver’s NIMBYs who were fabricating homeless right and left.

          Moving out of NIMBY areas taking your job with you allows you to save a TON without making much effort.

          High housing costs have been making American workers uncompetitive imho. Also, high healthcare costs. Putin gets that Americans cannot get wealthy by trading houses with each other. Why cannot Americans get it?

        • wkevinw says:

          Lisa Hooker- as I said, basically correct about finite resources.

          Think about it this way. In about 1 or 2 billion years the sun will supernova (or pick your favorite end of the world scenario).

          If you have enough resources to make it until then, you have effectively enough (~infinite for practically purposes). So, you don’t need infinite resources, really.

          Also, for many resources, there are substitutes. Once one runs out you use the next one – more expensive, but still available.

          It has happened in human history many times and will continue.

      • Jon says:


        Saw a wonderful interview between Ted Cruz and Eric Weinstein. Weinstein said that after the we detached from the gold standard, rather than find new sources of growth, those in power just gamed the system in every sector of our economy, including the universities.

        You can find the interview on YouTube

        • paul easton says:

          I looked for that. It wasn’t in the interview with Cruz. I wish I knew which video it was in.

        • Engin-ear says:

          I just looked into dictionnary:
          “fiat” means “an arbitrary order”.

          Not sure if it is the deep meaning of the “fiat money”, but if it IS, then what to say avout the economic activity based upon it?

      • RepubAnon says:

        Simple, really – just repeal the laws of thermodynamics! Once we repel the law of conservation of mass/energy, we’ll have perpetual motion machines… and repealing entropy would give us a boost toward immortality!

        • Happy1 says:

          I always thought that was a stupid law …

        • Lisa_Hooker says:

          We will never get the Democrats and Republicans to agree on repealing the laws of thermodynamics. But it was a great idea.

      • Engin-ear says:

        Our current model is not evil per se.

        It gave us the best product of all times: The Middle Class.

        You know what is the middle class lifestyle?

        You live in (relative) peace, you don’t share your home with other families, you have a car and you have liberty and pleasure to travel. You have access to quality education. And you have full time professional occupation which pays the bills and avoids you the existential boredom.

        The only problem of this model is that it has exhausted its potential.

        • paul easton says:

          Exhausted it’s potential? Why do you say that? Aside from the cars I don’t see why everyone couldn’t have it, if we had a democracy.

        • paul easton says:

          Oh, excuse me, I forgot what Wolf said. The point is we don’t have a democracy, and the Owners are blinded by their materialistic lusts.

      • Person X says:

        The thing I find so frustrating is that we have the answers and just don’t use them. If we were to go full speed ahead with renewable tech we would get rich developing and selling it to the world, employ the whole country, start new industries …and bankrupt our enemies and most reasons for war at the same time….but we don’t because people are fooled by the political propaganda of the Koch brothers etc. I’m just constantly amazed how easy it is for them to fool such a large part of the population. If we actually did things based on what people want and is good for them instead of our system of lobbyists that only do what rich players want we could have things so much better. So much wasted potential.

      • Saylor says:

        The only thing that will save us in the long run is going off planet. We made it to the moon and then just shrugged and walked away. That was when I started to question our viability as a species.

        • Engin-ear says:

          For obvious reasons, the Moon has no oil.

          But it might have nuclear fuel.
          It’s unclear though if it is cheaper to invent new energy tech than to go to the Moon for current tech fuel…

        • paul easton says:

          I am behind you. Please leave. We need more unexploited land.

  3. RagnarD says:

    if u had imagined such a fiasco, would u have been more bullish on gold? Are u bullish now?
    I most certainly am.

    • Emmit Street says:

      Who is John Galt?

    • Frederick says:

      Ive been bullish since well before I went all in at
      1275 in 2016 My silver is up 7 percent today

      • RagnarD says:

        what was the tipping point, the thing that made you go all in?

        For me it was two things,

        back in 2011 when John Corzine was running that hedge fund and he bought those toilet paper Portuguese and Spanish bonds and blew up

        i thought, “who is john corzine?”
        Former head of Goldman Sachs former senator and governor for New Jersey form, one time presidential hopeful. in short One of the most well-connected financial people on the planet.

        and what did he do? He bought toilet paper Portuguese and Spanish bonds because he knew that the government was going to print the money.

        how did he fail? He got the timing wrong and got a massive margin call.

        so from that I learned that even the most well connected financial/ political person on the planet can’t get the timing of this stuff right. but…. he did know that they were going to print.

        the other was When Germany asked for their 700 tons or whatever it was of gold back from the usa, and the USA said “you’re gonna have to wait”….

        and then the price of gold went down.

        “down?!?!”. I smelled blood in the water when that happened.

        Those two events set me over the edge.. way way too early, admittedly.

      • DeerInHeadlights says:

        So from 2016 to Feb 2020 (~1600/oz) before it crashed, you made ~12% annually. If this was in the cash portion of your portfolio, then that’s great because it beats inflation handily. If this was your primary growth vehicle, then not so much.

        Either way, it must feel good now. :)

  4. panamabob says:

    I bought my first gold 45 years ago, although it’s pretty high and approaching a new high, it may be time to hedge this mess. Maybe just don’t worry the Fed will save the day again,….doubt at this point.

    • Apple says:

      Where do you store gold anyhow?

      • BuySome says:

        In the rocker panels of your antique autos. Now just give me the license plate numbers and we’ll call it even Stephen. Don’t forget to leave the keys over the sun shade.

      • Chris Coles says:


      • Heff says:

        Very simple. Buy a good safe and alarm system. What’s the issue?

        • flashlight joe says:

          Keeping a significant amount of valuables in your home is setting yourself up for a home invasion robbery. Don’t put your family at risk.

        • Heff says:


          keeping anything of significant value anywhere is setting yourself up for ‘robbery’. if you keep your mouth shut you never have to worry about that.

      • happy_man says:

        I buried all mine in the national forest. Unfortunately I have lost the GPS coordinates. If you find it please let me know.

      • robt says:

        Where you can look at it. Periodically, inexplicably, it disappears from storage sites due to ‘inventory errors’, sort of like the way Bitcoin disappears unless you have it in your own ‘wallet’, especially in volatile markets.

      • Lisa_Hooker says:

        Cast your gold into fenders for your classic Rolls Royce. Everyone knows that.

      • RagnarD says:

        i’ve thought about this a lot, and if you’re storing it in the USA,/the two of best places are in the leg of a table at your house, that is the steel leg of a table or any kind of common steel object that you can put it in which can’t be detected with a metal detector.

        and the other is in the woods of public lands that you know will not be developed.

        for this you need to mark it with video/photos/GPS coordinates, etc.

        gold is a pain in the ass.

        but that doesn’t mean u don’t need to own physical. all these pain in the ass aspects just add to the contrarianess of it.

        People will tell themselves negative stories or bearish stories about gold so they don’t have to do all this crap.

        it’s much simpler to believe that ur 401k and IRA, etc etal are not going to be pilfered in one way or another by the govt.

    • sunny129 says:

      That’s where option-PUTs on GLD come handy! Same with minining stocks GDX & GDXJ!

      As The gold/mining stocks(ETFs) go up I just add puts as hedge. Working fine. I don’t have to buy physical gold but can have all the advantages!

      There is NO other risk managing tools to individual investors like option trading. Yeh Not that easy to learn/master but worth it in times like these!

      • Lisa_Hooker says:

        Making good money every day selling puts to the nervous. Then they expire and I sell more.

    • paul easton says:

      I can’t understand this obsession with gold. Gold is useless, so the price depends entirely on subjective factors. I would put my money into useful things, like food or industrial minerals. I might also suggest recreational substances, where the demand is countercyclical, but one would have to beware of legalization, which would play hell with the price.

