The Crack-Up Boom

You are awake to this but how long will it take for average people to get hip to the dangerous realities in which we live now? [Gilder's Daily Prophecy] November 17, 2022 [WEBSITE]( | [UNSUBSCRIBE]( James Altucher has been helping people make a fortune with cryptocurrencies for several years [Click here to learn more]( The whole internet laughed at him when Bitcoin crashed from its high of over $19,000… … but the laughing stopped when Bitcoin rocketed even higher, just as James predicted… … hitting over $60,000 in value. Now it has crashed again… and James is back with a NEW prediction about how to make a fortune with cryptocurrencies. And it’s NOT with Bitcoin. [Click here to find out what James is predicting now… and how to make up to an 8,788% return with crypto by 2025.]( The Crack-Up Boom [Jeffery Tucker] JEFFREY TUCKER Dear Reader, How long will we live in this state of denial? I don’t mean you. I mean most people. Yes, people are grumbling about high gas and food prices, But we are not yet at the panic stage. For goodness sake, the President of the United States warned about coming food shortages. If he had any credibility at all, there would have been a run on grocery stores. This didn’t happen for three reasons. First, people do not take Biden seriously. He seems not to know this. He continues to pronounce at press conferences in ways that seem almost crazy, like he doesn’t know that he is no longer believable. Second, Americans have lived forty years with relatively predictable supplies and prices. At this point, it is baked into how we think and behave. Third, there seems to be a widespread assumption that these price increases are temporary and will settle down to the old normal at some point. The reality is that all the current price increases are permanent. The Fed has no ability to bring them back down, even if the Fed had the desire to do so. The measure of inflation, called personal consumption expenditures, already reached a 40-year high. We could soon inhabit an extremely unfamiliar economic environment. 2008 and 2021 There is no question that the pace of inflation has blindsided the Fed, which was predicting 2% last year. How could they not have seen this coming? M2 is up 42% in two years. Is there really no one involved at the highest levels who understands the relationship between money supply and prices? The state of denial dates back to 2008. Last time there was a huge crisis and the Fed unleashed monetary expansion on a dramatic scale, they observed continued downward pressure on prices. That was contrary to many predictions, among which my own. What I had not anticipated was the advent of a new policy. The Fed actually paid banks — and did for many years — a higher return for holding assets in the system rather than releasing them. This kept hot money off the streets. Why did the Fed do this? Because the entire point of the policy was to re-capitalize the banking system. There was no great macroeconomic agenda. The Fed wanted to save the system from collapse. That it did. And it did it with newly created money that never landed in the hands of producers or consumers. The entire event ended up to a vast exercise in financial cosmetics. The markets loved it. The expansions of 2020 and 2021 were entirely different. Congress spent money it did not have. Trillions and trillions. That spending was debt financed. The Fed stepped up to buy the debt. The money was dropped directly into bank accounts of both business and consumers. It became very hot. The Fed felt it had no real choice. They pointed to Congress as the culprit. They merely responded to the wishes of government, and that’s true to a point. Regardless, it was not without consequences. Biden to Introduce Social Credit System like China? [Click here to learn more]( If you say the wrong thing on Chinese social media, you are labeled “untrustworthy”. They can then take away your ability to travel, restrict internet access, or deny your family the best jobs. They even confiscate your pets. Thanks to Biden’s new Executive Order 14067, a former CIA and Pentagon advisor predicts America will soon become a total surveillance state like China. [Click here to see our dark future…]( The Crack-Up Boom Ludwig von Mises in the 1930s fleshed out his theory of the business cycle in great detail. He demonstrated that the distortions we see with credit expansion go way beyond steady price increase. The new money distorts all the signals in the market leading to a mismatch between production and consumption. This creates the conditions that lead to the economic bust. At this point in the cycle, what happens next is determined by the central bank’s response. If the central bank is determined to avoid recession, it will lean in with more monetary expansion, leading to ever more rapid price increases. Hyperinflation hits. The recession and then depression happen anyway. This threatens the integrity of the money itself, as people more and more flee paper for goods. This process leads to the most feared event in 20th-century economic history: the crack-up boom. There is a shortage of money even as production collapses, leading to goods shortages. The very possibility of such a thing in the US was essentially unthinkable in 2019. But then the lockdowns happened, and the preposterous decision by Congress and the Fed to game the whole system with fake money and massive spending. There is always a lag to the effects of such things, typically running 18 months. We are past this point, so what we are seeing right now is entirely predictable. The Fed is talking like a hawk right now but if you listen to the language it is using, the rate increases are solely designed to tamper down inflation. There is still a strong intention in place to avoid recession. What will the Fed do if recession happens anyway? It’s anyone’s guess but it strikes me that no one at the Fed or anywhere in government today has the courage to let the economy fall into recession. Back in 2021, Ron Paul issued a strong warning that his trajectory could in fact lead to a crack-up boom. He was pretty much alone in daring to utter the words. So far his warning and proven prophetic. Even as he spoke, the Fed was still talking like this inflation would be transitory. It is far from it. How Bad Can It Get? The future of prices is heavily influenced by consumer and producer behavior. If expectations are high, the fear becomes self fulfilling. Right now, there is still vast room for inflation. The Fed is very much behind the curve at this point. No one is contemplating the kind of policies that would even attempt to suck up all the excess liquidity. It has to go somewhere. Meanwhile, there are growing signs of recession. Mortgage rates have soared in a matter of months. The yield curve is inverting on key bonds. The timing couldn’t have been worse from a political point of view. There is a huge additional problem with the breakdown of trade relations both with Russia and China, and China too seems to be headed to a period of slow growth, if not recession too. Germany already faces 8% inflation, with no end in sight. This raises a remarkable prospect of a global crack-up boom. No one dares talk about it. The Biden administration is facing all of this with some of the most dangerous budget proposals in many decades, if not ever. Record-breaking tax increases plus innovating a new method of taxation: going after not only income but yields on wealth held. I recently offered my theory that this was really about taxing crypto holdings. I checked out my theory with several experts on the topic. They confirmed to me that this is very likely the whole point. If it passes, the tax authorities could be unleashed as never before. Nothing will be safe. You are awake to all of this, but how long will it take for average people to get hip to the dangerous realities in which we live now? Regards, [Jeffrey Tucker] Jeffrey Tucker The Metaverse Story You’re NOT Hearing… [Click here to learn more]( Everywhere you turn, people are raving about the Metaverse. Facebook’s now called Meta. Microsoft’s CEO says, “The Metaverse is here.” Apple’s all in too. But there’s a critical piece of the Metaverse story you’re NOT hearing about… [Click here now for the full details](. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2022 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. 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