For the record it was THE LIBERTARIANS who called 2008. For years afterward we heard from the disgraced and the bailed out in Washington and New York about how “no one saw the Crash coming.” BULL. Many Austrian economics adherents, most of whom are libertarians called it. Ron Paul, Peter Schiff, Tom Woods, many others, could see what was coming but all the bankers and the real estate debt junkies (not to mention The Fed) thought they knew better. Well, we saw what happened didn’t we?
Now Ron Paul is warning again. You would be wise to pay attention. I frankly have little confidence in the system if and when such a reversion to the mean happens. Many people, like in 2008 will freak out. They will panic – again – as their portfolios evaporate. They will, like 2008, look to the government to save them.
Meanwhile the people who don’t have assets, many of whom lost what few assets they had in 2008-2011, will again find themselves in the fire and dysfunction of economic depression.
I was talking to a friend of mine yesterday about a current popular gift, The Cozy, or something like that. It’s basically a sherpa blanket with arms and a hood. Something to wear while Nexflixing and chilling. I mentioned that I remembered that the first version of The Cozy, The Snuggie (I think that’s what it was called) came out in the winter of 2008-2009. Just in time for people struggling to pay bills to turn down the thermostat. Some people remained huddled under those Snuggies for years to come. Some are still huddled under those things.
The Great Recession hit the middle and working classes hard. The Great Recession was created by the Federal Reserve. Any new downturn will be the result of Fed policy. That is, any Great Recession Mark II will have been created by the CENTRAL PLANNERS. The government and monetary policy will have created another crisis.
But watch, any downturn will be blamed on “capitalism” just as the Great Recession was, which is stupid and obviously untrue. (Assuming a basic understanding of Fed policy.) However, pinning any failure on “capitalism” instead of on the Federal Reserve, the government, and the bankers who exploited their relationships with the Fed and Washington is much more convenient. Sadly, if such scapegoating happens again something much worse than the Great Recession could happen as people search for a solution to a problem they are told a free economy created.
We don’t have anything like a free market economy. We have a deeply controlled and crony economy with government and business woven into one another. We have central planning and over regulation and crushing red tape and interest rates that do not reflect reality but the whims of a star chamber in the Eccles Building. If we want to get out of this centrally planned cycle we need to embrace an ACTUAL FREE MARKET ECONOMY. Let prices move. Let supply and demand do their thing.
But that means the cronies have to give up power, and they like the system just as it is thank you very much. After all, in a free economy how would they get bailed out?
Ron Paul is warning this year’s corrections could be a precursor to an epic market collapse that may come sooner than investors think.
“Once this volatility shows that we’re not going to resume the bull market, then people are going to rush for the exits,” Paul said Thursday on CNBC’s “Futures Now, ” The relentlessly bearish former congressman added that “It could be worse than 1929.”
Put yourself in the mindset of a 70 year old retail investor. (Not the biggest part of the market by any means, but still an important part, even today.) Let’s assume that he or she was able to weather the Crash of 2008 reasonably well. Let’s say he or she had enough wealth that he or she didn’t have to liquidate all their assets in the Great Recession. The investor has seen the stock market re-inflate, but then the investor suddenly realizes that he or she might be looking at a bear market, a serious bear market, right at retirement. If the greed of ever inflating stock assets gives way to the fear of a diminished retirement that retail investor may sell, and sell a lot.