  5. Wisoot says:

    Ripe time for writing off all debt planet wide. Roll on. Central banks have bought this upon themselves. ECB warned recently so long as we do this as a one off and not all the time. But it is all the time. It is fraud. It is not generally acceptable accounting principles to apply liquid to part of mechanism siphoned off before the level drops below half gauge. Video cut out half way through Wolf. From what I heard the startling conditions are a good indication of what is ahead – latter 6 months of 2020 will be a story for the grandkids. Take notes.

    • BuySome says:

      Huh? You missed the part where we eat the grandkids! We’ve been driving the Convertible Buick toward a cliff called Heck Point. It may be a straight line from there as the nose dips, but someone keeps altering the “End of Road” signs for another half mile. Meanwhile, we’re tossing cash into the air while smoking cigars bought on credit. Enjoy the ride.

      • Mr Wake Up says:

        Mario Draghi literally said ” we must destroy the future of our grandchildren in order to save our selves today”

    • Wolf Richter says:


      “Video cut out half way through…”

      I just checked. It seems to work fine all the way through. Maybe you had some connection issue.

    • Lisa_Hooker says:

      Writing off all debt planet-wide is a pretty big step. How about first cutting off all credit and not permitting any future debt. Can you imagine how well that would work for the economy? Can you settle every one of your current transactions in cash?

  6. timbers says:

    I know how to get out of this mess and so do a lot of other people.

    • Wolf Richter says:

      By creating an even huger mess called MMT? And then what kind of hyper-gigantic-huge mess do you need to create to get out of MMT? ????

      • Normansdog says:

        The FED and ECB are implementing MMT right now as we speak – but only to help the Banksters, they are not spending it on schools, railways solar generation capacity and hospitals which is what we would want.
        On the positive side buying bonds and shares does not directly use up any of the earths real resources so MMT for main-street is sill quite possible.
        Why do you hate MMT so much? You remember the New Deal don’t you? MMT pure.

        • Wolf Richter says:

          No, the New Deal was not MMT. MMT is a creature of its own. Our current situation gets a step closer, but is still far from it. Argentina has practiced MMT with its peso policy, where its central bank is a division of the Ministry of Finance. Look at how the peso has done over the past 20 years against the USD.

        • Jdog says:

          MMT is a fantasy. There is no such thing as a free lunch….

        • sunny129 says:

          MMT sounds good in theory, as long as the rate of growth of GDP EXCEEDS that of DEBT, fine. Once it lags or reverses, the interest payment will compete with all the spending -defense and social -SS & Medicare. That’s when they realize the weight of ball with chain around their neck.

          Until then ‘Extemd & Pretend’ crowd keep clamouring for it!

        • Happy1 says:

          MMT = Venezuela

      • RR. says:

        An amusing, but totally serious question. Do you think they
        will succeed one last time before the election, with ramming the
        Dollar Up! The Precious Metals Down! and the Markets to
        All Time Highs! – – –
        Is it All Down Hill From Here! (wie der “Hahnenkamm”)
        Your opinion truly interests me.
        Thank You,

      • California Bob says:

        re; “… what kind of hyper-gigantic-huge mess do you need to create to get out of MMT?”

        How about a ‘reverse split’ on the dollar (including all products and services)? Say, 100 to 1?

  7. Gershom says:

    The dollar is in a freefall as the Fed’s deranged money-printing hurtles us down the road to Weimar 2.0. Turning our money issuance over to this criminal private banking cartel run by a rapacious oligarchy was the beginning of the end for our former Republic.

    • NeGuy says:

      That and congress borrowing and spending like drunk sailors.

    • Nabi says:

      Not to worry, mokes. All the other currencies are in ‘freefall’ too. Apparently at almost exactly the same rate.

    • Cashboy says:

      The US dollar is not in free fall because all the other currencies are money – printing at the same rate.
      The US dollar will remain the reserve currency for the next 10 years and will hence keep its value against other currencies.

      What is the alternative reserve currency to the US Dollar?

  8. Rowen says:

    What shouldn’t be done is for the Fed to print and give Blackrock to buy up the country.

  9. Penny Wise says:

    Fed’s money printer go brrrr…

    Google it.

    • Joe says:

      Probably cause a shortage of whatever the need to print money. I don’t think they use wood/ paper anyone.
      Going to melt the edge of my Canadian money together to be one big heavy, need a crane block.
      Now, where to put it…hmmm.

  10. MCH says:

    Can kicking rocks… but one has to wonder how far cans can be kicked don the road. I wonder if one can draw some odd parallel to the crazy bubble we have in China.

    And really at what point will this whole stock market bubble burst because sooner or later, the guys who aren’t getting paid now at the end of the chain will want to be paid, and Fed bailouts aren’t going to work any more. Seems like we’re in for a fun ride ahead.

  11. JC says:

    Default on the dollar. Something I learned here, during the great depression the US defaulted. Do it again.

    • HD says:

      The US will lose the privilege of the world reserve currency. See how that will work out for an economy which is consumer driven and imports an impressive amount of goods. But I agree, there wil have to be a reset of sorts and it will have to be big enough to – well, really reset the system. What would replace the dollar? There’s no other viable currency candidate. Our euro? Yeah, right. SDR’s?

      All I can say is that I have become a gold bug these past twelve years and that is not because I find the metal particularly mesmerizing. I have no special relationship with gold, other than the fact that it will always retain purchasing power in times of major crises.

      • Trailer Trash says:

        When refugees are once again wandering the countryside (see “Dust Bowl” and “Grapes of Wrath”) those with callouses and skills will eat. Those with gold will not. Desperate souls with neither will need to be quick learners.

        • Frederick says:

          Hey trash and those of us with both will eat lobsta

        • Lisa_Hooker says:

          Some of the refugees will be wandering the countryside because they’re seeking someone to buy their gold. In a collapse only the very rich can afford the extravagance of gold and they set the price, not the seller. Gold is only usable after the economy re-stabilizes. Gold is very long term.

      • Brant Lee says:

        I don’t think the US defaulted on the dollar during the depression. But gold was confiscated.
        Reset to what? A world currency? I don’t think so. We’re probably going to continue to see who is the best of the worst. Nations can’t agree or trust each other. Some country will come out of this the strongest or one who hasn’t been completely nuked.

        • sierra7 says:

          Brant Lee:
          “Nations can’t agree or trust each other”…True.
          Then the people will have to force them to.
          Or, it’s curtains.

          Another commenter above mentioned something about a “reset”.
          I’ve labeled what is to come, “The Great Reset”

      • sunny129 says:

        ‘The US will lose the privilege of the world reserve currency’

        NOT again the same!

        What will replace US $ as a global currency or as currency at Fx exchange? NONE there! EU, Yen, YUAN, Rubel?
        US$ is used in more than 60-65% global commerce including petro $!

        Yeh, it is true it keeps losing it’s purchasing power. Hence GLD and Gold mining stocks shooting up, now
        GLD has gone over 20% and mining stocks (GDX,GDXJ) gained over 30% YTD!

        Overnight gold is inching up!

    • Normansdog says:

      dollar not collapsing – gold standard not returning, dollar default? When?

      • sunny129 says:

        The other fiat currencies are in WORST shape compared to US$!
        Which of those ( Eu, Yen, Yuan, Pound?) will replace it Global currency and Fx exchange currrency?

        US$ is the least dirty shirt, every one hates but WANTED all over the World!

    • The dollar is going to explode. The EU is in the process of collapse, including the EURO currency. After decades of central bank printing that flood of money will find the US dollar the less dirty shirt, and Fed and Congress ready to do whatever it takes. That will precipitate another sort of dollar crisis, but not the current slow drip water torture.

    • happy_man says:



      since they are already in a state of permanent and continuous defaulting, what will the next default accomplish?

      • sunny129 says:

        Not defaulting just LOSING purchase power- value! Did you compare other fiat currencies in the rest of the world?

