Episode-420- What Will the False Recovery Look Like — 20 Comments

  1. I would argue that not only has nothing been fixed, but we are in a worse position now than before this event. History says each crash will look different – housing, tulips, silver, stock market – we don’t know what the next crash will involve.

    But, we do know that the “too big to fail” are now much bigger than before. Look at how many big banks the big banks scooped up. Chase alone swallowed WAMU which is a gigantic operation themselves.

    The next time will be even harder because the entities are now even more entangled and able to bring the system down.

  2. “Don’t believe them, don’t fear them, don’t ask anything of them” – Aleksandr Solzhenitsyn …

  3. I suspect your timeline is correct, unless we experience some sort of catastrophic disaster (manmade or natural) that can escalate the timeline dramatically.

  4. Jack,

    You’re so passionate about this topic…it’s always a “wow, right on!” moment when I listen to your opinion on this matter. Might I suggest that the reason Farber, et. al. aren’t in your camp is because they make money off the bottom and not the mess in the middle?

    But if more people are waking up to the “puppet show” by listening to you and other alternate media, might there be any chance of a different scenario? Who would have thought Ron Paul would be in a dead heat with a sitting president in a legitimate poll?

    Thanks for what you do, please don’t sell out. “Stay gold, Ponyboy.”

  5. @rockinstroll

    Awesome book, decent movie and better poet that the line is based on. One of my favorite and very unknown Robert Frost quotes is,

    “Don’t ever take a fence down until you know why it was put up.”

    Don’t worry man I will never sell out. I am actually in negotiations with a Sat Radio Station now to be on the air with them. If it happens you will see something no one has ever done before. I will leave it at that for now and simply add you won’t see me doing anything different and that is why it will be revolutionary.

    To put it another way, “I have promises to keep, and miles to go before I sleep, and miles to go before I sleep.”

    To say I will stay gold seems arrogant to me, I will say though I will always keep my promises to the people who do me the honor or listening to me.

  6. Hey Jack, good job today! Your passion and in site are highly valued and should be given serious consideration by all. The answer to this mess lies with in each of us, learning, growing and defending our freedom and heritage. Your a catalyst
    in my efforts.

  7. @Tracy I noticed some skips as well. Not sure what that was about. Still a great show, as always.

  8. Excellent show! You spelled it out perfectly for us.I\’m just not sure how to protect ourselves other than reduce our debt and buy commodities. As a baby boomer and closer to retirement, options to prepare are limited due to time.

  9. Jack Spirko For President!
    -Lots of passion on this one. I\’ll have the kids listen to the last half of this show.
    When those in government start to hear this message and begin to say, \"we will keep you free, YOU will make your way\", then we have begun to move in the right direction. Jack, you\’re making a difference.

  10. @Tracy

    Yes, a lot of skippage today… thought my iPhone needed a reboot. We’re not alone.


    The whole show was gold. But the last 10 minutes or so should be something everyone should hear from either their parents, or in high school.

    If only I could articulate how much my life has improved since I quit looking outside of my circle of influence for solutions to issues. I also find myself more relaxed rather than agitated when I hear of ass-clownery at the state and federal level… much better for your health I\’m sure.

    Jack, think you could make a clip of that end available for open public distribution? That is something that needs to flood email in-boxes world wide.

  11. Jack, I listened to this while I was working in my garden.. and lets just say I have a completely weedless asparagus patch now — I really felt the passion and conviction in your message and much of it echoed my own thoughts and opinions.. as usual, you are speaking MY mind. I even quoted you today on facebook– the idea of taking control (and responsibility) of my own life really resonates with me.

    Thanks for another great show.

  12. Jack,

    I enjoyed the show today, but I’ve got a couple nits to pick. In your analysis of inflation and economic history of the last hundred years, you were using prices as a measure of inflation. But inflation is not increases or decreases in the CPI or any other price measurement. It’s an increase in the money supply.

    Prices are the interaction of supply, demand, and the money supply. Prices typically go down as production increases, so a falling price index does not necessarily equal no inflation or even a falling money supply.

    Second, as you discussed a few days ago money is lent into existence upon the Fed’s monetary base. Right now, even though the monetary base is double what it was just eighteen months ago, we are actually in a deflationary situation because the banks are not lending out their reserves. (Gary North points out that this could turn around overnight if the Fed starts charging a fee on excess reserves instead of paying interest albeit minute interest).

