Second Great Depression: <u><b>Synthesizing Reader Input</b></u>

Synthesizing Reader Input

February 25, 2005

READER SURVEY RESPONSES: EXTENDED PREDICTIONS ’05 SUMMARIZED

I’ve been slow getting to this summary, so apologies for dragging this in to the second month of the year! However, I think it is worth the wait, the results below are informative. I’ve read through all of the posts and then categorized them in to primarily “yes” or “no” answers where possible. This was inexact, so don’t hang me if you feel my interpretation of some answers was incorrect, I did the best I could to make sense of answers and to drop them in to one category or another. When an answer was too difficult to interpret I just didn’t count it. Next up I’ll be working on my predictions for the next 12 months, but for now enjoy this summary of reader input, I’ve repeated the survey question, followed by the results and then some of my own comments:

1. How would you invest $100,000 in '05 to achieve the best gains?
Cash/CD’s 6
Precious Metals 10
Energy 3
Tech Stocks 4
Foreign Exchange 6
Land 4
Food 2
Stock Markets 7
Bonds 2

Comment: Seems that gold came out the winner in this race, which is not too surprising as we are a bunch of gold bugs on the www.Depression2.com site! No one seemed to think that ammunition was worth investing in, which I guess is a good thing – but some folks wanted food and land. In general people are harboring their wealth in metals, cash, foreign currencies and the stock market. I guess a good summation here would be to lean heavily on metals with some diversification out of dollar denominated financial assets.

2. Will planet earth be rocked by more record breaking "earth changes"
Yes 10
No 6

Comment: The majority here felt that we’d continue to experience the trend of the past couple of years where we’ve seen increasing global warming (whether as a result of the sun or mankind) and an up-tick in seismic activity, with more earthquakes and eruptions and resultant tsunami’s – perhaps with some more hurricanes, tornadoes and storms. A lot of folks felt these events couldn’t be predicted, some felt that what we’ve been experiencing lately was normal and wrote off the notion that this was much of an issue. Personally I believe this area is as big as war, financial crisis and other man-made disasters – it’s all one big boiling soup of potential upheaval!

3. Will humanity face an epidemic of some kind during the year that will cause massive loss of life?
Yes 9
No 6
Aids Already 2

Comment: I don’t know about where you live/work but there have been 2 large flu outbreaks at my workplace in the past 3 months and they were pretty nasty, of course this happens annually but it sure as heck seems like the incidence of outbreak has increased over the years. Globally there definitely appears to be an increase in animal epidemics and airborne viruses, etc. As a group we appear to be agreeing with that interpretation.

4. Will the US be struck by another terrorist attack on a scale greater than 9/11?
Yes 8
No 6

Comment: Some folks abstained from this as it was too unthinkable for them to think about. I must say that growing up in Britain during the IRA terrorist attacks we didn’t think about it because we knew it would happen again. To be honest we didn’t even worry about it much either, different times I guess. The attacks in Britain weren’t on the scale of 9/11 and weren’t on the same frequency of what the Israeli’s experience, but they were a constant threat and people just got on with their lives. It is now mid-February, so almost one sixth of the year has already passed us by. Earlier this week there were reports that there is a rising terror threat in the US, I’m expecting a Code Orange any day now, it’s been a while and the powers that be need to ensure the system is still working and still generating unnecessary fear in the masses.

5. Where will interest rates end the year, will the Fed raise them continually throughout '05?
<3% 3
>4% 13

Comment: This was easy; nearly all of us felt that rates would rise over the 4% mark during the year. This week Sir Greenspan has made noises that another increase is on the way – so we’re easily on target to exceed the 4% level by late summer. I guess the big question is whether something unexpected happens, like the Koreans pulling out of the US $$, or the revaluation of the Chinese Yuan, etc. that could really impact the current trend. All things being equal rates should rise for some considerable time.

