February 15, 2005

Summarizing 2004 Predictions - Rich Lancaster

Frederick Nietzsche once wrote that people "on the approach of severe pain, hear the very opposite call of command, and never appear more proud, more martial, or more happy than when the storm is brewing."

How prescient Mr. Nietzsche was! We contrarians marvel at this psychological quirk in humanity. Just how does Joe Consumer remain so defiant in the face of so much evidence of the coming financial storm? The collective subconscious is astonishing in its stoicism, fortitude, delusion and denial. Perhaps humans share certain inherent traits with the Lemming?

In 2004 I titled my predictions, The Lull Before the Storm, and I still believe that title is appropriate today. The storm is still forming just over the horizon, but society is blissful in its interpretation of events current and future.

However, without the necessary flushing of our debt-burdened system (like some kind of financial colonic) we are just stalling the required adjustment and increasing its ultimate impact by layering more debt on top of existing debt. I believe that the debt-based money system foisted on us by the international bankers through the Federal Reserve Act of 1913 is ultimately responsible for the predicament we’re in – and until that entire philosophical approach to monetary control, supply, fraud and manipulation is deconstructed we are really never going to be safe from financial thunder and monetary lightning strikes. But lets save the rest of that debate for another day.

Here is my analysis of how my 2004 Predictions performed:

1. Bush re-elected. For me this was a no-brainer. Once I discovered that Kerry was another (Skull &) Bonesman it was all over. The media did an amazing hatchet job on Howard Dean and the people just took it in the shorts and said/did nothing - - again. Of course the election was rigged with rampant fraud, especially in Ohio, but lets sweep all of that under the carpet. The American governmental system has devolved in to the status of a banana republic with a junta in control. Get used to it, and be grateful and thankful for the freedoms we still have – who knows how long we’ll have them?!

2. China revalues Yuan. Wrong! They didn’t, they should have but they didn’t. It seems inevitable to me that this happens, so I’ll mention this again in my 2005 Predictions.

3. Europe struggles. They did, but they also made large gains in terms of the Euro being seriously considered as a replacement for the Dollar. The EU is a net creditor with a new fiat currency, whereas the US is a net debtor with a tired old fiat currency. Seems to me that Petro-euro’s could really help improve the EU economy over time with net inflows in to EU countries/companies that are less debt burdened than their US counterparts, and more fairly valued.

4. US Dollar stabilizes around 80 through the election. Right on the money, so to speak. The dollar has traded just above 80 since the election; it was hovering around at 81 as the New Year broke. The dollar will continue to decline in my humble opinion – but that’s not rocket-science anymore as the mainstream media arrived at this conclusion in the third quarter of ‘04.

5. Consumer prices deflate somewhat. Well we have stagflation or disinflation or really some inflation and deflation concurrently. Basically goods that deflate do not show up in inflation figures, but for sure we’ve seen prices going down on all kinds of items from cars and appliances to electronics and goods coming from China. Oil, natural gas, stocks and housing have all been inflating.

6. Gold rises to $450 by year end. This was easy. Gold moves in the inverse to the USD, so if you pick one you just do the math for the other. The coupling of gold to the USD is a bit of a mystery to me, although of course I understand the store of value issue with gold all too well. I’m just not sure why the coupling and the inversion of the two remains so absolutely rock solid. I wonder if they may decouple at some point in 2005? Anyway, my gold trades didn’t exactly rock this year as the junior mining stocks performed badly, so even being right in the big picture hasn’t helped me a great deal financially.

7. Oil continues to move upwards ending the year at close to $40 per barrel. Well I didn’t imagine oil going to $55, or the debate about Peak Oil being pushed so far to the forefront. I think it is amazing to watch CEO’s of some of the largest companies in the world start to suggest that all is not well in Denmark (or should I say Saudi, Venezuela, Nigeria, Somalia, Iraq, Iran, most of the “Stans” etc?). Even the new TV ads from British Petroleum suggest that the company is now planning its future beyond oil extraction. Oil makes the world go round (or it that electro-magnetism? I don’t know!), along with money and gold!

8. Interest rates rise towards the end of the year, but not massively. This was easy. The Fed has accurately and consistently signaled their intentions with rates now for some time, and they really haven’t deviated at all from their course, yet. What is interesting in this space is watching the central banks of other western democracies (banana republics) – they ratcheted up rates earlier than the Fed and their economies, especially housing, are starting to show signs of stalling – I’m sure this trend will continue and catch up with the US shortly as rates continue to rise.

