Three Months Until Impact

A Timetable of Recession... [The Daily Reckoning] September 07, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Three Months Until Impact - Another drop in the latest GDP forecast… - When you can expect the impact of this year’s rate hikes… - Then Jeffrey Tucker gives you a blunt assessment of the U.S. economy… [QUICK! Count how many pennies you see.]( [Click here for more...]( Here’s why: If you missed out on making a fortune with cryptocurrencies, the recent crash has finally given you your chance to scoop up cryptos for pennies on the dollar. Literally. Because there’s a cryptocurrency quietly preparing to conquer the marketplace… and it’s trading for 96% below its all-time high. In fact… … it’s trading for the number of pennies you counted above. Get your hands on this bargain crypto while you can. Find out how to make up to an 8,788% return with crypto by 2025… [Click Here To Learn More]( Annapolis, Maryland September 7, 2022 [Brian Maher] BRIAN MAHER Dear Reader , Here in the mid-Atlantic summer’s fever is broken — at least for the moment. The temperature is fair, the sky is slate and a refrigerating breeze rustles the leaves. Thus our thoughts turn to pending autumn. What does this autumn hold in store, economically? We do not know of course. Yet we observe some straws swaying in the breeze… The Federal Reserve’s Atlanta outpost presently forecasts 1.4% third-quarter economic growth. Merely one week ago it had forecast 2.6% economic growth. We anticipate further revisions — negative revisions — before quarter’s end next month. Consider: Inflation has consumers by the snout. Real wages are in steady decline as inflation outpaces nominal wages — and by lots. Consumers are tucking into savings to merely stand still. Savings levels, incidentally, hover at five-year depths… as credit card usage runs to 20-year heights. That is, consumers are plunging ever deeper into debt. Meantime, the Federal Reserve has taken to the warpath. It has been elevating interest rates since March — frantically — and working down its balance sheet since June. Markets presently give 90% odds of a 75-basis-point rate increase this month, incidentally. As the thunder lags the lightning and the cannon’s boom lags the cannonball… the economic slump lags the rate hike. By how much time? By nine months — on average. Thus you can expect the March increase to announce its presence in December. The subsequent increases will roll in with the same nine-month delay. Mr. Lance Roberts of Real Investment Advice: As the Fed continues to hike rates, each hike takes roughly nine months to work its way through the economic system. Therefore, the rate hikes from March 2022 won’t show up in the economic data until December. Likewise, the Fed’s subsequent and more aggressive rate hikes won’t be fully reflected in the economic data until early to mid-2023. As the Fed hikes at subsequent meetings, those hikes will continue to compound their effect on a highly leveraged consumer with little savings through higher living costs… the consumer is exceptionally unprepared for such an outcome. We must agree. The consumer is exceptionally unprepared for such an outcome. “Permabear” Peter Schiff likewise agrees. Here he nods his head, violently, in agreement: Because of the Fed, everybody is leveraged to the hilt. The economy has never been this leveraged and never been this dependent on the cheap money that the Federal Reserve is now taking away. So we’re going to go through the mother of all economic withdrawals as the Fed is weaning us from this monetary heroin… Because [the Fed] left monetary policy so loose for so long and allowed the economy to get so leveraged, allowed inflation to get this out of control… fighting inflation is [not just] going to cause a recession. It’s going to cause a financial crisis. There is no way around that. Just so. Yet we are not half so convinced Mr. Schiff is correct. It is true that the Federal Reserve is tightening at a gallop. It is also true that the Federal Reserve is a gang of Wrong Way Charlies that cannot tell A from B at the price of their souls. Yet we believe the Federal Reserve lacks the resolve to see things through. It will throw up the sponge long before it has inflation licked. Wall Street will demand it. And Wall Street will get it. Here is our forecast: Sometime next year the Federal Reserve will turn 180 degrees around with rate cuts and — in all likelihood — renewed quantitative easing. The Federal Reserve has a tiger by the tail — a tiger of its own creation. And it cannot afford to let go. That time has long passed. The evil cycle will resume… easing… tightening… easing… tightening… world without end… Madness without end. Below, Jeffrey Tucker addresses Jamie Dimon’s recent claim that the U.S. economy is headed into “a hurricane.” Is it? Read on. Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: In Jim Rickards’ 2011 book Currency Wars… He warned that the U.S. was engaged in a special type of economic war. And that these wars: Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. The historical precedents are sobering… Some version of the worst-case scenario is almost inevitable. Now with Putin invading Ukraine… Rising tensions with China… Inflation, recession, supply chain issues and the potential for greater violence breaking out all over the world… It seems as if Jim’s worst fears are coming true. [That’s why he recorded this short video message.]( Jim wants to advise you on exactly what you need to do to prepare for what he fears is coming next. Because if history is any indicator, there could be real trouble ahead. [Click here to view Jim’s urgent video message.]( Urgent: Currency Wars Alert [Click here for more...]( “Worst case scenario is almost inevitable” -Former Pentagon Insider Jim Rickards In my 2011 book, I warned that the U.S. was engaged in a currency war. And that these wars: “Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war.” Now with Putin invading Ukraine…Rising tensions with China… Inflation, recession, and supply chain issues all hitting the U.S. economy at the same time. It seems as if some of my worst fears have finally come true. [That’s why I’ve recorded an urgent video message.]( To update you on exactly what you need to be doing to protect yourself. Because if history is any indicator, this will not end well. [Click Here To View My Urgent Message]( The Daily Reckoning Presents: “This much is for certain: The smart money is preparing for a storm”… ****************************** Headed Into a Hurricane By Jeffrey Tucker [Jeffrey Tucker] JEFFREY TUCKER The recent jobs report was the usual unimpressive combination of low unemployment and low labor participation. But the spin doctors got to work right away to tell the world that things are finally getting back to normal. Oh sure. That’s an improvement over last month and the depth of lockdowns. What they don’t tell you is that you have to go back to September 1977 to find the most recent rate that low. Isn’t it amazing how journalists are so quick to adapt to the new weirdness and stop calling it out? Wall Street wasn’t buying it, and the markets very quickly hit the skids. It’s not even clear why. Some days it just seems like financial markets are looking for any excuse to issue sell orders. Or maybe it had something to do with Jamie Dimon’s recent incredible prediction, that the U.S. economy is headed into a hurricane. Yikes. Many things are fundamentally broken and are not being fixed. I’m increasingly convinced that this labor shortage is really about more than early retirement, moms leaving the workforce and temporary dislocations. It’s more serious than that. It is a reflection of population demoralization, the draining of ambition, the diminished confidence in the future and the growing unwillingness on the part of all classes of people to make the necessary sacrifices to build a good life. Back to basics for a moment. The natural state of humanity is one of grueling poverty and short life. Digging out of that more requires intelligence, sacrifice, long-term thinking and a vision of progress. Once that catches hold, growth and wealth make an appearance as if by magic, followed by capital investment, expanded division of labor and more complex production structures. All that requires the cultivation of the bourgeois ethos, backed by sound money and a reliable rule of law. You can’t have a gang of thugs wandering around pillaging people’s wealth and expect people to keep investing and working to build a prosperous society. When all of that is in place, beautiful things can happen. If it doesn’t come together, societies never really get off the ground. There are thousands of examples around the world of societies large and small that never got it together to generate that thing we call progress. We’ve taken it all for granted for a very long time, operating under the assumption that nothing could break the glorious things we’ve built together. Then arrogance took hold. Elites started hammering at the system in multiple ways at once. They dismantled trade relationships. They mucked with the money. They spent like crazy, running up debts that are impossible to pay. Then finally they locked down economic life in the name of virus control. We are living through the effects of that, the dominant one of which is the decline of the culture of the bourgeoisie. Instead of work, we get sloth. Instead of saving we get into debt. Instead of investment and the future, we are just getting by. The energy and confidence in the future we’ve long taken for granted are all being fundamentally challenged. My own view: This accounts for the labor problem, more than any other factor. [Stunning New Prediction for 2022]( You’re going to want to see this — America’s #1 futurist just came out with a stunning new prediction for what could happen in 2022. And surprise, it’s got nothing to do with Trump. Or trade wars. Or the ongoing gyrations on Wall Street. In fact, this could be your one chance to ignore all that upsetting “fake news”… and get back to the business of getting exceedingly rich instead… [Click Here Now]( There is some kind of symbolic poetry to the Biden administration’s massive attack on fossil fuels and coal because it shows that energy itself is being undermined in fundamental ways. I was digging through price data this morning and found an incredible thing. The category called transportation is now moving up at 22% year over year. That’s just an incredible figure in a country that has prided itself on stable energy prices for decades. Who is the culprit? It’s almost everything really. It includes gas, plane tickets, shipping costs, natural resource costs, new and used car prices and more. But the margin of increase right now is being driven by a surprising source: coal. Stockpiles are getting low and inflation is eating it all away. Here is the coal price chart. [IMG 1] That’s pretty ugly, but look at the percentage increase year over year. [IMG 2] That hockey stick you see at the end there is a 43.5% increase. In coal! It just so happens that the Biden administration is a hater of coal. I’m increasingly of the view that all of this is deliberate. These crazy people actually believe that they can harm traditional energy sources enough to the point that they can somehow goad civilization into adopting their preferred “renewable” sources of energy like wind and solar but the whole thing is ridiculous. They are going to drive us all back to the Stone Age if they keep this up. Let’s revisit Jamie Dimon’s forecast. He says that the combination of inflation, war with Russia and Fed tightening is going to create a hurricane. We’ve talked that much about the war. The critical issue here is not the war but the response to the war (just as with the virus). The financial and trade sanctions against Putin have proven that he can weather just fine. The main parties hurt are in Europe and North America. We are paying a heavy price, not just now, but for years to come. This much is for certain: The smart money is preparing for a storm. That involves a completely different strategy from the index-fund magic of the last 30 years. The performers are going to be the particular companies that specialize in particular sectors under deep distress now, including and especially commodities, housing and infrastructure technology necessary to keep the appearance of civilization alive. Meanwhile, the Fed has no idea what it’s doing. The interest rate increases are cooling off money expansion but that might be entirely because the economy is slowing through lending restrictions, particularly as they affect housing. Beyond that, they have no real means to sop up the $6 trillion-plus in new liquidity that they dumped on the markets between March 2020 and March 2022. They know that this new money has to make its way through the system through larger prices. They further know that prices in general are NOT going to go down. At best, they will in general settle down to a more reasonable rate of increase. All told, 15% of the purchasing power of the dollar has been stolen in a mere 2½ years. That’s something we’ve not seen in 40 years but probably not really since the latter days of the American Revolution. This much everyone knows for certain. The Biden administration will do nothing helpful to stave off the coming disaster. Their only plan, so far as I can see, is to take your guns and inject your kids with a serum. Is it any wonder that the job approval of that Biden has reached new lows? It’s not even clear that he cares that much. Regards, Jeffrey Tucker for The Daily Reckoning Ed. note: In Jim Rickards’ 2011 book Currency Wars… He warned that the U.S. was engaged in a special type of economic war. And that these wars: Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. The historical precedents are sobering… Some version of the worst-case scenario is almost inevitable. Now with Putin invading Ukraine… Rising tensions with China… Inflation, recession, supply chain issues and the potential for greater violence breaking out all over the world… It seems as if Jim’s worst fears are coming true. [That’s why he recorded this short video message.]( Jim wants to advise you on exactly what you need to do to prepare for what he fears is coming next. Because if history is any indicator, there could be real trouble ahead. [Click here to view Jim’s urgent video message.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Jeffrey Tucker] [Jeffrey Tucker]( is an independent editorial consultant who served as Editorial Director for the American Institute for Economic Research. He is the author of many thousands of articles in the scholarly and popular press and eight books in 5 languages, most recently Liberty or Lockdown. He speaks widely on topics of economics, technology, social philosophy, and culture. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please read our [Privacy Statement](. For any further comments or concerns please [contact us.]( If you are having trouble receiving your The Daily Reckoning subscription, you can ensure its arrival in your mailbox [by whitelisting The Daily Reckoning.]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.