Go Back To Sleep – No Depression Here

It’s all good, folks. Nothing to see here, move along. The economy is fine now, look at the DJIA, it’s all good. Go back to sleep, and don’t forget to spend money online before you turn out the light.

Sounds good, doesn’t it? This is what they want you to believe, that everything is fine. Even the President came out and said that the economy isn’t as bad as we think.  

Huh? Say what? The economy isn’t as bad as we think? Then what was all that just a couple of months ago when you said that the economy was in serious trouble? 

Color me cynical, but I’m not buying what you’re selling, Mr. President.

Let’s take, for example, this article on Bloomberg.com: U.S. Bailouts Add to Risk of Depression 

Some Excerpts from the above article:

“The U.S. risks sending the world into a depression as its bailouts of failed companies rob healthy businesses of capital, investor Jim Rogers said.”


“The U.S. is repeating the mistakes made by Japan in the 1990s and risks creating “zombie banks” by rescuing failed financial services companies that should have been allowed to go under…”

“Oil prices may rise to record levels in the future because of depleting reserves and a lack of major field discoveries…”

“People should be prepared for inflation as governments worldwide are printing money to prop up economies at a time when commodities supply is under pressure…”

Hmm, well. That certainly doesn’t sound like things are going well, does it? Folks, what you’re seeing is just smoke and mirrors; Pay attention to what’s behind the curtain. Your survival depends on it. It’s important that you don’t let your guard down and start believing the hype that the economy has hit the bottom and is going to get better. I sure wish that this was the bottom, but there’s more to come so I don’t see how it could be.

Inflation is coming, bet on it. It’s too early to say if it will be hyper-inflation or just plain ol’ inflation, but it’s most likely to be bad enough to be severely crippling to our economy for the coming few years.  Translated, this means that you’re going to be effected by it, one way or another.

Okay, let’s suppose that you’re talking to your friends or family and someone points out that this is the bottom and it’s easy to see because the markets have been recovering lately, and AIG and several other banks are saying that they’re fine, they don’t need more bailout money, yada yada. You think about it for a while and, because hope springs eternal in humans, begin thinking that maybe they’re right. Perhaps we have hit the bottom. It’s easy to start thinking like this as no one wants a disaster to happen.

There’s a fairly simple way to check this. Go to DShort.com and click on the chart image. Take a look at where we’re at in relation to where we’ve been. Has the market really started to recover? This chart tells you many things. First and foremost, right now, this little jump in the markets is nothing. Looking at the chart, you’ll see that jumps like this is normal. The Crash of 1929 had at least 6 jumps. You’ll also see that we’re not even close to recovering to where we were (the chart also shows that recovery doesn’t happen that fast, either).

There are other important things that this chart tells us:

  • Two of them are that we’re in the 17th month, several months short of the 1973 Oil Crisis, 
  • This current crash fell lower than either the 1973 Oil Crisis or the 2000 Tech Crash, and it happened faster,
  • Lesser crashes have a gentler slope, while deeper crashes have steeper slopes,
  • The current crash has the exact same slope as the Crash of 1929.

If this current crash maintains the same slope as the Crash of 1929, but bottoms out quickly, like the 1973 Oil Crisis, then we can expect another 3 months of falling markets and another 12% loss on value. However, due to the steepness of the slope, and the numerous issues that we’ve covered in other blog posts (and in our podcasts), we can be fairly certain that it will be quite a bit longer before we hit bottom.

So, prepare now. Take advantage of the deflationary period that we’re currently in.  Stock up on things while you can. Keep track of your inventory and make sure that you replace what you use, and keep adding as you can.


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