6. If democratic elections go ahead in Iraq this year will a Shi-ite regime come to power?
Yes 9
No 5
US Puppet 5

Comment: Looks like a Shi-ite coalition with the Kurds and “moderate” Sunni’s is on its way in to power in Iraq. I find it massively ironic that we supported puppet Saddam against the radical Iranian Shi-ite’s for a decade because he was a secular Sunni. Now we’re supporting the supposedly secular Shi-ite’s against the now “fundamentalist” Sunni’s who are now known as insurgents! I know, it’s confusing – and we all know this president is easily confused. Just how a “democracy” is supposed to work in any current Middle Eastern country is beyond me, so the future of this issue will be interesting to watch. Kuwait, Sharjah, Dubai, Abu Dhabi (UAE) appear to be stable and somewhat democratically run principalities – freedom abounds for everyone, almost, in those small, massively oil rich countries. But therein lies the rub. Almost any nation on earth can be “moved” in to the western sphere of influence, and the western materialist lifestyle, if there is endless wealth and a tiny population! Unfortunately the large Muslim states have large populations and local wealth is for the ruling class only, so religion is the opium of the masses, which pits the more radical, Muslim poor against us western secularists. So, it’s really about economics at the end of the day, but that is not what the corporate-owned media want American’s to understand. We need these people as our enemies, so we can justify our actions – for economic reasons!

7. Does Hugo Chavez of Venezuela survive 2005?
Yes 14
No 5

Comment: I hope the majority of readers are right on this, the world needs a few outspoken voices of dissent. I don’t pretend to know Chavez’ politics – I hear he is a Commie! Frankly his politics don’t matter to me, he is the leader of a small inconsequential South American nation that is not a threat to anyone. Of course, they have oil – so that makes Venezuela “strategic” – which means we have the right to mess with him and the people there. Bottom line for me is that the Venezuelan people deserve to choose their own direction, even if it’s not ours! Now if they become a threat to our physical security then that may change my perspective, after all we have the right to defend ourselves, but last time I checked the Venezuelan navy, army and airforce could probably be defeated by one US Navy aircraft carrier! Lets leave Venezuela to the Venezuelan’s and see how they do!

8. Will Osama be caught some time during the year?
Yes 2
No 15

Comment: Intriguing result here. Seems we’re all a bunch of cynics who believe that OSB is really a construct of the Western money power, or somehow a puppet of the current US regime!? If that really is the case then do we collectively believe that 9/11 was also a fabrication? These are taboo questions in almost any other environment. I know what I believe; I’ve believed it since I saw the first plane hit the first tower. There is a criminal element within the US government that is complicit in these events – at the very least. When analyzing the history of the world it is best to do so from the perspective of “who benefits.” Major events in history are rarely purely accidental, life just isn’t like that. Cause and effect is at work in the world. To me 9/11 looks like another Gulf of Tonkin or Pearl Harbor incident – there is a body of evidence now that suggests that these events were instigated by the West to enable the prevailing geopolitical agenda to be fulfilled. This is very Hegelian in construct: Thesis, Synthesis, Antithesis – if you are unfamiliar with this Machiavellian approach to population manipulation then go Google “Hegelian Dialectic” and read up on just how events are engineered to produce specific outcomes in the minds eye of society in order to manage the consent of the masses (while you are at it look up “managed consent” and learn how the media is being used to shape how society reacts to anything of importance).

9. Does the US go to war against another adversary during '05, Iran, N. Korea, etc?
Yes 6
No 12

Comment: I think the majority here have it wrong (but I hope not), in the past few weeks it has looked more and more likely that the US is gearing up for phase II of the neo-conservative, global domination plan – also known as the New World Order. Most likely the next action with be some kind of an attack, or “accident,” on Iranian nuclear installations. Whether the Mullah’s (or Moolar’s as the president calls them) should ever be allowed to have nukes is probably a real good question for public debate. I would conjecture that the western public would vote overwhelmingly to block Iran from gaining nuclear weapons – the idea of some half-crazed religious zealot having his finger on the button is abhorrent to most of us, but of course Iran isn’t the only nation with religious zealots in control now is it!?

10. Does the Chinese bubble burst in '05?
Yes 8
No 10

Comment: Well the vote was pretty evenly split on this. Interestingly no one questioned whether the Chinese economy was a bubble, just commented on whether it would burst in ’05 or later. If it bursts soon then I hope you’ve all stocked up on those cheap Chinese imports, because the materialist, mass-consumption party will definitely be over if their economy catches pneumonia. There is a symbiotic relationship between China and the US, trash and trinkets for fiat dollars – it works and it’s energizing the world’s largest population and keeping us consuming westerns doped up on cheap stuff. But just how long the US can afford to consume Chinese exports, and just how many US dollars the Chinese are able to store for a rainy day, and whether the Chinese economy can be self-sustaining without the US market, are the big questions. If the music stops in ’05, who gets the last chair?

In conclusion, I hope readers have had a great time with this little experiment in predicting the outcome of 2005. I have a feeling the vast majority of answers are correct and that collectively you are seeing the future quite clearly. Stay tuned and we’ll track just how close these predictions are over the next 12 months.

Next up, I’ll be publishing how I see the rest of 2005.

Cheers Rich

Posted by richardlancaster at February 25, 2005 12:24 AM

Comments

I've been creating an account on marketocracy.com and since then I've found many other sites where it is possible to simulate an investment of 1 million dollars.
I still think it be fun to collectively play with a rule like place your bets in the beginning of the year and do not move till the end of it, just to check the bets made.

On an aside, I really recommand www.roubiniglobal.com lots of macro.
I also appreciated the link you recently posted on freemoney. http://www.prosperityuk.com/prosperity/prosperity.html
Gold as a money is a joke. I can't believe some of you believe in it. The amount of cash as to move in line with GDP. What the people above point out is really huge, paper money used to be 40% of the money circulating, it now is down to 5%, the rest is money based on credit, which means money disappearing if there is a panic, a credit shrunk. Deflation.

As I see it there are 3 major risks.
2 will happen any how :
When will the overindebted consumer fail to increase spending ?
Since wages lag way behind productivity there s no doubt it will happen sooner or later. Spending can only increase as indebtness increases and debt can not grow forever especially if rates are to rise.

Will the Asian central banks drop the dollar ?

Then comes a terrorist attack or a war. But that's out of control and can only have a trigger effect. The main problem is debt. Debt within the countries (especially debt of the US consumer). And debt between the countries (especially US debt to the rest of the world).

Posted by: DF at February 25, 2005 10:38 AM

HI Rich

I am not an economics expert so could someone explain in laymans terms
When the inevitable economic crash comes, and banks close and 401K are valueless, how does offshore accounts help?
And exactly what is meant by offshore accouts? does this mean buying stock in mostly european stocks, or sending money to ie: Cayman Islands?

Also something that would be of interest to me is
if you store a lot of Federal Reserve Debt notes what will happen to them in a crash? Are they still good.
You guys probably have this as second nature to you, but i am totally stock illiterate. I am a
down to earth grandmother just trying to set up her children and grandchildren to survive what i am sure is comingand make by community a better place for everyone and would appreciate any comments/tips you could share.
Thank you again for the place to listen and hopefully learn
ChemicalGal

Posted by: ChemicalGal at February 25, 2005 06:17 PM

I agree with DF.

Today´s huge inflation should remain constrained to asset prices because growth and continuous liquidity expansion is the only way to ensure not collapsing the present credit bubble.

Stagflation would bring a debt bubble deflation. Debt could not be serviced and liquidity would shrink. So crude price rising is not only a menace for price inflation, otherwise it would be welcomed by the Fed, first is a menace for growth.

Today´s economy when it grows goes on fueled by liquidity steroids, if growth is not strong enough steroids are not working and debt bubble collapses.

Posted by: Nineu at February 27, 2005 10:39 PM

DF -- under a commodity money system, real bills of exchange bought and sold by discounters handle the ebb and flow of necessary credit -- read Antal Fekete's recent piece about a conversion to a gold standard, and the thoughtful exposition about responses to it. Not that this could happen while the central banks are in control...

ChemicalGal -- Federal Reserve Notes are like any other fiat currency -- only worth what people exchange with you in return for them.

Basic preparation for a hurricane, blizzard, or other long-term event where you might be without power, cash, or grocery stores is prudent in any economy. In this one it is especially prudent.

Holding physical commodities other than subsistence necessities is one way of storing value that is largely independent of the financial system. Gold is good, but you can't eat it, which is not to say it will not hold value -- it just might be less liquid than say, cases of Jack Daniels' (pun intended), ammunition (NATO .762, .22 long, etc.), cigarettes, or food.

That having been said, gold and silver have stood the historical test of value maintenance, i.e. being a hedge against inflation. Silver is quite interesting, given that there is actually much less above-ground silver than there is gold, even though silver production is bigger than gold production. Silver is a *crucial* industrial commodity which has, in many cases, no substitutes, and its scarcity will only increase in the future.

I personally have been taking every spare bit of cash I get and buying, not gold, but silver in the form of circulated pre-1965 90% silver coinage. It's divisible and well-recognized.

Offshore accounts -- don't do this unless you want about a dozen federal agencies breathing down your neck.

Posted by: Some dude at February 28, 2005 07:03 AM

Good stuff "Some Dude" great advice and commentary, thanks.

I think Silver and Gold (but especially silver) are about to break-out and go to new multi-year highs. Owning physical metal in my humble opinion is a store of value, insurance against future events and fun.

Personally, I don't think I could ever have too much gold or silver.

Cheers Rich

Posted by: Rich at February 28, 2005 04:48 PM

Thanks Some Dude
You know I hadn't thought of Jack Daniels and that is really a good idea, you were probably making a joke, but it would be a good trading commodity as well as cigarettes. Guess brands won't matter a lot.
I have a little gold more silver (easier to trade)and am storing food ....could probably support the
neighborhood for a month now if necessary.
but will think a little more broadly for trade items now. (Making sure it's stuff I'll use & rotating stock....just in case we're lucky and it doesn't happen)
Thank you for the imput. every little bit helps.
Chemical Gal

Posted by: ChemicalGal at February 28, 2005 09:41 PM

To DF do you really think Electronic $ dollar entities in a credit card or debit card will be accepted in a crash give me a break. During hurricanes, and power outages its cash only. and 1 question if you and I want to buy food from a storekeeper afer the Great Depression occurs which do you think he will prefer Real Gold in his hand or a plastic cards promise to pay later? You have not taken into account Govt's declaring banks Nat. holiday so your card wont work and banks will close, also with the worlds oil running out there could be power outages so your credit card plastic wont work. anyway its based in worthless Paper dollars so your card will also be worthless like 401-K's , I.R.A.'s, any insurance will be worthless ie: Life, Home , Health , auto ,any kind based in Fed. reserve play money.
If im the storeowner id want something with intrinsic value separated from Dollars in its own separate world-plain. as oil goes up at $54.00 a barrel so will gold, & METALS because its the only "REAL MONEY". Look at history it allways repeats itself. When oil went up in 1980 gold-silver went up bigtime. except this time theres none left! its Finite! Paper is renewable resource from trees! Gold, silver , copper is Finite! I rest my case!
I recommend buying something to defend yourself . Tazers can incapacitate knock people out, pepper & mace foam can choke up a person stopping them from attacking you momentarily long enough for you to get away,etc. But nothing scares a assailant, rioter,looter than a loud bang from a gun. You dont have to shoot them once they hear that theyre outta here. and if they persist then you realize its either you and your family get hurt or they get hurt.Id rather it be them. self defense, survival of the fittest.Buy a gun that suits you.If you cant see to aim too good then A pump shotgun is good relatively $100.00 inexpensive and you should buy a gun that ammo is easy to find. dont get some gun that has unique rare ammo. A 357 magnum can also use 38 special ammo and a 44 magnum can use 44 special ammo. stainless is better for women you dont have to maintain it as much, the gunpowder+p pressure is not as important as a blue steel barrel and remember it does rain sometimes! A hammerless revolver is good for women the hammer does not get caught in purse, they have lady guns made of lighter metal alloys{lady smith} or you can standardize, some rifles shoot 9MM and then get a pistol that also shoots 9MM so you can interchange ammo. 45ACP is slow but its a lot of lead to knock a person down. american guns will be easier to get parts for. dont forget extra clips, magazines for your gun and a cleaning kit. Revolvers are good in that theyre instantly ready to shoot! You cant ask a looter, carjacker to wait until you chamber a bullet into your automatic pistol and wait please let me check, take the safety off. yhea right. dont forget revolvers have speedloader cylinders that you can buy to drop in 6 bullets into the cylinder in the time it takes to manually put in 2 bullets. suprize-em some revolvers carry more than 6 bullets!! 22's would be good for killing rabbits as well as self defense. I would recommend 1 pistol for your car 1 for inside your home, 1 12 gauge shotgun pump or auto, 1 rifle auto or bolt for long distance,and one large capacity machine pistol. Full auto is illegal unless you have FFL but full auto is unnessesary unless you like shooting at raccoons in trees and wasting ammo.dont forget at least 500+ rounds for pistols and 1000+ for rifles. pawn shops are great for bargins. Put your shotgun shells in sealed army surplus ammo boxes to preserve gunpowder and primers and stop rust!Keep your ammo away from fire,heat. and they have signature fingerprint safes for under your bed so kids dont get your gun and big safes for big guns. also occasionally go to shooting ranges and practice.Learn how to change clips.Remember guns are "very loud" get used to it, you wont be able to wear hearing protection when looting starts. It wont be good when the looting starts to learn how to shoot! damn wheres the safety???!I like 50 cal, mauser 7MM, 30-06 cal. or 308 that will keep-em down permanately My preferred Rifle is M1-A Big M-14 early vietnam but is heavy for a woman so a M-16, M1 carbine, Ruger Mini-14 is lighter and the bullets are smaller so you can carry more ammo. Carrying Guns and ammo can get heavy! You can buy bullet proof vests but thats if you have lots of money. Hollow point ammo can jam easier than non hollow point but it is is going to do more damage to flesh than full metal jacket ammo except pointed or steel ammo will penetrate the fibers, cracks in vests and even gangs have vests today. aim for the head if you can and if someone is trying to hurt your family shoot to kill dont try to shoot in the arm like in the movies. dont handle the lead uncoated bullets remember lead poisoning. so remember this is a serious reality , not a joke and death is final and permanent. its you or them. Police wont work for free after govt goes bankrupt would you? and during the LA Riots they sometimes didnt even respond to calls. You will have to fend for yourself. I used to live in the 2nd most dangerous city in USA and its true people will kill someone for under $100.00 and when theyre hungry theyre capeable of anything. Im a realist and the average american is asleep to whats coming to america and the world. The euro is 90% fiat also and anyway its redeemable in nothing. Having money offshore is not a good idea. having money in a bank safety deposit is also not smart if banks close youre out of luck. People still recognize FRN's but they have "no intrinsic value" & wont buy much soon but they will still be better in your hand than an electronic entity written in your checkbook to a closed bank. Gold , silver, even copper are precious finite metals with intrinsic value. You can Get dollar coins, Half dollar coins, or quarters and store them in rolls and even the copper-nickel in them { sandwich variety} is semi-precious metals. rarer than paper. I knew in the 1990's the next Great Depression was coming soon. our govt is bankrupt because of both major parties. anyone who believes our current politicians or either parties will fix things is dreaming. You will never see your Social security, your 401-K's, IRA's, and stocks will be worthless, redeemable in a bankrupt currency that will have virtually no value, "pennies" on the dollar. Your electronic money in your bank acct's checking savings will "NOT" be saved by the