    Also, according to Austrian Business Cycle Theory (Mises, Hayek, Rothbard, et al.), an inflationary boom should feel good. Economic activity is stimulated and job growth is crazy and fortunes are made overnight just like you described in the dot com era. The problem is that it is unstustainable. According the theory, a deflationary bust is the cure to the monetary boom. It hurts, and lots of people lose their jobs temporarily, but as money increases in value, prices fall allowing the jobless to get more product for their savings.

    In the 1930s, the Fed and government did everything they could to prevent falling prices and wages. Hoover convinced industries not to lower wages. The fed printed money, the government created make work jobs, and agricultural products were destroyed (entire cotton harvests burned; wheat left to rot in the fields; seven million pigs slaughtered, etc.). In 1936/1937 the Fed eased off the money supply, and as deflation set in again, what little artificially stimulated economic activity there was came screeching to a halt. (Paul Krugman thinks this was a huge mistake and thinks Bernanke is making the same mistake now.)

    Anyway, in 1930, the government was actively inflating the money supply, and the deflationary bust was not yet complete. In 1940, prices had just gone through a decade of deflationary depression despite government monetary inflation attempts, so lower prices were exactly what was expected (and not a moment too soon). And in the next few years, war price controls and rationing would make the rest of the depression seem to disappear.

    I also think that you’re perhaps “putting words” into the mouth of Peter Schiff by saying that he disagrees with you. He says that we are CURRENTLY in a false recovery. False because joblessness is still at an all time high, but the media calls it a recovery because stock prices are increasing and companies are making a profit. (Although as you pointed out, how could Citigroup possible lose money after being given billions of dollars and not having to pay taxes on profits?)

    But Peter Schiff points out if you price the stocks and indexes in gold or silver, they are actually lower than before. But most poeple don’t think that way and are lulled into thinking that we are in recovery (esp the 80% of workers who are still employed). As evidence, we are already back at a negative savings rate.

    Anyway, sorry about the book. Overall a great show.

  13. Jack, I am a relative newbie here. Having said that, this podcast is one of your finest. The last part was what really resonated with me, for I am guilty! 
    I rail, bitch and moan about govt and their tyrannical ways when much of that is simply outside of my “circle of influence” (I knew Steven Covey was on to something, but I never really got it). 
    Ultimately, all I have control over is my response(ability). Your passion in exhorting this and living with “honor” smacked me between the eyes like a 2×4…Thank you! 
    I have some old written off debts I need to settle. It never felt good to say, “screw them, they shouldn’t have given me that credit card”. It was simply an excuse to behave irresponsibly and left me feeling less than honorable. As you stated, I freely signed my name. 
    What do any of us really have, when stripped bare, if we lose our honor? 

  14. I want to be crystal clear about what a false recovery is here when I say it.

    I don’t mean that this is the false recovery we are seeing right now, if the whole thing blows up by fall and drops back down I won’t be saying I was right, I will be admitting I was wrong.

    These “experts” Schiff included are not saying that, they are now calling this period a false recovery because the media is saying it is better but it really isn’t. No one is working, etc. I want to be OH SO CLEAR, this is NOT what I am saying.

    I am saying with some hickups we are going from here into a period that will actually look like real recovery. I am saying unemployment will drop, companies will begin to expand, real estate will improve a real honest to God apparent recovery.

    Than and ONLY than will the Celente’s of the world again adjust and forecast a second fall. They called this the knock out blow and none of them (yet to my knowledge) are saying the economy will improve the way I am. To be clear I am talking about 1-2% drops in unemployment, I am talking the Dow breaking AT LEAST 12,500 possibly going even higher. I am talking about what looks like a sustained recovery. I am talking about one that lulls the sheep back to sweet bliss.

    It could last 2 years, it might last 6, I am not sure because what they get done politically will determine how far it flies before it flops.

    I am saying there is one more big run left. I won’t be shocked to see the Dow go to 14K again if they get Cap and Crook passed.

    Now if anyone can show me an expert saying that who said it at least a few months ago, let me know. I want them on my show for an interview.

  15. Oh and Pat, I didn’t use prices I used the actual inflation rate against the currency from a calculator. You can try to get fancy with this stuff but in the end all that matter is how much harder do you have to work for each dollar and how much less does it buy.

    I could make formulas more complicated but it doesn’t help people, it simply serves to make the person speaking appear more clever than they actually are.

  16. Hey Jack,

    Thanks for the clarification. I agree with your prediction that another bubble is possible; the government is certainly trying hard enough.

    You’re absolutely right that Gerald Celente and Marc Faber think we’re past the point of no return. Faber is even advising his clients to buy farmland and have someone homestead it for them.

    I’m still not so sure about Schiff. He says that it’s still not too late to do the right things and recover.

    Out of curiosity, which inflation calculator did you use?