The pandemic marked the end of the consumption oriented lifestyle. So what did the masses do? They doubled down on collapse...
Here is something you won't hear any prognosticators predict - which is that the consumption lifestyle is about to explode along with markets. The magnitude of this three sigma asset bubble is of a scale and duration that precludes bailout. Whereas in 2008, the Fed and Congress found a way to bail out Wall Street from the impacts of their subprime financial WMD, this time their bailout efforts will fall far short. Which means that the "system" is now at risk.
Am I predicting the end of the world? No. I am predicting the end of a failed way of life that has become toxic and lethal to those who embrace it. This is the side of the story that market pundits don't want to tell. That the modern lifestyle is lethal both physically, mentally, and financially to those who embrace it. And of course to the planet itself. Somehow we are dealing with an obesity crisis, a mental health crisis, and a retirement crisis yet no one makes any connection back to the corporate system that makes record profit from Frankenfood, Narcopharma, and rampant financial fraud.
Very few people we know question the system. In their minds, it's always been this way. They see zero differentiation from a past when farm to table was the standard way of life, to now where it's the rarified privilege of yuppies while everyone else consumes GMO-manufactured factory food on an industrial scale. Most people are too busy self-medicating themselves into oblivion to question the system itself.
Of course, when any bubble explodes, people say there was no warning. Last week, Jeff Bezos couldn't get his mega yacht out of dry dock because it didn't fit under a bridge. Looking back, history will say this was a seminal moment that captured the peak zeitgeist of the supernova asset bubble driven by ULTIMATE greed.
"According to a study released last March by Americans for Tax Fairness and the Institute for Policy Studies, the collective wealth of 657 billionaires in the US grew by 44.6% — that's $1.3 trillion — during the pandemic"
Social mood is now coming down off of the pandemic-induced monetary crack high. We see it in growth stocks, the collapsed IPO market, China's real estate implosion, the Crypto market, and of course in consumer sentiment.
ALL of today's pundits are blaming "inflation" as the cause for collapsed consumer sentiment, because they have no clue that their own social mood is what drives markets and the economy. They themselves are caught up in the bubble zeitgeist and are therefore completely unaware of their latent crack high. By the time they figure it out it will be WAY too late.
When inflation morphs to extreme deflation amid record asset collapse, the universal desire to "bring down prices" will be filed under careful what you wish for.
Late last week, Goldman Sachs put out a note saying that after the CPI release they now expect seven rate hikes in 2022 - one at every remaining Fed meeting:
However, on Saturday they put out a note saying they now predict recession:
Got that? Seven consecutive rate hikes or recession. Whichever comes first.
What a recession would do first and foremost, is cause a stampede out of cyclicals stocks which have been leading the 2022 rally. In addition, it would cause a commodity collapse deja vu of 2008. And yet the same people who say that recession is now a major risk ALSO say that the case for commodities has never been stronger.
The case for commodities was only stronger in 2011 and 2008, right before they collapsed:
In other words, going into a recession believing that inflation is the biggest problem, is by far the worst case scenario for investors.
Why?
Because it means they are holding record LOW cash. FAR lower than in 2008:
In a happy turn of events our middle son has also come to realize that the modern lifestyle is fraught with existential "risk". He recently introduced my wife and I to Taoism which is a philosophy uniquely suited to helping people navigate troubled times such as these. For that, we are very grateful. While he and I still disagree on some topics, there is starting to be much more Zen overlap.
Therefore, he wrote a poetic essay which he hopes will help his generation navigate this continuing crisis.
These are his words:
"I wonder about the silent screams
Those who while awake have terrible dreams
I wonder why I can’t bring myself to speak
When I open my mouth no one hears a creak
It seems that this world has gone mad
Chain reactions all around us, yet caring is a mere fad
As time went on we lost our villages
Seeking solitary confinement while we allow them to pillage us
We see the division as red versus blue
But in reality we know that isn’t true
Fear has run amok and we have become hasty
Sliding down a slippery slope cleverly guised as safety
Looking to the people you see a mass of the feeble
I am no different, in actions I am equal
We must not despair at the beliefs of our neighbor
All of us want the same just wishing for the stable
The path ahead appears to many as dim
And I assure you this is not on a whim
But a deliberate act of the few against the many
They’ve succeeded in making us believe our neighbor is the enemy
The path ahead with danger is fraught
A path few of us would have actively sought
While the time will surely come for action
All I want to do now is inspire passion
Led astray bruised and battered
Our communities have become tattered
But if we can see past our illusory divisions
We can forge a bright future ending this cultural fission"