FDIC what a joke. Our govt will bring back $500.00 and $1000.00 big bills to pay its deposit insurance. some dude is right! stock up on commodities barter items, because a black market will open up. Store & date extra food 1 year if possible more is better. Buy extra medicine. Oil is used to make lots of everyday things we use, medicine and fertilizers for crops so they will become expensive! even after the roman empire fell and other empires their coins were still used because they were made of precious metals not paper.
Remember in other depressions Credit virtually disappears cash sale only {coins or paper} .like the waltons, Grapes of wrath, or power outages cash only no plastic. electronic entity plastic cash is a joke ha ha ha sorry joke. I will end soon.
I cant believe some of you still believe in it. Checks will not be accepted either unless the storeowner personally knows you and your bank is still open??. remember lots of Banks in 1930's depression closed permanately!! just try to get your electronic entity money HA good luck! would you want to work at a bank when the depression starts and crouds of people start a "RUN ON THE BANKS"! AND WOULD YOU WORK FOR THE GOVERNMENT FOR FREE? Remember they will be bankrupt! what really suprizes me is when I see,hear a person on T/V say I cant believe that happened in my neighborhood. Give me a break! anything can happen anywhere. Think about it. well it looks like the collapse is starting. South Korea is wanting to Dump their Dollars who is next? Bush asked for another $82 Billion. Greenspan warned congress theyre spending is out of control and said what happened {return to} "pay as you go"? Oil is back up to its record high and this year demand will exceed supply. Oil is Finite and our country must have cheap Oil or it will suffer and the age of cheap energy is over. The airlines will be hurting in 2005. Many airlines already raised their ticket prices $50.00 each. If people stop traveling or travel less business will suffer, and they will. Gold and silver will go up like 1980's oil crisis dont be left behind. except 1980's crisis was partly political this time the worlds oil supply is running out vs demand. Its the dying truth and sorry but the truth hurts sometimes dont be in denial. New well discoveries since 1980 are small. Sweet crude from the top of wells is pumped out long ago and now the bottom of the wells heavy oil has sulphur, impurities, tar sediment in the oil will need even more refining and cost more to produce gasoline. We will pay $3.00 to $4.00 a gallon this year ouch!More each year thereafter. Dont expect your govt to tell you the truth, they think it will cause a panic. Wheres the ready alternatives? how much will it cost countries govts and its citizens to convert their cars to alternatives like bio-diesel? Is there enough fertilizer and land to plant corn,etc? mankind will survive but many wont! electic power plants "WILL USE COAL" whether you like it or not. Turn your houses power off and see if you like it.You can at least learn something from it. Switch your inefficient wattage power wasting incandescent bulbs to screw-in Fluorescent now! Get a Wood stove or second heat source! Dont be afraid to warn others, friends, family at least once. do it respectfully , logically. Think! our govt cannot borrow and overspend "FOREVER". TELL THEM "THE EARTHS OIL WILL NOT LAST FOREVER" ITS FINITE! Ask them if theyve ever gone HUNGRY? and would they want to see their kids starve and they might whistle a different tune and "WAKE UP".People in 3rd world countries live on a little rice each week thats it. The North Vietnamese and the Japanese soldier Fought us well and sometimes beat us only on a handfull of rice!!!!!! Well DEPRESSION 2 is starting in 2005 time to prepare is getting shorter. GOOD LUCK and LET FREEDOM RING!

Posted by: CAPTAIN FREEDOM at March 4, 2005 07:28 AM

Capt!

Phew!

Hehe, Rich

Posted by: Rich at March 9, 2005 01:21 AM

Sure cash is better than electronic money on a bank account.
But remember the 30's did gold fare well ? Nope. Gold is good for inflation times. Those are not ahead. Not at all. Gold is just an alternate form of cash, heavier.

Posted by: DF at March 14, 2005 01:09 PM

Any reason why when you click on one of the links like "Hard Work Hard Times" or something totally unrelated to Lieberman here, several different links, they all bring up the same page, a story about Lieberman? Is the owner of this site in love with Lieberman, being paid by Lieberman, or what?

Messed up links do not enhance a site, and make people wonder about your loyalties if they keep linking back to the same corrupt pol.

Posted by: IhateLieberman at March 18, 2005 07:53 AM

Will the chinese bubble burst?

Not a chance, their bubble is real and has just began bubbling. I see china owning us all in a few years. China is going to be what US was. Soon.

Posted by: sticks at March 22, 2005 08:25 PM

That long awaited crash, sure takes a long time to come.

Posted by: DF at March 31, 2005 02:19 PM