Let’s talk about financial “experts”; “gurus”; or whatever nom du jour floats your boat. Like political, social, and corporate “ascendants,” they attain their 15 minutes of fame for a variety of reasons – from bona fide success; to diligence, luck, nepotism, or marriage, among others. Whatever the reason, the stars aligned for said “precious few” for a brief period of time, enabling a combination of celebrity, financial rewards, and adoration. And nowhere more so than the financial world, where millions of investors desperately seek people to trust.
Unfortunately, the odds of long-term success in the business world are slim to none – which, by the way, is why it’s so impressive that David and Andy Schectman have been able to maintain Miles Franklin’s financial health, market position, and reputation for so long. Remember, not only is our industry unregulated (except, as of last year, in our home state of Minnesota); but its end product represents “enemy #1” to the political and financial establishment – i.e., Washington and Wall Street.
Regarding financial experts specifically, Warren Buffett is widely considered the “smartest investor of our generation”; when in fact, like Alan Greenspan, much of his success stems from having sold out to “the powers that be.” Which is why the “Oracle of Omaha” was not only bailed out in 2008 – let alone, from the very same “weapons of mass financial destruction” he, in a prior era, publicly railed against – but handed essentially free, “government protected” ownership in fellow “too big to fail” companies like Goldman Sachs and General Electric – in return for years of sound bytes of how strong the U.S. economy is, and how undervalued its stocks. In the meantime, like Greenspan, Buffett started to drink the “manipulation Kool-Aid” himself – yielding last week’s S&P outlook downgrade of Berkshire Hathaway, after it dabbling in one too many ridiculously leveraged buyouts. And while Berkshire stock hasn’t yet been damaged, Buffett’s reputation certainly has – to the point that outside of his personal lapdog at CNBC, Becky Quick, few could care less what America’s biggest corporate sell-out has to say. And to think, his father, the Senator Howard Buffett, was one of America’s pre-eminent real money advocates!
Shifting to the “hedge fund” sector – whose massive underperformance since the 2008 crisis belies the reality that few, if any, consistently generate significant “alpha” relative to broad market averages – “15 minutes” is a wild overstatement of how long they can typically maintain alpha. And frankly, the most valuable asset a good hedge fund manager can have is not the ability to actually make money, but convince investors you have the ability to do so. Bill Miller, Bill Gross, David Einhorn, Steven Cohen, and countless others have come and gone – but few stand the test of time. And that includes me as well, having dramatically outperformed in my personal investments over the first eight years of my “investment career” – from 1999 through 2007 – before dramatically underperformed thereafter (in large part due to the gold Cartel), causing me to permanently end my love affair with financial assets in 2011; and particularly, “paper PM investments” – in lieu of physical gold and silver.
This morning, Paul McCulley, a former PIMCO managing director and long-time associate of the aforementioned, long since discredited Bill Gross (who still seems to be lauded by the financial press, despite being heavily underinvested in the very credit markets he was paid to invest in, amidst an historic, multi-decade bull market), was on CNBC to discuss the same old, tired topic of whether or not the Fed will raise interest rates by a quarter point sometime in the future – be it September, December, or otherwise. To that end, I’m not here to again discuss the ludicrousness of such a potentiality – given America’s massive addiction to record, skyrocketing debt levels, and the all-out, accelerating implosion of global economic activity; currencies; and commodities; occurring in plain sight, for the entire world to see. Oh, by the way, yet another “15 minute guru” – Jeff Gundlach – claimed yesterday that plunging oil prices – having just breached March’s lows – will have “terrifying geopolitical consequences.” Hmmm, I seem to recall having said something similar ten months ago – when I wrote “crashing oil prices portend unspeakable horrors.” Then again, I predicted the Chinese Yuan devaluation back in April, when no one even considered it; much less, on Monday morning, barely 12 hours beforehand.
