Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Great Correction: 4 Years…and Counting…Still No Economic Recovery in Sight

Economics / Great Depression II Aug 01, 2011 - 07:20 AM GMT

By: Bill_Bonner

Economics

Best Financial Markets Analysis ArticleI’m glad to be the last speaker. Nobody can come after me and tell you why I’m wrong about everything. Instead, I get to tell you why the other speakers were numbskulls. Besides, we all have a tendency to be most influenced by the last person we talk to. Or at least I do.


Wherever we go we tend to pick up the accents…and attitudes… of the people who are around us. We all know, because we’re all good contrarians, and this is something we can all agree on, that whenever everybody thinks the same thing, nobody is thinking. But that’s just what happens. We all come to share the ideas of the people around us…even without realizing it.

Right now, a 10-year US note yielding less than 3% is an illustration of this phenomenon. That gives that note a current yield that is actually – in real terms – negative. Consumer prices, as measured by the feds themselves – are going up at about a 5% rate, giving that Treasury note a current yield of MINUS 2% before taxes. After taxes, it’s nearly MINUS 4%. What kind of group-think causes that?

Of course, I don’t know if bonds will go up or down. I just know that when we see so many people are doing such an amazingly bizarre thing, it’s worth looking at it more closely.

My wife and I were driving up to New York from Washington a few months ago. That’s when I realized how easily we are influenced by whomever we’re listening to at the time. My wife is always trying to improve the family. So, she got a tape recording of Virgil’s Aenead for us to listen to on the drive. It’s the story of the founding of Rome by refugees from Troy, read by a BBC actor in a grave and booming voice.

By the time we got to the end of the New Jersey Turnpike we had been listening to the story for a couple hours. I was thinking in Virgilian terms. So, when Elizabeth suggested that I ask the tollbooth operator for directions, I just blurted out.

“We have long travailed over hardened black earth…

“And now we seek the northern tribes…those of the reddened sox…

“Who – with the gods’ help – crossed o’er storm-tossed seas to build great cities on the desolate coast among the savage Yankees.”

Without a pause…the woman at the toll booth fired back:

“Yeah…well you’re goin’ to Brooklyn.

“Ah…destiny has brought us hither!”

“Yeah…and if you don’t get movin’ I’m gonna call the cops.”

“Thank you oh sweet maiden, daughter of Venus and Minerva.”

The story of Rome is a great story. And Virgil’s account of its founding is very different from, say, press reports on the debt-ceiling hike or the coming of QE3.

The big difference is that Virgil thinks things happen for different reasons. There is more at work than just choices made by mortal man. Sometimes the humans in his story makes good choices. Sometimes they make bad choices. But that is not all there is to the story. There are the gods too…who are either jealous and treacherous, or generous and helpful. And there is something else – destiny itself. Fate. Or as the old Anglo-Saxons used to call it the “Weird.’ “Your weird is set,” they would say…meaning you’re your goose is cooked and there is nothing you can do about it.

I only introduce this idea as a thought…provocation. Not even a hypothesis. Just an analogy. What if the US were…well…like Rome?

No one knows what will happen. “It is not given to man to know his own fate,” as the saying goes. But it could be that there is more going on here than just a bunch of people trying to make the best decisions in a bad situation. Maybe destiny is involved too…and maybe that is why people all come to think the same thing at the same time.

If everyone thinks the US T-note is such a safe item that they’re willing to take a negative yield just to hold it…maybe it’s not safe at all.

And if destiny…or some huge historical force is involved…maybe the fight is hopeless. So why bother? Why get all bloody and dirty?

I know you all have to make investment decisions. So, I will try to bring this down to the practically level. The only place where I’m directly involved in giving investment advice or in taking it is in the Bonner Family Office. In a nutshell, I’m trying to figure out how to leave money to the next generation in a way that helps them…rather than destroys them. I’ve invited a few other families to help pay for it. We’re not taking any new members right now…but Will will be happy to tell you more about what we do later on.

The trouble with fighting is that you don’t notice a lot of things. You have to keep your head down. You have to stay focused on the fight at hand. And you have to believe in it…even when the facts don’t necessarily support you. That’s why zealots and believers are generally poor investors. They want to be proven right. They want their side to win…and they’re willing to back it with their money. They put their money where their mouths are, in other words. Sometimes both get whacked.

It’s all right to be a fighter when it’s only your own money at stake. You can do with it as you please. But if you are custodian for future generations, it’s probably better to lift your head and look around. You want to put your money on the fighter who is most likely to win…not the one you’d like to win.

In our family office, we are neither fighters nor flee-ers. We try to be careful observers. We’d rather get a good seat ringside, where we can see where the blows are landing…but not too far from the exit. Right now, we hold a lot of our wealth in cash. Not that we are tempted by a lot of the investment advice I’ve heard hear this week. But cash is like a seat by the exits. You don’t want to sit there all the time. Too drafty. But it comes in handy if there’s ever a fire…at least we won’t get trampled trying to get out.

Most of the speakers you’ve heard from at this conference are fighters. They think they can either turn the country around…like Addison…or that the US will turn itself around, like John Mauldin…or that new technology will make us all rich and help us to live as long as Methusela, so we won’t care.

But suppose the US really is like Rome? These guys can fight all they want. The Empire has its own destination in mind. And it will get there in its own sweet time.

More to come…next week.

Bill Bonner
The Daily Reckoning

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century and Empire of Debt: The Rise Of An Epic Financial Crisis and the co-author with Lila Rajiva of Mobs, Messiahs and Markets (Wiley, 2007).

http://www.lewrockwell.com

    © 2011 Copyright The Daily Reckoning, Bill Bonner - All Rights Reserved
    Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules