written by reader financial collapse

By Anonymous Questions, October 28, 2015

hi, Just found your site poking around for an answer to stansberry best investment. thanks.

do you think all the gloom and doom about the collapse of the us/world financial system is true β€” US trillions in debt, deflation, and so on.

thanks,

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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jp10558
Irregular
jp10558
October 28, 2015 3:55 pm

I’m a new member, and far from any sort of expert on investing. That said, here’s my opinion.

I like Stansberry’s newsletters. They’re interesting, and seem to often get macro trends right, and are believable to me. Their stock picks, like everyone newsletter, are not so great. Their own reviews at the end of the year point out many products only rate a B, and they regularly have some that flat out get an F for the year. This is their own rating.

Have you read any of the paid Stansberry products? Their teasers really oversell the “End of America” and “Total Financial Collapse”, which isn’t exactly what Porter actually says in the paid content.

He doesn’t think civilization is going to end. He doesn’t think we’ll all return to bartering. He does think there are more massive credit bubbles that will hit like the 2008 housing bubble. I think there is broad consensus that the US did not really do much to prevent another 2008 sort of securitized bad debt products and leverage problem from happening again. Sub Prime auto loans, and for-profit University Student Loans both seem like they’ll eventually crash, and for that matter, Student Loans in general are getting close to the maximum I think is likely (i.e. where the immense cost of the loans starts to outweigh the earnings benefit of having a degree.)

That sort of crash could cause another 2008 crisis. Now, the other question is about the rest of the world – is the USD likely to lose it’s position as the reserve currency? Last year I would have said it was possible, and Porter sure seems to think it’s likely. Today, I’m not so sure. While printing dollars to inflate our way out of interest payment / debt problems for the nation may be considered bad, it’s less bad than confiscatory taxes, and it’s far less bad than defaulting. You might think this would have weakened the dollar, and it would, except everyone else is doing it now too because of similar economic issues. So the Dollar actually remains pretty strong.

No one really thinks the US is going to default for financial reasons. Political ones could happen, but I have to hope even the partisan congress isn’t that stupid. And China or whoever cannot “Call” our debt to them. We didn’t borrow it like a margin stock purchase. The US set out the terms of the bonds it sold, and you have to accept repayment in USD and at an interest rate and timescale the US govt set when they issued the bond. The only way anyone could get money out of US bonds RIGHT NOW is to sell them on the market, but in that case, that’s not really a problem for repayment – the US doesn’t come up with the money when someone else buys bonds on the secondary market. And it doesn’t change the US obligation either – we don’t care who we pay 0% interest to over 30 years or whatever.

So, everyone is inflating, so there’s no relative massive price changes like with Argentina currency collapse. Fiat currency is all relative as I understand it. That’s the problem with it – but it also means that even if the USD is devalued, it’s not super important to our economy as long as it stays relatively similar to other countries currencies. And the government is strongly keeping inflation around 1-2% so far, so it’s not like the price of food is going to double tomorrow. Your paycheck isn’t going to become worthless before you can cash it.

In that situation, long term we see the issues with consumer buying power going down, and it’s not great with wages not keeping pace with the inflation, but it’s far from a collapse situation. Do you know many businesses that suddenly don’t want to accept USD in the US? What do you imagine would actually have to happen to make people start demanding you pay them in gold or in kind / barter? 2008 style crash didn’t even come close.

So, Stansberry is saying be prepared for a bear market, and work out how to profit from stocks going down as well as when stock prices are flat for an extended period of time. Nothing there that’s really shocking I don’t think.

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Travis Johnson, Stock Gumshoe
October 28, 2015 4:01 pm
Reply to  jp10558

Well put, jp — welcome aboard!

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philly3367
Irregular
philly3367
October 29, 2015 10:12 pm

Wow. I agree. I watch gloom and doom type of emails and it has been driving me crazy for a couple of years. Thank you for your input. I needed your perspective.

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Fernando Macias
Guest
Fernando Macias
October 30, 2015 5:52 am

People, you just don’t get it. The next economic collapse will send the world into the dark ages. Just as soon as the government stops paying social security checks people are going to start rioting in the streets and militias are going to grab their guns and much of what is happening in the middle east is going to be happening here in the U.S.. I know we all would like to think things are going to go on forever, but they are not.

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Travis Johnson, Stock Gumshoe
October 30, 2015 8:54 am

So when will this next collapse come? Social Security checks are easy, by the way — a government that prints its own money and borrows in its own currency can always send out money. The money might be worth a bit less in real terms each year as time goes on, as it has been most years for the past 40+ years, but the checks will keep coming. There is a wide gulf between “this can’t go on like this forever” and “the United States will collapse into anarchy next year” (or even in three years, or whatever your prediction might be) — “this can’t go on like this forever” was also the argument 40 years ago and 25 years ago, and there was some appealing logic behind it then, as there is some logic behind the doomsayers arguments today, but folks who hunkered down in their metaphorical bunker 25 years ago have missed some great living and great opportunities in the meantime.

I think we should be prepared, as best we can within the confines of our lives and careers, for the possibility that we could have another terrible recession, and be prepared for disasters both natural and man-made — that’s just being careful. But we should not bet our futures on a certainty that these disasters will come, and particularly not that they will come at a specific time.

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DR Hill
Guest
DR Hill
April 1, 2016 1:17 pm

So true, my brother has nothing to do but listen and read this type of negative stuff. These subscribers should understand, it is all about MONEY from subscribers. You make a prediction and it happens, BANG, millions of pre-negative people jump to hear more negative news. If one listens to the news everyday for a few hours, he or she will become negative and believe, CHICKEN LITTLE!!!!

Fernando Macias
Guest
Fernando Macias
October 30, 2015 10:22 am

I’m not saying what I’ve said relying on my own predictions. People like Paul Craig Roberts, James Rickards, Ron Paul, Gerald Celante, and most notably Catherine Austin Fitts, have all predicted an immanent collapse of the economy. We are in an unsustainable path that will lead to a crash. All of the charts and present graphs show as even Mr. Donaldson shows that the present condition is very similar to the 1929 crash. All it’s going to take is an adverse reaction to the Feds raising of interest rates, a housing bubble, or any number of bubbles, more gambling of credit default swaps, oil being taken off the dollar and replaced with another currency, or the dollar losing it’s reserve value status. Any removal of a single card is gong to bring the house of cards down. You can smooth things over with denial talk but it’s not reality.

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Travis Johnson, Stock Gumshoe
October 30, 2015 10:48 am

I agree on the “unsustainable path” — the same “unsustainable path” we’ve been on since debt at both the government and individual level started ballooning in the 1980s. I think the “will lead to a crash” or “imminent collapse of the economy” is an assumption based on reasonable-sounding logic, but far from a certainty. Predicting huge events gets you attention and/or subscribers or customers, which means anyone who’s uneasy about the economy and profits either from attention or from selling information is incentivized to talk most about the most extreme outcome they can imagine.

That’s not to say they’re definitely wrong — someday someone is likely to be right in this big picture cataclysm… but similar prophets have been around for a half-century, I think we’re all wiser if we look at their assumptions and question any certainty they claim to have about timing and degree and what the long-term human response to that next crisis will be.

I don’t wish to live my life or structure my portfolio around the possibility that the economy will collapse, because that creates massive opportunity costs… but I think having some degree of protection against major financial upheaval is, of course, wise. I wouldn’t criticize someone who kept 10% of their savings in gold, or who had water and emergency rations on hand… but I’d think you were taking huge risks if you sold all your stocks and took your money out of the bank and held nothing but cash and gold buried in a hole in the backyard, or moved away from the job and life you love so you can live on a farm only because you think that will be your salvation in the next crisis (if you want to go be a farmer, however, more power to you).

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DR Hill
Guest
DR Hill
April 1, 2016 1:19 pm

YES, you listen to terrible people like RON PAUL. Look at this man, he looks like the product from his mouth. Listen to men such as, the late Sir John Templeton, he never claimed a depression would not occur, but the percentages of it happening. Read the books he wrote and you will understand.

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Fernando Macias
Guest
Fernando Macias
October 30, 2015 12:00 pm

Well I agree with you. What does the Bible say also? “And just as it happened in the days of Noah, so it will be also in the days of the Son of Man: 27they were eating, they were drinking, they were marrying, they were being given in marriage, until the day that Noah entered the ark, and the flood came and destroyed them all. 28″It was the same as happened in the days of Lot: they were eating, they were drinking, they were buying, they were selling, they were planting, they were building;
I live my life as there were not going to be a disaster however I know there will be one and there’s not much I can do about it but do my best everyday.

Patricia
Member
October 30, 2015 4:21 pm

Fernando, I can remember hearing that the world was about to end ever since I was a child in the ’50s. But I’ve never seen that those who believe in Biblical prophecy regarding “end of days” have any clear basis for predicting when. On the other hand, I agree with your point that people have always neglected or mocked the possibility of disaster and most of them tend to not be prepared. I finally realized the solution is to be reasonably prepared, then relax and enjoy your life. In fact only IF you are prepared can you really do that, because those who aren’t ready have a deep down insecurity they usually aren’t even aware of. It’s idiotic to live in earthquake country, for example, and keep no emergency water on hand – which tells us immediately that the majority of Americans living in earthquake zones have at least a streak of idiocy.

Ted Koppel has a book out “Lights Out: A Cyberattack, A Nation Unprepared, Surviving the Aftermath” which he’s been out promoting – I only watched one interview (with O’Reilly – I was disappointed in Bill who seemed to make light of the possibility). But something like terrorists setting off EMPs over major cities is something that concerns me more than the economy right now, and we should always think ahead and have plans in place, vote for those who will best support our national defense, then not worry and live to the fullest.

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DR Hill
Guest
DR Hill
April 1, 2016 1:20 pm

If you believe the Bible, you would not be screaming negative crap. Those who truly know Jesus will not be harmed.

SoGiAm
Irregular
October 30, 2015 2:23 pm