        Purchase GLD with US$!

        GLD up over 20% ytd
        GDX up over 30% ytd!!

    • Jdog says:

      In the great depression, the Fed became bankrupt due to poor investments (as you are seeing today) requiring the gold confiscation to recapitalize it.
      In the event of a financial collapse in which asset values fall you could very well see a similar situation. The debts of the US government are ultimately the debts of the American people. The government if necessary will confiscate the wealth of the American people to keep itself solvent. Those of you who think there is an easy way out are deluding yourselves. The bill for this debt party will come due, and it will have all our names on it……

      • Happy1 says:

        The government will not attempt to confiscate assets as the main response, they will (and already are) attempting to inflate away the value of the debt and default by means of debasing the dollar.

        • Jdog says:

          You are deluding yourself. The government will confiscate your assets one way or the other. That is a certainty. It may be in one mass bail in, or it may be incrementally with a large tax increase or possibly the wealth tax they are now discussing, but they will do it. They have to. The National Debt must be serviced. You cannot inflate away the debt, that is a fantasy. There is no free lunch, and there is no way out of the hole we have dug without pain…. a lot of pain.

  12. GotCollateral says:

    20 Sept 20

    Get ready for the free fall from the next “unpredictable” shock

  13. Anthony says:

    Walked into a outdoor clothes shop, which had going out of business signs in the window,,,yes it had good reductions…. BUT……… the staff said the closing down signs were just a way to get the landlord to reduce the rent…….

    • Anthony says:

      Forgot, I live in Manchester UK

      so it’s not just the USA…….. ho ho ho

      • Gandalf says:

        Speaking of the UK, just how is Mike Ashley’s Sports Direct doing? It does have an online arm. And what’s going on with the sale of Newcastle United to the Saudis?

        • DR DOOM says:

          Newcastle Brown Ale was my favorite Ale.It’s brewed in Holland now for export to U.S. Newcastle Brown Ale is Brown.You could read a newspaper through a full bottle of the imported swill from Holland.Boom,the bottle is amber now but rhe contents still suck compared with the one and only from Newcastle.Holland can’t make Newcastle Brown Ale cause Holland ain’t Newcastle.

  14. historicus says:

    The central bankers fluffing the markets at the all time highs with QEs and REPO madness…. they create these messes because they never back off…they come in and “rescue” (2008) but never “retire”. They self expand their authorities and author their own mandates, while ignoring the ones on the books. (stable prices and moderate long term interest rates)
    They prevent cycles that flush excesses, thus excesses are pent up and the eventual flush becomes systemic risking nature.
    Thus the Fed has yet one more opportunity to “rescue”, expand their powers, and never retire.
    And now we get extend and pretend. The lenders receive no money, the borrowers dont pay. Frozen.

  15. Bet says:

    Toonces is driving
    I keep trying to think to use history as some kind of a guide line. What to do. Before it was be debt free , have hard assets. But if it’s a reset then what does being debt free matter. Rack it up now? Buy tools , essential gear? The 1 percent always wins
    I was told that after Germany’s defeat all were given 100 marks and good luck.
    I think the civil unrest is to get much worse here in America and we are all armed now
    Patiently waiting in bread lines? Good luck with that

    • MiTurn says:


      “I think the civil unrest is to get much worse here in America and we are all armed now.”

      Time to buy a plot of land in Nebraska to get some degree of self-sufficiency.

      • Paulo says:


        I have a nephew from Nebraska. Old family, been there forever. The key word there is ‘from’. There are too many reasons to list why he left and will never go back.

        Unless a person has lots of skills, and I mean lots, the average person would be better off in a smallish city or large town, with a big garden and access to farms/local produce. The time to head for the boonies was 25-30 years ago…or longer, imho. We have some city folks who moved in to our valley about 3 years ago. Not only do they not fit in, they are despised. They think this is wilderness, when folks have made a decent living around here for 100 years logging and fishing. They think locals are stupid and often give free advice and make complaints to local authorities who are related to, or friends with, who they are complaining about. They bought up a farm and opened a B&B. (What else?). Their farming practices are limited to running a Kubota lawn tractor. The only phrase I can use to explain the problem is they ‘just don’t fit in or belong’.

        You know that old saying, “You never get a second chance to make a first impression”.

        The extreme example of this is James Dickey’s novel (and movie) Deliverence. Obviously, this is extreme but the theme is there at the end of the movie when Dickey (in a cameo role as sheriff) says, “Don’t ever come back up here”.


        • MiTurn says:


          I agree. I was mostly being facetious. I’m from Minnesota and as you inferred with Nebraska, it’s a great place to be from. Emphasis on ‘from.’ I live in Idaho and I fully understand the sentiments you expressed in your comments. It’s like a cultural invasion.

          I think in a prior post you said that your father was a from from Minnesota? Mine too.

          History is simply a record of change. Our sense of ‘present’ is usually constructed from the context of a couple decades. Change is always now.


        • MiTurn says:

          “your father was a from”

          Oops, typo. Fat fingers.

          I meant “a farmer from…”

        • Brant Lee says:

          Ha Ha, Paulo, maybe the city dwellers need to watch the movie ‘Deliverance’ before planning to move out in the woods. A lot of people live in the deep woods for a reason. You don’t mess with them. I grew up in the Ozarks and Indian territory lands. There are mostly good people but you have to fit in.

        • HD says:

          Paulo, you’d be suprised how quickly people – even city folk – will adapt to new rules when the situation calls for it. We live semi-rural and for years now I keep my own chicken for meat and eggs (I had up to 55 at one point, laying hens and meat chickens, varous breeds), I butcher them myself and on those rare occasions I mention this, people around me tend to get all “really, you actually raise those animals, kill the broiler chickens after a set period and clean them all by yourself? All by yourself!?” Why, yes, I do. So they look at me as if I am the village idiot, a sadist or a mass murderer, because apparently in our modern and civilised society this is something which should only be done by professionals behind closed doors (actually, I decided to provide our own chicken meat and eggs after watching some nauseating footage on chicken farms here on the old continent).

          But I will bet you those same folk, if need be, will not hesistate to ask me to show them how it’s done, and after one or two demonstrations they will know the essentials. Me, I’ve never raised and butchered a hog or a goat, but if push comes to shove I’ll find someone to show me.

          People adapt, it’s what they do all the time.

        • Harrold says:

          My sister moved to a very small town 30 years ago and the locals still refer to her place by the name of the people that used to own it.

        • Mike G says:

          My friend grew up in a small town (1000 or so) in rural Australia. He says unless you were born there, married a local or have lived there 30 years, you’re considered a “blow-in” (outsider). It would be a lonely place if you cashed out in the city and moved there without any local connections.

          I foresee a premium for college towns, which combine small-town advantages with a degree of cosmopolitanism, job opportunities and openness to people moving in.

        • Nabi says:

          But the locals in Deliverance were presented as dumb (albeit, good at playing the banjo). Meth labs now, maybe.

    • doug says:

      Every time I have witnessed humans in real distress, they have been helpful to their fellow humans. Every time.
      Plus ‘we’ waited in bread lines in the 30’s. and will again, if it comes to that.
      ‘we’ are not all armed now. Just not true.

      • MiTurn says:

        You’ve never visited the inner cities at night.

        • gnokgnoh says:

          Good grief, violent and property crime have been rapidly declining for several decades now. Even the minor exceptions have only decreased at a slower rate, the minor exceptions being a handful of midsize to large Midwestern cities (Little Rock, St. Louis, Memphis). This includes Chicago, where, even with the recent increases in murder and violent crime, is still substantially lower than in the late 1980’s. Check out FBI UCR data, or the Brennan Center.

          I lived in NY and Philly in the late 1980’s. They are substantially safer.

        • doug says:

          not true. why do you assume( and state for fact) that? You have no clue as to where I have been.

