A few weeks back I wrote a piece titled “why don’t you listen to them?”. The subjects were Paul Craig Roberts and David Stockman because both were previously employed at top level positions in Washington and are both are trying to warn a sleeping American population as to what is really coming. At the time, I thought it was important to highlight their on target logic exactly BECAUSE they were from inside of Washington. I’d like to do the same type of analysis again but instead choose another individual with a very long term track record from the private sector.
This past week, Bill Gross reiterated the dire warning he’s given in the recent past. Bill Gross has been dubbed “the Bond King” has had more assets under management than anyone over the last 25+ years, to say he has a little experience under his belt is putting it lightly. He has also lived and invested entirely inside the box his entire career, he may be seeing a problem with the box itself.
I had planned to include Richard Russell in this missive as I have noticed his “tone” change this year, and particularly the second half. As he has in the past, he has again flip flopped this week and believes we may still have a year or more of equity reflation. Until two years ago I thought he tiptoed a little bit too much and really tried to stay out of the manipulation debate. Little by little as moves in gold and silver could only be explained by jamming volume during off hours and other tricks, Russell finally came around and called BS on all markets as manipulated. Not just markets but financial and economic reports, “bravo old man!”. It’s just been in this year’s second half where he his gloomy outlook has included the talk of “systemic collapse” and also included talk about the world going back to gold standard (again, bravo!). Now, his systemic collapse is postponed in his mind but still at the center of the table.
While Richard Russell over the years has been able to speak his mind as an independent, this wasn’t as true for Bill Gross. He primarily managed bond portfolios and more or less had to “talk his book,” this has really changed recently as he moved from PIMCO to Janus funds. Gross wrote in his Dec. newsletter some very interesting and I might add very painful truths of the financial world. If you notice, the following paragraph was underlined by him as important:
How could they? How could policymakers have allowed so much debt to be created in the first place, and then failed to regulate their own system accordingly? How could they have thought that money printing and debt creation could create wealth instead of just more and more debt? How could fiscal authorities have stood by and attempted to balance budgets as opposed to borrowing cheaply and investing the proceeds in infrastructure and innovation? It has been a nursery rhyme experience for sure, but more than likely without a fairytale ending.
The basic premise to this newsletter is that a debt problem cannot be cured with more debt, (does this sound familiar to you?). He seems to be back pedaling from what he wrote a few years back where he believed this scheme could actually be pulled off with three caveats:
But each of these central bankers is trying to achieve the same basic objective: Solve a debt crisis by creating more debt. Can it be done? A few years ago, I wrote that this uncommonsensical feat could be accomplished, but with a number of caveats: 1) Initial conditions must not be onerous; 2) Both monetary and fiscal policies must be coordinated and lead to acceptable structural growth rates; and 3) Private investors must continue to participate in the capital market charade that such policies produced.
For me, the cherry picked gem from this letter was without a doubt when Mr. Gross wrote… “Keeping private investors playing the “game” in our financial markets even though they smack of a pyramid scheme might seem like a no-brainer”. And there you have it, “our markets smack of a pyramid scheme!” Again, where have you read or heard this before? He makes mention how investors will leave the negative interest rates of Germany in favor of 12% rates in Brazil, I would ask if Brazil is any less of a Ponzi scheme than anywhere else in the world? Without a doubt, I am sure Bill Gross knows this but he does work for a mutual fund company which has a basic need for capital to stay “within the box”. By the time the words gold or silver come out of his mouth, you will know game over has arrived.
I wanted to mention Bill Gross to you for several reasons. First, he is at the absolute pinnacles of the finance profession and the core of the system …debt. No one has managed more money nor been closer to the debt market internals than he has. I believe he sees the game coming to a head and wants to be “on the record” before it ends. Please understand what this man is saying about “HIS” industry, he used the word “pyramid scheme” within his thought process …the only worse word he could have used (which coincidentally starts with a P) is the word “Ponzi!” How anyone could read his thoughts and still stay “inside this financial box” is beyond me?