In McCulley’s obviously “propagandized” view – given he works for a shadowy “think tank,” funded by who knows who – it would be ‘no big deal’ if the Fed raised rates. Aside from his moronic “belief” – or whoever wrote it for him – that the U.S. economy is ‘looking strong,’ he claims the strong dollar is not an issue at all. No, not an issue, despite everyone from the White House to America’s largest corporate titans weighing in otherwise. Not to mention, essentially every Central bank on Earth – each, working in their own interest – debauching their currencies as rapidly as possible, to put the “burden” of a strong currency on America. And this, as America – not to mention, the Federal Reserve itself – sits atop history’s largest debt edifice, supported solely by the very money printing required to hold rates at record low levels. Laughably, McCulley supports his case for the “immateriality” of such a decision by claiming just 13% of U.S. “GDP” is due to exports, “offset” by 14% attributed to “imports.”
Listening to such drivel, I’m reminded of Rodney Dangerfield in my favorite comedy ever, Back to School. When, as a grizzled, successful businessman, he’s forced to listen to an Economics 101 professor tell him how business works on paper. Dangerfield – i.e., Thornton Melon – tells Dr. Phillip Bombay “you forgot a bunch of things”; and eventually, that Bombay’s fictional business model could only exist in “Fantasyland” (MUST WATCH).
To wit, he claims the Bureau of Labor Services, or BLS – which calculates GDP, “double seasonal adjustments” and all – can accurately calculate the impact of a rising dollar on overall economic activity, much less using its arbitrarily GDP calculation. Obviously, he is either lying or speculating; and when the “liar” or “speculator” is of dubious credibility to start with, his conclusions must be viewed with significantly heightened skepticism. That said, it doesn’t take a “think tank genius” to realize the global economy hasn’t been helped by either a “strong” or “weak” dollar. Or that the historic asset bubble collapses; parabolically surging debt defaults; and accelerating commodity, currency, and emerging market equity implosions that would result from rising rates would be a decidedly bad thing for America.
Not to mention, the all-out collapse of the biggest financial and economic Ponzi scheme of all time – in China; or the complete destruction of the world’s largest economic union – in Europe – where this morning’s horrific GDP report put an exclamation point on how bad things have gotten in the land of “NIRP and QE to Infinity.” Let alone, its weakest link – Greece – whose Parliament, laughably, approved “bailout #3” in last night’s wee hours, taking Greece’s real debt/GDP ratio to roughly 300%, and putting it on a crash course with a guaranteed Grexit in the very near future; which, unquestionably, will be followed by not just the other “PIIGS,” but the vast majority of cratering European economies. To that end, take a look at how Greece’s largest, for all intents and purposes nationalized, bank is doing today if you think Greece is saved.
All that said, if you ask “powers that be” with self-serving agendas – like McCulley – they’ll tell you “all’s well; sprinkling in every propaganda buzzword imaginable, from “tapering,” to “recovery,” to “rate hikes.” Of course, all such nonsense is eventually washed over by reality. And thus, I’ll put my “Yellen Reversal” prediction against his pro-Fed propaganda any day. Heck, the Fed is practically screaming it themselves – as following this week’s further, decidedly NOT “strong” data, its own “GDP Now” tracker is forecasting just 0.7% third quarter GDP growth, compared to the current Wall Street “consensus” of 2.7%! And that, before the impact of the past two weeks’ catastrophic commodity implosion have had a chance to filter through to sovereign, municipal, institutional, corporate and individual spending plans.
Sadly, no “powers that be” have agendas more contrary to the “99%” – and for that matter, their own countries – than said Central bankers. Led, of course, by Whirlybird Janet and her world-destroying printing press – which have been eviscerating purchasing power, living standards, and the Middle Class for decades – particularly since the 1971 abandonment of the gold standard. That said, no one noticed, or cared, until the inevitable “debt saturation” fiat currency Ponzi schemes always result in was reached; in America’s case – and most of the world’s – in 2008.