        • Happy1 says:

          Things are better than in the 70’s and 80’s for certain, but also substantially worse than 2 years ago, the direction is not good, and demonizing police is a big factor

      • Anthony A. says:

        Just not true that we are all armed? Well, you just aren’t living in Texas, I guess.

      • Nabi says:

        And what planet did you say you just arrived from, sir, madame or transitioner?

      • nodecentrepublicansleft says:

        Remember the kid who was so amazing on the banjo in Deliverance? There was a grown man behind him, sticking his arms through his shirt and playing the banjo.

        Wiki: “In Deliverance, a scene depicts Billy Redden playing it opposite Ronny Cox, who joins him on guitar. Redden plays “Lonnie,” a mentally challenged and inbred but extremely gifted banjo player.

        Redden could not actually play the banjo and the director thought his hand movements looked unconvincing. A local musician, Mike Addis, was brought in to depict the movement of the boy’s left hand. Addis hid behind Redden, with his left arm in Redden’s shirt sleeve. Careful camera angles kept Addis out of frame and completed the illusion….”

    • Happy1 says:

      The 1% doesn’t always win. Over leveraged people of all kinds lost everything in the Great Depression. Hard assets and no debt has always been the correct answer in similar times. Rich or poor.

      • Petunia says:

        Joseph Kennedy, the president’s father, was one of the few one percenters who correctly timed the market back in 1929. He cashed out almost a year before and was totally unsurprised by the crash.

        • Jdog says:

          As I remember the story he received stock advice one morning from a shoe shine boy. That was when he realized they were at the very top of the market. Kind of the equivalent of Robinhood today…

        • robt says:

          FDR appointed Joe Kennedy to create and head the Securities and Exchange Bureau in 1934.
          FDR privately said: ‘I’ll set a crook to catch crooks”.
          Kennedy was very effective in his post.

      • Jdog says:

        Correct, the thing most people do not ever grasp is the difference between intrinsic value and perceived value.
        Debt is almost always based on perceived value, or what someone believes an asset is worth.
        The intrinsic value is what the asset is actually worth. Depending upon the time period, those values are often very different.

    • njbr says:

      It is really funny how the gun-totin’ NRA preppers throw the “I’m carryin'” into conversations about one or another impending doom.

      In a country with unregulated guns, everyone has guns.

      Just sayin’.

    • Jdog says:

      Survival in any environment depends on the accurate assessment of the situation. We have gone through the most prosperous times in human history in the past 40 years, and yet the vast majority have failed to prosper.
      They failed because they did not correctly assess the situation they were in at the time they were in it.
      While we are certainly headed for changing times, I doubt if 1 person in 1000 really understands how or why the changes are coming.
      If you are not already prepared, in both finances, and skills, it is probably too late. If you are partially prepared, the time to get serious is now.

    • paul easton says:

      It is looking like USGov is on the way out. When the money goes Zapp and they can’t pay the soldiers and the cops, there will be nothing to hold it together. Certainly not good will. No one likes it any more, and fewer and fewer of us subscribe to the USGov snow job. Good riddance bye bye.

      But what will we do then? What will we eat? Who will fix the pipes and take away the garbage? Can we find another basis for cooperation? Or is it to be the war of all against all?

      We need to come up with some answers now. Once it happens it will be too late. We need to talk about it. How can we start?

  16. polistra says:

    Well, there is a way out. Return to the pre-1975 productive economy. Focus on industry that builds things instead of consumers who buy Chinese things with credit.

    That’s the simple and complete solution. Unfortunately it’s not gonna happen.

    • HD says:

      Unfortunately, it’s quite difficult not to buy Chinese. Recently, I went on a quest to purchase a variety of halogen lamps in our local store and I was dead set on buying “made in the EU” or “made in the USA”. Naturally, all the cheap stuff was “made in the PRC”, so I turned to Philips and Osram, better quality and higher price range. Guess what? All those were also produced in the PRC. Long story short, I had to leave the store with Chinese products or face broken bones in the darkness of my simple abode. So there’s that.

      • Harrold says:

        Thats Capitalism.

        If companies can save a penny by manufacturing in China, they will.

    • Jdog says:

      It may happen, relations between our countries is deteriorating rapidly.
      I doubt if most actually understand what that really means though.
      Over the past 50 years, Americans have lost their skills, and their work ethic. They have become accustomed to cheap goods and rampant consumerism.
      It would be a real hardship for Americans today to achieve any degree of self sufficiency. I am not saying it cannot be done, and in the long run be the best thing for us, but it would be a real reality check…. It would definitely dispel the notion of American exceptionalism in a hurry…

    • Endeavor says:

      You may be surprised if the dollar craps out to the point imported goods are no longer affordable.

      • Anthony A. says:

        If that happens, we won’t buy them and maybe we really didn’t need most of them anyway.

  17. Lance Manly says:

    Corporate debt, another extend and pretend. As they maxed out their credit lines everyone was cheering that they would not default. Of course they are ignoring what paying all that back is going to do to future profits.

  18. Dave Mac says:

    I’m sure Uncle Joe has a big plan to solve all this if he gets elected…

    • nodecentrepublicansleft says:

      So what is the other option, Dave? Allow the Gang of Putin and red don the con to continue their destruction of the economy, health, etc. of the USA?

      In case you hadn’t noticed, the GOP gave huge tax breaks to millionaires, billionaires and huge corporations. A handful of rice and a middle finger to the rest of us.

      Then, the anti-science party led by a trust fund, money laundering, pathological lying narcissist decided to:

      1) Disband the cabinet level Pandemic Response Team;

      2) De-fund the CDC people in China (what purpose could they possible serve???);

      3) Ignore the Pandemic Playbook (aka Pandemic for Dummies). Why? Because it was created by the administration of a half black man who hurt Covid Don’s snowflake feelings (witch-hunt! hoax! I’ve been treated worse than Lincoln!!!)

      I could go on, but I think you see the pattern. We can’t survive under deadly incompetence so yeah…Sleepy Joe is the logical choice.

      With respect, I ask: What’s your “big plan to solve all this”, Dave?

    • paul easton says:

      I guess Aunty Liz has a plan. She has a plan for everything. I don’t think the DNC would go for her though. They only need a couple more months of kicking the can.

  19. Crush the Peasants! says:

    Cancelling the missed payments means taking a hit on the return on the debt. Over the lifetime of say, a 30 year mortgage, not a big deal. But the economy must start up again, so that payments can resume.

    200,000 people dying of Covid-19 in the USA is a tragedy, but not the end of civilization. The country survived 80,000 fu deaths a few years back, without an insane panic.

    Beware the terror amplifier.

    • njbr says:

      4 months with 140,000 deaths would translate into 420,000 on an annual rate. It should be clear that there is no off-season for this virus.

      Plus there is the unknown factor of persistent heart, lung, kidney and brain disruption from the virus. What are those costs to society?

      • leanfire_Queen says:

        Exactly. I’m better off preserving my health and letting the economy crash than risking my health just to sustain inflated asset prices.

        The economy is there to serve me, not the other way around.

      • nodecentrepublicansleft says:

        What some of these folks don’t seem to understand is that we’re in uncharted waters. This isn’t the flu. This isn’t even the 2nd wave necessarily.

        Like the old expression that a recession is when your neighbor loses their job and a depression is when you lose yours, some folks won’t grasp this until it kills somebody they know or themselves.

        I live in FL where the official (i.e. vastly under-reported #s) show 1 in 50 people in the state +/- have Covid. When is it a problem for these folks? 1 in 25? 1 in 10? 1 in 5?

    • Marc 60 says:

      @Crush the Peasants!

      If you really think its only going to be 200,000 dead from Covid -19 by the end of the year never mind the end of the Covid problem good luck with that.

      You already have over 150,000 dead with spiking infection rates and sadly many more deaths to follow.