Switching gears entirely, I want to briefly ask a few questions as usual. The Treasury Department yesterday put out a bid request for “survival fanny packs” for their bank examiner employees. What in the world do they need these for… in case they get stuck in an elevator somewhere? Of course we already knew of the firearms purchased for the various government agencies along with ammo. At first it was just 1 billion rounds but that was moved up to nearly 2 billion …in case the first billion wasn’t enough or didn’t work?
We also found out yesterday that Russia, who had previously scheduled testing of their own “SWIFT” system for May, next year …will now test the system Dec. 15th! Why did they move this up 5 months? Did they also see 100 NATO (U.S.) tanks rolling across Latvia as we did yesterday? Do they see something “we the sheeple” don’t? Or do they see something only the tin foil hat society could possibly dream up?
all the hubbub about oil and it’s derivatives that are gonna smack the ‘system” and crash is at zero hedge and at silver doctors and i’m glad that you see what i said at sd last week about bill gross.”bill gross did the rat jump off the ship of bonds”,is a telling clue. the bond market IS the 2-4 trillion dollar derivative toxic waste that will bring down the system.oil crashing will be the excuse.great piece you wrote Bill.some folks think that the el-arian mumbo jumbo and the bill gross fallout was because of ego’s getting in the way of each other,in hindsight,it seems like it was cover for gross to get out,and maybe even el-arian to. when you see the “grandpa rats”jumping ship,those that have been in the box for so long,than you know something is up.
thanks Chris, Gross going on record for cover …exactly.
Going for cover? Thanks for helping read the “signposts” Bill! Connecting the dots between these signposts leads one to shudder in amazement and horror, at the hints of what is about to come. Breakdown. Now, as to how deep the breakdown goes is anyone’s guess. As for myself? Prepare for worst case and hope/pray it doesn’t go that far. God’s speed.
Russia moving their test date up 5 months is very telling.
Do you get the scents that what ever is coming, is very close now? I’ve been having this sense of foreboding.
When Alan Greenspan spoke at Council on Foreign Relations in October, he like Gross were going on record–to protect his legacy if possible.
I owe Richard Russell–back in 2003-4 his writings let me see the light and load up on metals.
if you look back to Germany 1920’s, you wil see the stock market there went from index 97 in 1919 to index 2,690,000 in Nov 1923. However then the market crashed 97% while gold went up 500,000,000,000 times but the mark totally devalued to do that–and gold then was a true store of value. People should look at history –it may not be exactly the same but its going to be close enough.
yes Mickey, history does rhyme…because the laws of mother nature cannot be repealed by man.
The reason a lot of the aware people don’t listen to these folks is in one word “Credibility”. Most of these people are not consistent or have No credibility. I see Bill Gross comments more like someone that sees the ship going down and he is positioning himself for the transition. In my book Bill Gross has NO credibility, he would probably sell his mother out for a better position. As for Dino-Russell it seems no one is educating him on his stupid charts/graphs everytime he write an article. Does Russell really believe in w total jacked up mulipulated market with “Price & Risk” totally misstated that his stupid charts actually mean anything. Russell is a Dinosaur! If any of these people had credibility they would immediately say get out of paper and get into hadr assets i.e. PMs, productive farm land, etc. Just my thoughts.
Thanks for what you do Bill.
Thanks Colonel, Gross was “restrained” because of the sandbox he was playing in. Russell has “flipped” more times than a California Raisin.
Good article Bill.
The pigs party has gone on longer than I believed likely.
Aside from pure convenience cash in the bank, I am out of harms way.
Sleeping is not a problem.
hold on a second there Smurf, either you are in or you are out. You have posted many times “no rush to buy” blah blah blah…the metals are still going down. Now you say you are out of cash except for “convenience”, which is it? Are you waiting for lower prices? Or already in with what you can afford? You posted yesterday “Bill Holter was wrong”, that may be but if you are all in then you are also. You flip flop like Richard Russell, is it from taking or not taking medication? Thank you for the compliment, I enjoy them but with you I have to wonder what tomorrow brings?
Bill, not out of cash, just that most ain’t in the bank, or any other institution.
I own gold and have since it was in the $300.
I have sold half my silver at the very top and more since, exchanging for gold.Swapping really.
Its not for sale.
Don’t like silver..too bulky. Aside from that I think there will not be much need for it in deindustrialising world.
I am currently naked short silver..i like a bit of sport and can easily separate my trading from my positions/thoughts about PM’s.
About the only thing I disagree with you about is the supply/demand issue and the need to buy gold NOW or for the last couple of years!
As I have said before,when comes to Gold i am happy to wait and watch a monthly time frame chart,in other words my signal will be when the price is going UP.
Blah blah blah
Part 2: I would put much thought into fanny pack during the holiday season.
As for Putin, yah, they see a Hot war coming! That’s why they are moving swiftly before we further choke out their commodity economy. I expect a large load of shit to hit the fan within six months…
You have to wonder whether or not some holiday cheer is stowed away in the pack?
Richard Russell is pro metals and said he has 100%–but when he recommended the one insurance co and SPY, he added I think, that if you must or want to play the market here are 2 decent ways.
I am 100% metals as I do not see value elsewhere.
especially insurance companies which have bond and stock portfolios.
everybody wants to make money in the markets but few think of risk.
I don’t want to make money Mickey, I just want to survive through the reset with a reasonable chance going forward with a capital base.
Bravo! about the holidat cheer in a backrupt government spending money they don’t have on holiday fanny packs. I’m afraid at my age a large dosage of holiday cheer is due this year!
God bless you and your family this holiday season.
Bill my sentiments on Bill Gross are exactly as you wrote them. Gross is like Jim Rickards, these people are saving face for when things go wrong they can say “I told you so”. They are all part of the problem. Russel told his people to get out and stay in cash and own gold and silver. Now he is saying to buy DIA and other paper assets. I guess he must be speaking to the ones who like to speculate but at least he should be clear on this. It makes him seem double minded to me!
Thanks for the write up as always.
P.S The 15th is this Monday. With Russia doing a test we may wake up to some fireworks. The system either breaks up or breaks down, either way it will break!
if the test works, there is nothing stopping a breakaway from the dollar.
I give Richard Russell the benefit of the doubt. He’s the type of person that never discredited the ownership of physical gold. I appreciate that. He’s a loyal comrade and I admire his sincerity & noble mind. Don’t get me started on Armstrong. That guy might be a good chart/paper forecaster, but then only to make bottom predictions of “the bottom of the physical gold barrel”. So where’s the value in that? His thesis is flawed because much of it it based on the assumption of an infinite supply of physical gold at x-price. And this in context of NIRP? Crazy guy. That man just fails to comprehend life and to choose sides. He’s living a fairy tail and provides more obscurity than clarity. This reprise article is an excellent follow up on the previous one. It is now very clear that the question of conscience is now starting to “haunt” some of those that loved the paper game. If they want to keep this thing up, the people are gonne need alot of hush money in the coming years, only to break more world markets. This is done. I know exactly why I bought physical. And I will continue to buy the decline. That’s where I am. My conscience, “opaquely” clear.
Armstrong=quid pro quo for out of jail.
Bill, may e you can shed some light on this. Paraphrasing from your above excerpt, right after Bill Gross asks how people can think more debt can solve a debt problem, why does he ask why governments try to balance budgets instead of borrowing cheaply for more infrastructure. Doesn’t make sense to me these two thoughts are back to back unless infrastructure is presumed to be the “good,” self liquidating debt.
yes I thought the same thing, I think he is alluding to the fact that the deficits are not towards anything real or helpful (infrastructure, plant, equipment) for the future.
Thought provoking indeed Bill.
More Debt into Infrastructure is a deflection.
We know more Debt doesn’t solve a Debt problem.
What it does do is it keeps the system functioning, albeit an irrational and distorted one.
More Debt facilitates the “Inflation” mantra along with managing the interest rate cycle (ZIRP).
To have Debt support Infrastructure would imply they want to stimulate growth and therefore an ability to increase GDP with all of its side benefits.
They NEVER did want to stimulate or increase GDP…that was never the goal (nor is it mandated). Witness unemployment, dying industries as well as depressed levels of economic activity and negative real wages together with an inflated bureaucracy which continues to stifle business and gorge its way through the citizenry.