9. Real estate drops in value and slows by end of 2Q. Real estate is all about location, so I guess I’m part right, depending on where you are talking about. As mentioned above, in the UK housing has started to stall and quite noticeably, they are the proverbial canary in the coal mine when it comes to asset deflation as a result of increasing rates. I was wrong about US real estate, my timing was wrong

10. Whiffs of deflation by Q3. I’ve covered this above more or less, it’s a mixed bag, I’ve vacillated between believing in a hyperinflationary depression to a deflationary depression that then devolves in to a hyperinflationary depression - - I guess either way I believe in hyperinflation being the outcome, but deflation does seem pretty intuitive given the monetary roulette the Fed has played for so long. Sooner or later consumers will not longer be able to consume more debt, the merry-go-round will begin to slow and deflation will start to spiral out of control. Then I see the Fed opening the flood gates in a last ditch effort to stall complete collapse – which will precede the rolling out of a new global currency that will be introduced by the BIS, IMF, World Bank and the Fed - - with the very vocal and public support of JP Morgan Chase and Citigroup and the central banks of the world’s leading banana republics (like Britain, the EU, Australia, Canada, Russia, Japan, China & assorted other aligned countries).

11. The American population remains blissfully ignorant amidst the biggest meltdown of a global financial system in the history of this Universe. Bingo, the people are on the whole absolutely clueless – or worse, willingly & enthusiastically deluded. I must say though I do detect that people in general know that something is absolutely fundamentally wrong, but they are too distracted to follow through on their suspicions, and lets face it….life is just too good to mess around learning the truth or reality!

12. Upon the conclusion of the election we start to accelerate towards the inevitable collapse of our monetary system and all of the necessary, but very painful, adjustments in our lives that comes with it. And that is what my 2005 predictions will all be about.

I meant to get ’05 predictions out by Chinese New Year, but just couldn’t pull it off. So stay tuned for the next installment. If you have comments on any of this content go ahead and add it below. I will be summarizing the 2005 Prediction Blogs shortly in another article.

Cheers Rich

Posted by richardlancaster at February 15, 2005 10:50 PM

I am waiting eagerly to see your 2005 predictions and any further discussions you begin.
I find this one of the most interesting sites that
I visit.
I hope Decoymaker and Captain Freedom come back to
debate some more.
Thank you for an interesting and INFORMATIVE site.
Chemical Gal

Posted by: ChemicalGal at February 17, 2005 04:14 PM

i agree, as i was born to be a wittness to this whole event ,and have tried to warn peole from 98
i am amazed from the sheep syndrome or matrix based zombies that are phycoligcaly death ,so i have predicted the same ,exactly the same {uncanny}as u,and i thought i was mad,
ok own home and car 0 debt , gold to trade for food
genrator for light and large petrol reserve and food {tins} bit over the top ,not when the time come to eat,break in case of emergencey ps.. us hit towers to start beginning of new world order ,,syria next

Posted by: samuri david at February 20, 2005 07:26 AM

USA to raise rates to a point that enslaves and kills
home owners ,and then 1 year later buisness busts late 2006early 7 ,australias $ jumps on a falling us dollar and we raise our rates to drop our unatractive over priced $ we loose homes and buisness ,, deppresion or ressesion .well do the math, inbetween this us devises another brainwash scheme as people are waking up , they nuke a part of either aus or themselves in a safe and minimal casualty situation,, that re confirms there plight and this time ww3 really beggins as nwo is in play, and then we all get curcumsized,

Posted by: samuri david at February 20, 2005 07:38 AM

While I'd rather not follow the spam posts here in the comment section, I did want to add something to item #5. Why does everyone seem to forget the cost of food? Here in Middle America, the rise in food prices is becoming significant and noticeable even to a casual shopper like me.

Aside from that, the big event to tip the scales in favor of economic collapse has not come; even the tsunami didn't quite fit the bill. My pet notion is that the increase in earthquakes since then will continue, and a big one may do what nations cannot: bring things back to reality.

Posted by: cg at February 22, 2005 01:03 AM

I continue to clean out the filth that some disreputable people spam on to such forums. It sickens me that there is seemingly no end to the debauchery on the net, and no way to police it.


Posted by: Rich at February 28, 2005 06:17 PM

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