      As for “But the economy must start up again, so that payments can resume.”

      Seriously whats the point they have created so much debt it can and will never ever be paid back they will just create more and more of it until they can’t. Robbing Peter to pay Paul stops working once Peter is dead.

      News flash Peter is on life support and its not looking good.

  20. MF says:

    Nobody has any idea how to get out of it because the only answer (give up power, money or status) is off the table because being the first loser guarantees being a loser. So why not hold out and hope for the best?

    It’s a stand-off. It doesn’t matter how much wealth and power I have — even if it’s just a little, I’m waiting for everyone else to blink. That way, they lose; I win.

    All the opt-outers left the game a long time ago. The only ones left are those who are comfortable playing brinksmanship. Even if you think you have no choice but to play the game, you’re still playing by the rules set by those with the most power.

    • leanfire_Queen says:

      I think I turned into an opt-outer once I turned into a remote worker to run away from the homeless making NIMBYs and trained myself to save about 75% of my income. I figured most consumption activities are time-consuming and not that fulfilling, hence can be delegated to said NIMBYs, who seem to LOVE Costco.

      The feeling of safety and stability that the capitalist system was trying to take away from me was restored by those 2 very simple measures.

  21. Can Kickers United says:

    The central question for the Fed, and all other CB’s, is…what is the end-game here? What do we do when it becomes obvious to everyone that we, the Fed (and CB’s of the world), cannot backstop the system anymore and kick any more cans down the road because the confidence game associated with fiat currencies is being swamped by endless money printing, can-kicking, and impossibly high debt loads?

    Put another way, there will come a day when the cans will have been kicked down the road so far that their value is not visible anymore on a Balance Sheet. This day may be fast approaching, so here is my thought on how one last kick at the fiat currency gig will happen (before some other system of currency support takes over)……

    Ring, Ring……

    Hello Jerome, Steve here. I just thought i would let you know that we have come up with a plan, of sorts, to deal with all of the debt.

    Ok sounds promising Steve. How are we going to do this?

    Well, it is quite simple, actually. We at the Treasury have been working overtime to come up with some ideas and we have decided to issue a new form of Bonds. They will be called ZPERPS….zero coupon perpetual bonds and they will be “fully backed” by the U.S. Government. We plan to issue $6 Trillion of them this year, and then probably more next year.

    Are you kidding me? Who on earth is going to buy these silly-assed things that pay no interest and will never be paid back….wait a minute….are you calling me because you think we at the Fed will be the buyer?

    Bingo, Sherlock

    What the hell will you be doing with all of these funds?

    We will purchase, and then retire, $6 Trillion of U.S. Government debt of varying duration…everything from T-Bills to 30 year bonds.

    But what about my Balance Sheet? I will have $6 Trillion of worthless securities, issued by you no-good politicians, on my Balance Sheet?

    Nope. Because they are worthless they will not be recorded on your Balance Sheet. I checked with the bean-counters and they agree.

    But what about the Banks that we help out ….er “regulate”….all of the time. They will be furious that you have done this and they are not the ones calling the shots. At a minimum, they will not be happy if i have to stop bailing them and their hedge fund buddies out and end the subsidy…, “regulatory requirement” ….associated with “Excess Reserves” that allows them to book big profits and hike their dividends.

    No problem….. i have a plan for that too, thanks to an idea that Larry came up with. We will be issuing $2 Trillion of new T-Bills and other debt at the same time and you can purchase these by printing electronic $ and then use these funds to come up with another one of your alphabet soup programs to bail them out again, provide a new subsidy, and maybe give them some free money to support the stock “market”.

    So, net/net you have paid down $4 trillion of national debt, my world will be ok because i can keep the banks and hedge funds happy, and many more new cans can be kicked down a new road with the $2 Trillion.


    One last question…i fear that the U.S. $ will be devastated by these actions.

    No problem…i have a plan for that too….i have been in touch with my counterparts across the world…the EU, Japan, U.K., China and every major country will be doing the same thing as us, all at the same time and in proportion to the purchasing power of their currencies, relative to the U.S. $. Everybody is on board with the plan because it allows all of them to purchase and retire large portions of their national debts, all at once, without affecting the relative purchasing power of their currencies.

    So a massive world-wide debt destruction/restructuring effort is what we are doing here?

    Bingo, Sherlock. And a last ditch attempt to support the current system of U.S. $ Reserve status and a system of fiat currencies that trade relative to the U.S. $.

    Brilliant Steve. I didn’t think you had it in you to figure all of this out.

    Bye for now Jerome. Start thinking about what you will say at your next mumbo jumbo economics-talk bafflegab…er…”press conference”. I need you to do this to support the effort. We will talk again tomorrow.

    • Wolf Richter says:

      “…i have been in touch with my counterparts across the world…the EU, Japan, U.K., China and every major country will be doing the same thing as us, all at the same time and in proportion to the purchasing power of their currencies, relative to the U.S.”

      You’re confusing “exchange rate,” which is what you describe, with “purchasing power” of a currency, meaning that it requires ever more currency to by the same goods or service.

      Your scenario has been followed by Argentina, whose central bank is part of the Ministry of Finance.

      The problem with Argentina’s plan is the loss of purchasing power of the peso. This is also called inflation. In Argentina, the annual inflation rate has been between 40% and 50% recently. And yes, this inflation can exist in many countries simultaneously, and their exchange rates might therefore remain kind of stable. But all those currencies would lose a lot of purchasing power, and everything denominated in those currencies would lose purchasing power, including LABOR.

      • Can Kickers United says:

        Thanks for the clarification re: exchange rates/purchasing power Wolf. Not sure that the Argentina experience is the right way to think about the U. S. however….after all the U.S $ is currently the most important Reserve Currency on earth and it is backed (still) by a massive U.S. economy and the strongest military in the world….not so for Argentina, i am afraid. It is raw Financial, Economic and Military power that makes the U.S. $ (and anything the U.S. decides to do with it) so powerful.

        W.R.T. the broader point of my silly dialogue between “Jerome” and Steve”….The broader point is that there is no good outcome for all of this at the end of the day. Massive loss of purchasing power (ie. inflation), leading to precipitous declines in living standards across the world (including U.S.) could very well be the unfortunate outcome to years and years of excessive debts by all economic players across the world….households, governments, businesses, etc. The sad thing is that the Central Bankers could have learned from history (ancient and more recent as well) and put the brakes on things earlier, thereby avoiding the temptation to patch things over with crazy money printing schemes. They, of course, did no such thing. They talked themselves into believing that technological advance, globalization, PHD Economists at the helm of the Fed, and econometric models could overcome the weight of monetary history. No such luck, i am afraid. Who knows what will transpire in the future. The death of the fiat system? A “new” fiat system? A modern day pseudo-fiat system backed partially by Gold (or Silver) based Crypto? The creation of a new Crypto standard controlled by the IMF? I don’t know and maybe the Central Bankers don’t know either.

        • Wolf Richter says:

          Can Kickers United,

          I share your concerns, including this: “…maybe the Central Bankers don’t know either.”

          Inflation is going to be allowed to run “hot.” That much has already been said. This stimulus money is getting spent but people are not having to produce anything to get it. The government just hands it to them. This is very inflationary. We’ve already seen some of it already.

          Then there is the combination of supply shock and a demand shock. Weird nonlinear outcomes are guaranteed.

  22. GrassRanger says:

    Nixon and Congress imposed “extend and pretend”49 years ago for federal govt debt. It has worked so far, so why shouldn’t it work for everybody? 49 years, then a jubilee? HaHaHa!!!