Since then, the money printing cancer that had been gradually spreading since Greenspan took over the Fed in 1987 – when, “coincidentally,” the PPT was officially formed – has not only turned “malignant,” but rapidly infected the entire global “body.” The initial post-2008 money printing orgy took but three years to miserably fail; as when 2011’s Global Meltdown II hit, the European Union was nearly destroyed; America lost its (undeserved) triple-A rating; the Nikkei plunged to a 30-year low, and “dollar-priced gold” surged to an all-time high of $1,920/oz (with silver hitting $50/oz, before the May 1st, 2011 “Sunday Night Paper Silver Massacre”).
Consequently, said Central banks, realizing their “point of no return” had arrived, went “all-in” with an unprecedented scheme of overt and covert money printing, market manipulation, and propaganda – with no peer in history, either in the scope of its operations, or the horrific political, economic, and social damage engendered. Think “Operation Twist and QE3” in the U.S.; Abenomics in Japan; QE and NIRP in Europe, for just a few examples. This, and this alone, is why paper gold and silver prices have been slaughtered – and stocks and bonds boosted – whilst global economic activity has plunged to its singularly lowest point in generations.
Of course, all said scheme has truly “accomplished” is accelerating, and prolonging, the devastating impact of already historic economic overcapacity and financial bubbles – whilst physical gold and silver demand has surged to record levels; above ground inventories evaporated; and the mining industry, perhaps permanently, imploded. I mean, geez, I just yesterday discussed how the bullion industry’s silver supply is vanishing – to the point that 2008-like shortages may well be as imminent as they are inevitable. And yet, with NO OTHER MARKET so much as BUDGING, this is what said “powers that be” just did to paper silver – turning 12 hours of gains into losses with the same “Cartel Herald” algorithm they have used to stop EVERY gold and silver rally for two decades; at exactly the 10:00 AM EST close of the global physical markets; on a Friday afternoon when clearly, said “powers that be” are terrified of what kind of reading and thought might go on this weekend (just look at how many hits, and thumbs up, my latest Greg Hunter podcast, uploaded just Tuesday night, has received). Much less, as physical silver demand – which was so strong, the U.S. Mint was forced to suspend Silver Eagle sales before this week’s massively PM-bullish Yuan devaluation announcements – has rocketed higher, as evidenced by extremely strong buying this week through Miles Franklin, one of the nation’s largest bullion dealers.
Just two weeks ago, I wrote of how the “only difference between late 2008 and today” was the historically manipulated financial markets resulting from the aforementioned post-“point of no return” Central bank machinations. However, the truth is that today is far worse – as not only is the global economy far weaker; global debt levels many multiples higher; and social and geopolitical tensions exponentially broader; but faith in the world’s “financial leaders” has never been lower. Which is quite a terrifying situation, as said “leaders” – i.e., Central banks – have already spent the vast majority of their ammunition, with only one remaining “live” bullet to be used. Which is, of course, all out hyperinflation; to not only pay back exponentially rising debts, but foster a series of “scapegoats” to blame their failures on.
With this week’s commencement of the nuclear phase of the “final currency war” – which thus far, has ushered in the annihilation of countless commodities and currencies, as well as surging physical PM demand – it can’t be long before “Economic Mother Nature” overwhelms the aforementioned forces of financial destruction, unleashing the most terrifying economic scenario in generations. Undoubtedly, the “end of belief that Central banks can save us” is arriving. And to the contrary, by this time next year, I’d be shocked if they are not universally viewed as destroyers of economies and markets, rather than the saviors they purport themselves to be.
To that end, no matter how prescient such views are, I assure you the Miles Franklin Blog will never be viewed as “gurus” – and more likely, “Cassandras” to the bitter end. Fortunately, we don’t care a whit – as if we have convinced just a handful of people to protect themselves beforehand (and frankly, there’s only enough gold and silver for a “handful” anyway), we’ll sleep the “sleep of the just,” knowing our professional lives have been a decided “success