Alas, we are in a world fixated with ever increasing DEBT to the point where everything eventually ceases to function normally and breakdown occurs. At that point TPTB hope to introduce the alternative or successor to the King Dollar Debt paradigm. The next heir to the throne will not have country nor a religion at its core or origin. It will be universal and limited only by the digits available on a data entry point. It will be forced onto the world in the same fashion the USD was, at the end of WWII.
maybe the Western world but not China and the East, they will tether to gold.
Sure I understand that dynamic and their distaste for everything “western financial system” related, but to contemplate an alternative monetary system requires serious plumbing. They (BRICS) are many , many years away from that point. Where are the deep bond/treasury pools and mature markets to facilitate liquidity and trade. Regional hubs aren’t the entire solution. Neither is Gold.
China and Russia (in particular) want to break the Monopoly. That is understood. But the devil is in the detail when it comes to hoarding gold, new swift systems and pricing Oil in their own currency / even Gold. Collapsing the existing system is not in their best interests. Demonstrating that they deserve better representation is the Key. They want to win acceptance/recognition …and perhaps at some point DEMAND it !!
Realisation that China and East are part of the Global economy. That cannot exist in their own World without US/UK/France/Germany/Canada. I do see the transition from financial Hubs of London / New York to perhaps Shanghai/ Singapore/ Frankfurt but again there is tremendous work still to be done to accomplish their goals.
not “nay years” away.
Thanks for your excellent articles.
It appears Russia thinks there may not be 5 months left in this current ponzi scheme.
I’m totally shocked it ever made it this long.
Those that are not prepared will regret it as in their lifetime they will never recover.
exactly Farrell, me too.
Those who are rich and sitting on piles of gold and silver may indeed be prepared for what is about to take place, that is, the collapse of the world’s economy. On the other hand, those like me who are merely sitting on a pile of food and spare clothing are simply hoping to make it through the first two years without having someone come in and take what we’ve stockpiled. After that, I hope I will have learned enough about the “new world” economy that I’ll be able to survive like everyone else.
you can only try to do your best.
Bill: although I do not believe Gross is necessarily a rat, there seems to be a concerted exodus from the sinking ship. It also appears that some very heavy hitters, like Buffet, are going to cash. BTW, hard to believe he owns no gold, considering his dad’s beliefs. Still others in the financial arena appear to be committing suicide (assisted or not). Signs of the end game or just coincidence. /sarc
As per CIA, “there are no coincidences”.
Perhaps you would care to comment on the following:
What Do They Know? CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide
I see that they see a big storm ahead. They are closing the hatches and will drown the rowers if necessary !!!!!!!!
yes Jack, they see it coming, I will write about this for Monday…tongue in cheek of course!
I would suspect that if this carries on, then miners will soon revert to bullion delivery only through Shanghai or Singapore or the middle east… and hold out for best offer.
I for the life of me cannot understand how the mining community has let itself be pushed around by these back alley bullies! Gold and Silver included. Mexico should set up its own silver market. Perhaps I am naive in pointing to this kind of action on the part of the miners, and perhaps its been tried, but .. this kind of threat and action is a huge signal to all concerned and its not good.
Perhaps the community … the people of the US because this is where its happening write a letter to their congressman asking that the same upwards bonus limits be applied to all executives in banks that received federal bailout funding.
thanks Jack, please understand that the miners need financing from the banks to build out their mines …this is why they remained silent. I believe this will soon change.
400 dollars loss a day rather than increase…
Never underestimate the wall street paper wizards to inflate/deflate what they want.
Look at the US consumer confidence : it is printed so high that everybody is surely now a billionaire in the USA !
I remind some saying that japan will experience hyperinflation but it is russia in 2015 which may experience if much before japan…
Bill….With the DOW down 300 today on Friday, it looks like the Santa Claus rally may not happen this year with oil dropping again….then the $1.1T budget on the Senate now…..if they pass the budget will they bring in the Santa rally or is the global economy too dire for that to happen????
please see my piece for Monday.