    • Jdog says:

      It has not worked so far. If you think it has you really do not understand.
      Wealth is not money, and it is not debt.
      A bank raising your credit limit does not make you wealthy, although you may appear to be so for a while if you abuse the credit you have been offered.
      Wealth is production. It is producing more than you can consume and selling the surplus for a profit.
      For the past 49 years we have reduced our production, and replaced the profits with debt and inflated asset values.
      We have mortgaged our children’s and grandchildren’s incomes for decades into the future to pay for our consumption. Consumption which for the most part we have nothing to show for….
      We can lie to ourselves and tell ourselves our assets are worth far more than they are and rationalize therefore we are prosperous. But in truth, our assets are worth far less than what we think they are, and in fact we are broke… That is the can we are kicking down the road.

      • Lisa_Hooker says:

        It is easier to kick an empty can and you can kick it much further.

      • MonkeyBusiness says:

        Wealth relies on other people being poor based on your definition.
        “It is producing more than you can consume and selling the surplus for a profit.”

        So if everyone does the same, no one can be wealthy?

        There’s an easier definition of wealth i.e. stopping your own self delusions.

  23. Winston says:

    So, from those obvious, intractable issues you point out we can safely assume that any talking head who is optimistic about the US economic future is either a blatant liar or a clueless idiot?

    Are other countries that experienced lock-downs in a similar situation? What countries and to what extent?

  24. DR DOOM says:

    Money Printer going full tilt Brrrrrrrrr…….Dollar is dying. Gold is taking its place again as the true Money. It’s mischevious Cadet , ,Silver is making those that ain’t got none feel, well let’s say politely , less endowed. Government policy of Extend and Pretend has now fully infected the private sector also. How to get out of this mess? War perhaps? The marketing feedback on War ain’t very positive these days. Dow 100k might makes us feel good as long as no one wanted to cash out. The rest of the world might force bankruptcy on our fiat dollar. That’ll do the trick. I would suggest in the meantime an oral pacifier and the fetal position and wrap ones self up in a nice cozy of cognitive dissonance. For me I am in full Ground Hog Mode. Even in my hole I can feel the vibrations of Jeromes Terrible Printing Engine plying its deadly trade.Hey I just realized that I am Head Honcho in my hole. Hope I don’t get netted in a catch and release and re-location operation by DHS.

    • BuySome says:

      Seen the GSR lately? Now below 80. Gold is a fat man trying to climb a ladder. Nimble silver is scrambling up those rungs. It’s a good long way to 16 to 1. And historically speaking, it was a bi-metallic money system where gold’s place was only used for big purchases like a horse. Silver was always the primary method of exchange. Silver was once as valuable as gold until mining changed…now there are large quantities of conserved gold, but silver is heavily depleted. At high prices there is an incentive to mine gold, but most silver is a by product of other mining which collapses with economic downturns and Covid could hurt dedicated silver mining. Nobody knows what will happen next, but someone’s making more on their silver investments right now than on gold…it’s in the percentage not the whole value.

      • Lisa_Hooker says:

        Silver was $50. Should be $1000 or $5000. Maybe $20,000. Or, maybe not.

  25. Mr Wake Up says:

    Extend and pretend!

    I literally thought president Trump is the bankruptcy king and that’s eventually where we were headed, an empire divided within will collapse.

    Maybe that’s the end game here. Keep printing embezzle all the money out the treasury increase your wealth right before the big bang.

    Then I realized maybe not. Maybe we just save all these zombie companies and the government ends up the biggest shareholder. Fed paying people to stay home, maybe next the fed pays the forbearance and takes over the lion’s share of debt too. Do we become the next Japan?

    President Trump gets re elected does extend and pretend no longer matter?

    Riots and protests will not go away anytime soon. Blue cities will be the biggest losers (as we already have been) of a Trump presidency. The message will be America has proven to be a R country. Raise income taxes, property taxes, sales tax, etc etc u name it. Then for the unlucky few who didnt leave or couldn’t leave they will introduce an exit tax.

    Then eventually they will introduce in the red states an income tax saying – what you gonna move to a blue state??

  26. Petunia says:


    If you haven’t seen Frank Portnoy’s article in The Atlantic, you should read it. Search “Frank Portnoy variable interest entities” it is the sub prime bubble of commercial credit. I expect you will be writing about this shortly.

  27. happy_man says:

    How to get out of this mess in two easy steps:

    1) Open the US Constitution and the amendments, the actual text- not the generations of corrupt supreme court “opinions”.

    2) Start following it.

    Yes this will actually solve several trillions financial problems very rapidly.

    • happy_man says:

      applying the idea of following the constitution to the current situation:

      – Local rent is not interstate commerce, therefore the states and supreme court should ignore the federal govts forbearance decree in the cares act as it (and many other things in there) are unconstitutional. When people start getting evicted they will will figure out how to pay their rent to avoid eviction. If the tenants don’t pay, the landlords can put tenants in who will pay. If lanlords go bankrupt, they will be replaced with responsible landlords who will be smarter about how much they pay for properties and how much rent they charge. What I am saying is that by kicking the fedgov out of this mess, tenants and landlords can be replaced, possibly at lower rent and property valuations, and the payments will start flowing again.

      Just one example. I could write a trillion more. Can you?

      • BuySome says:

        Here’s one: All men are created equal is to be understood to read all members of mankind come inti this world with no more or no less than any other. This means kiss off the inheritance by birth right. Everyone has equal access to anything made available under the General Welfare clause which is equally applied. Beyond that, you get to use what you earn. Mommy and Daddy can spend like a drunken sailor, and give you candy, but when they kick the bucket the rest goes right back to the public domain from whence it came. No tax on it. There’s your pursuit of happiness…enjoy it while you can, it’s yours and yours alone.

        • Jdog says:

          Wrong… All men are created equal, refers to “under the law”.
          It means the law, should apply to and effect all men equally.

          Obviously as humans, we are not all created equal. Communism, as you suggest, always fails as it strips humans of the incentive to excel. In the natural world, nothing is equal, and nothing should be.
          Darwinism and the survival of the species depends on the survival of the fittest, and the failure of the unfit. It is only through allowing the fittest to prosper, and the unfit to fail, that we can survive and improve as a species.

        • happy_man says:

          Welcome to the forum Marxist Buysome.

          as you have suggested, since you are interested only in the introductory sentences and care not for the limits on power implicit in the Constitution we have just seized everything you own. We have moved 30 people into your former home now, plus campers in your backyard. We also gave away your vehicles, clothing etc to people we determined needed them more than you. We’ll send an agent by a few times a year to ensure you don’t accumulate anything that makes you unequal and to ensure you don’t have any hidden assets.

          you authorized the govt to take your private property so we had it take yours first.

        • BuySome says:

          Read it again. No communism, pure capitalism with only the slight social modifications allowed under the law (Congressionally mandated where legit). You have to earn yours. No tax, but you can’t take it with you. You can pass along your genes and care for the young, but every generation goes back through the weeding out process. That’s how selection works over and over again. Just because you are fit, does not guarantee your kids will be. The idle rich offspring have proven that repeatedly.

        • two beers says:

          A handful of people have basically all the money and control all the resources. Instead of taking the obvious path of the dreaded redistribution (that there taxation is commahnism, martha!) that would actually resolve the problem, it seems most people would prefer to just eat their neighbors and complain about how easy the homeless have it. It’s not the billionaire sociopaths who have ruined the planet, but the impoverished freeloaders at the bottom of the economic ladder. Got it.

          Until you get past that sneaking suspicion that someone marginally less deserving than you is getting a slightly better deal (and past the belief that you are just a temporarily embarrassed billionaire), you (meaning most Americans) will fight against redistribution on behalf of the handful of billionaire sociopaths who have all the money and control all the resources.

          It’s cl;ass warfare, and you’re arguing for the class that is actively destroying the planet. Our billionaire overlords thank you for licking their boots and doing their dirty work for them.


      • Jdog says:

        You must realize that there is a political component to this. Unfortunately, we have a political entity in this country which wishes to implement socialism.
        The implementation of socialism requires the people to be dependent upon government.
        Once the people are dependent upon government, then the government can assume the position of master, and the people become the servants of the government.
        Government never acts to increase the prosperity and sovereignty of the people, but to increase it’s own power over the people.

        • BuySome says:

          I concur, on excess government, political power, and too much dependence. We have tried pure self reliance and it ultimately failed. We know that very limited social nets prevent a wave of communist sentiment and provide a foundation to get up, all viable under that General Welfare clause already set up…yes, they tend to abuse the dickens out of all the clauses via the lawyer class. I oppose the use of the income tax as it takes away all incentive to work for what you need and want, and just becomes another system of cheats and liars with loopholes. There are other ways to run this without that. And you can share your earned profits with whomever you please while your here…that’s the candy. Nobody is evicting you from the farm whether you raise corn or apartments for rent. Do what you do best.

    • Jdog says:

      Agreed, there is an old saying about how adversity does not build character, it reveals it.
      Unfortunately, our adversity has revealed that as a country, we no longer have much character.

  28. Seneca's cliff says:

    As Max Keiser says, ” You can’t taper a Ponzi.”

  29. Three crisis, health, financial, political. The financial system is in an I shaped recovery. The political crisis could be resolved in a few months when Putin is removed from office. America becomes an investment destination for a tired world. Poor people who cannot pay their rent receive the Robert Smith solution, (billionaire who paid the student debt for the graduating class at Morehouse). Recent polls indicate the president’s support among Blacks and Latinos has not slipped as much as other groups. This is about the money, they are getting some of it. A depression means money will disappear, while US govt no longer runs a family budget, investors no longer allocate. All boats are lifting. 45 is luckier than 40 but there is no V in virus.

    • dr spock says:

      ” America becomes an investment destination for a tired world. ”
      Ambrose, the US became the world’s mega investment destination in 1980 when its ungodly trade deficit started its parabolic journey.

  30. wkevinw says:

    How does a free society (with sensible regulations) “get out of this” (or any economic calamity?

    Creative destruction.

    These big events are very difficult because people without any fault of their own get hurt badly.

    Compared to WWI, WWII, Great Depression, (Civil War…etc.) or even the Spanish Flu, and maybe even the Cold War, this is child’s play.

  31. gkc says:

    Wolf is right of course – there’s no way out save a reset/restructure. But extend and pretend works … until of course it doesn’t. Those running the show are irresponsible at best but most are venal, who don’t work for the the common good but for the “rich and powerful”

    IMO, what the Fed and Gov are doing now is the same playbook from 2008.
    Offset debt deflation by monetizing bad debt; it’s really that simple.

    And this is not about bailing out the little guy or the homeowner,but the top of the food chain, the “owners” – banks, landlords, bondholders etc. The little guy is a slave to the usurious system we have; giving him forbearance is just to keep the books of the “owners” solvent as Wolf points out.

    The conditions of over-indebtedness where there is no intention to pay anything off, only roll it over continuously has been going on for decades. Access to credit for production is necessary, but we have excesses leverage that benefits Finance industry/Wall Street – and indirectly everyone than owns appreciating assets.

    • leanfire_Queen says:

      > And this is not about bailing out the little guy or the homeowner,but the top of the food chain, the “owners” – banks, landlords, bondholders etc. The little guy is a slave to the usurious system we have; giving him forbearance is just to keep the books of the “owners” solvent as Wolf points out.

      I think you are right. The right move for renters is to stop consuming altogether and hope that the entire house of cards collapses as soon as possible.

  32. joe2 says:

    Heck. Wolf, those of us who live on black humor have a feast which you have so eloquently laid out on the table.
    Not to demean anyone, but black humor is strict logic applied to illogical situations exhibiting an elastic characteristic. That is: akin to reversion to the mean, illogical declarations and actions will eventually revert to the discipline of formal logic, physics, mathematics (maff is hard and maybe white rasism), and entropy.
    Good luck foolish world unable to reason for yourself and destined to follow any pied piper who squacks.

  33. dr spock says:

    How do we know what the private and crooked federal reserve has bought?

    Answer: We don’t……… though some people don’t know that they don’t know.

  34. Bobber says:

    Don’t get too down. All it takes is some helpful news on the virus front and everything continues to shoot up again, in the short-term. The virus will not be here forever.

    Long-term, however, things look bad. If the economy does not recover, we’ll see massive write-offs and reduced asset prices. If the economy recovers, the stimulus must be reversed or inflation will sky-rocket. The Fed is cornered. The extend/pretend game can last no more than three years before a a reset happens.

    • Winston says:

      “The virus will not be here forever.”

      The huge deferred payment issue he described already exists. The virus could disappear tomorrow and it would still exist. Although he didn’t discuss it, it must also exist in any other countries where there were shutdowns and where the same policies were implemented.

  35. The Bob who cried Wolf says:

    A few thoughts…
    A buddy of mine had a lot of money in REIT’s, and he got slaughtered.
    We got approved for a forbearance as a tenant was stiffing us but we continued to make payments.
    And finally, there’s a group of people who will never find meaningful work again and they’ll end up moving in with family and be poor forever. This unnecessary herd thinning from the virus and all it’s crazy policies has ruined many lives. I figure 50% of the folks will continue the struggle as usual, 15% or less will actually get better from it, but at least 35% will forever be screwed. It’s all really very sad. This makes me remember how many people never came back from the 2008 meltdown.

    As an aside, anyone who owns a rental and rents to anyone marginal is asking for trouble. Only solid tenants should be sought after at this point. The government will mandate free housing at your expense for a long time to come.

    • Petunia says:

      You don’t realize that everybody is a marginal tenant right now.

      If you weren’t wiped out in 2008, you were just lucky, now your luck is running out.

      • Lisa_Hooker says:

        I wasn’t lucky. I moved my investments to Europe in 2005-6. Then, as the dust settled, I moved them back again as the EU became more and more stupid.

    • leanfire_Queen says:

      White-collars are losing their jobs now.

      I bet you were one of those confusing the last housing crash with a “subprime crash”. The timing of the debacle is the only difference between what you call “marginal” and what you think is “middle class”.

      So pity all landlords instead, for they are the ones who will end up paying for COVID.

      • Lisa_Hooker says:

        The landlords won’t pay, they don’t have any money. The banks won’t pay as no one will borrow their funny money. The pensioners “investments” will pay because that’s where the buck stops.

  36. Jdog says:

    The can kicking is going to come to an end, and it is going to be apocalyptic when it does. Moral hazard has now shifted into overdrive, and is effecting all aspects of the economy. The Federal Government is now realizing its limitations as it cuts its unemployment give always. Banks and lenders are going to start seeing negative impacts to their income as non performing loans take a bite. A large segment of society is quickly becoming accustom to free money, and not paying their bills. The free money is not being saved or used to pay past bills, but is being spent on consumption, as debt levels rise every day. In short, we are digging ourselves into a deeper and deeper hole, and our lack of moral character is becoming our biggest problem as we refuse to face the inevitable.

    • random guy 62 says:

      As with many others commenting here, I can’t shake the sense of harder times just around the corner. As a young, (relatively) healthy guy, the virus doesn’t scare me so much, but the economic damage does.

      When I connect the dots, it makes avoid debt, keep some non-perishables on hand, sharpen my marksmanship, and stay away from the city…

      Am I falling prey to my own confirmation bias? Am I seeing things clearly? Am I just hard wired for negativity?

      Time will tell.

      • sunny129 says:

        Yeh. ‘Extend & Pretend’ with Trillions being sprinkled has nicely covered up the rot underneath. Just wait fore the end of of 3rd if not 4th qtr to get the hard reality!

    • Stephen C. says:

      There is one side of my brain that likes the “free money.” It says to me, that extra $600 is making up for all the interest income that in a sane world I could have been earning in my savings account. It other words, they give some and they take some. This evil part of my brain also considers the extra $600 as a strange sort of compensation for the much diminished social security income I will get down the road.

      Oh, I should mention that I don’t feel I spend the $600 due to my immorality. I spend it on groceries. But maybe eating is considered by some to be immoral.

  37. Pete Koziar says:

    So, the big question is when the music stops. Tenants are out of work, so can’t pay their rent. Landlords don’t get rental income, so they can’t pay their bills.

    In fact, if no one has any money, they stop buying things. All things, starting with what they deem non-essential (although people have funny ideas about that – e.g. smartphones).

    The velocity of money dies. Once you fall down that hole, you can’t climb out of it. You get severe deflation.

    The propeller-heads running the place are gambling that they can create inflation at just the right rate to compensate for the deflation. In order for that to work, the money has to go to the people who will spend it and keep open the businesses that employ other people.

    We’ll see if they can do it. Any misstep in either direction is disaster. They’re balanced on the blade of a knife.

    Frankly, right now, I see deflation and depression winning. If this were just about the money, they might have a chance, but because of COVID-19, people are afraid to go out in public, to the places where they would spend money – the restaurants and stores.

    These things always take longer to happen than you’d expect. I can see us in big trouble by the end of the year. I think Trump hopes he can keep the plates spinning until after the election. It’s going to be a close call.

    • Petunia says:

      I see deflation coming as well. Even the current inflation in food prices will reverse once the $600 is gone and the evictions start. You need money circulating to cause inflation and most people won’t have any. Those jobs they think people are avoiding don’t exist as well.

      • Pete Koziar says:

        I’ve been thinking about the original question, about how this ends.

        I can’t see any other way than to go through the fire. The Great Depression burned off a lot of chaff, both financial and moral. It forged a generation that was sensible with its money, and knew what it meant to have to work hard, and what was important and what wasn’t.

        It also, unfortunately, laid the foundation for despots and tyrants to rise.

        Stein’s law states “If something cannot go on forever, it will stop.”

        “Extend and pretend” can’t go on forever.

        I just know that life will be a lot different in 10 years after this. I get the feeling that Western civilization as we know it is just past its peak. It’s like last centuries “Roaring Twenties,” full of excesses at all levels, with our own versions of “robber barons” and monopolies.

        Maybe if we’re lucky it won’t end in guns and torches.

  38. Anton says:

    Im just curious if Wolf is still shorting this market. I have been attempting to trade volatility and its been hard going because the market keeps staying right at its tippy top. This week we get some earnings from the big boys, which at this point are 22% of the market cap.

    • sunny129 says:

      One cannot directly SHORT this mkt without some hedge. mkt zoom for any kind hopium news (real or not) re V shaped recovery, Vaccine optism, Decline in hospitalization/death rates + Jaeboning by various vested interests. Investor sentiment is still ‘bullish’ irrespective of lack of fundamentals, evolving negative scenerio in the coming months.

      I do short (index ETFs) but with hedges. I am long on all kinds of Corp Credit ETfs. gold and mining stocks/ETFs, long on E-commerce ETFs, Cyber security and robotics.
      Been in the mkt since ’82. Lost nothing during GFC but slowly lost my profits once ‘ true’ capitalism was put into death by Fed in the March of ’09. But now I trade both short and long. So far so good!
      Covid 19 is accelerating the needed/expected ‘ reversion to the mean’ which is fine with me!

  39. nuttyspd says:

    For a populace that hates Communism so much, they sure are eager to take free money that disincentives work. Corporations kept alive with government support so no need to be competitive or viable. Centrally managed economy keep finance industry bonuses streaming. Turns out we have little green men too. If it walks like a duck and quacks like a duck, then ya’ll a bunch of Communists.

    • sunny129 says:

      Socialism is NOT communism, just like CRONY Capitalism is NOT true Capitalism!

      All Nordic Countries are socialistic and NOT communists!

  40. GoManGo says:

    In the movie “Margin Call” you may remember the scene where Dr. Micheal Barry in looking for info to support his belief that the real estate of the Great Recession would have to crash. He is shown in a scene with a real estate agent in Los Angeles as the real estate agent talks about the constant turning of homes at higher and higher prices way beyond reason.

    As I drove to donate expensive computer and camera equipment to the Salvation Army, I noticed in many homes in a tract I drove through to get there that many people had furniture out front, yard sale signs, multiple cars in the driveways. When I got the the Salvation Army store, I was surprised to see the collection facility closed. Given the high value of my items I went in and they told me the truck had been filled full with no room to take anymore….More stores for lease signs, more rental homes available, people every in full anxiety all are similar to what I saw driving all around SoCal during the beginning of the Great Recession.

    My point? It dawned on me that we are going to do something much like or even worse than the Great Depression of the 1930s’

    Extend and Pretend is now morphing into to SAVAGE DESTRUCTION that will result in the greatest shock. It does not require a Phd or much more to see what is coming.

    Fear is the most powerful human emotion and I see lots of it here.

    Bottom line is almost no one will be able to escape what is about to come.


    • Petunia says:

      These people are downsizing and turning everything they can sell to cash. We sold as much as we could to survive, tools, appliances, jewelry, furniture, etc. We also donated things that we couldn’t sell, clothes, books, toys, etc.

      This experience changes how you spend money in the future. I give a lot of thought to everything I buy.

    • Andrei says:

      Michael Burry was a protagonist of “The Big Short”

  41. gorbachev says:

    You need to be so diversified in this world.

    Nobody knows the trouble were in.

  42. JDGator says:

    Just like the cartoon in Grants: Young boy opens front door and man with briefcase says: “Young man, I am with the Federal reserve and today we’d like to buy your set of baseball cards.”

  43. Augusto says:

    There is no way out. Debts and accrued liabilities are too large. There is no willingness to pay taxes, let alone the cash to pay. Fakery is the only way. That is at some point there will be some kind of “restructuring”, meaning we will formally renege on our obligations, but pretend that the debts are being “carried over”. For those who have funded this nonsense however, savers and investors, there will be no doubt that they have lost and sloth has triumphed. It is then we are in big trouble.

  44. Winston says:

    Imminent Eviction Wave Is Coming To These States
    28 Jul 2020

    The Trump administration doesn’t have the tools to solve the crisis – fiscal and monetary policy can only delay round two of the economic crash until after the elections. Meanwhile chaos and disagreement on Capitol Hill means that there is still no deal on a rent moratorium extension, which means that the coming weeks could see the largest ever US rent crisis, one which would make 2008 look like child’s play.

  45. Salomé says:

    That the customers need a break is obvious but that the banks play along so nicely proves one thing: They need this game to go on, at all cost even if this means that capitalism as we know it has to be sacrificed.

    A bank produces credit, it has no other products it can sell.
    The interest on the digital money on the accounts is the only substantial source of income for banks.
    A bank needs to push out more and more of its pseudo-money no matter what:
    even to people that can’t afford the rates,
    even if this means that real estate bubbles grow until they burst,
    even if the resulting leverage makes the economy as a whole instable,
    even if the banks itself would collapse if they loose a tiny portion of their outstanding loans (unless rescued by the state),
    even if the whole society takes devastating blows from the crisis they produce with certainty one after the other.

    The madness Wolf described so vibrant goes on because the banks want it that way. (The fed is just their servant and – if thing go terribly wrong – their scapegoat.) One cannot expect the banks to come up with something like:
    “Yes, sure, this doesn’t work – even for us it does not work. We need to try something different, because what we are doing makes no sense.”

    Maybe something like: Effective limitation of credit money creation by banks. Effective taxation of the financial sector and of the asset bubbles.
    Better pay for the 90% such that housing and education don’t need to be financed by credit because credit is no replacement for a sustainable real income.

  46. Thanks again for the blog.Much thanks again. Keep writing.

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