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It’s Wise to Learn from the Wise

MARKET NEWS / MCALVANY RECAP / MARKET NEWS
McAlvany Recap • Aug 14 2023
It’s Wise to Learn from the Wise
MPM Posted on August 14, 2023

One of the difficulties in going broke “gradually, then suddenly” is that you get to hear the anecdote about going broke gradually, then suddenly hundreds of times (along with its distinguished attribution—to Ernest Hemingway, if you’ve somehow missed it).

That’s the difficulty with pertinent sayings, particularly when they remain relevant for a long period of time. They make everyone who uses them look smart, so everyone uses them.

At the risk of piling on, we note that the gradual part of America’s going broke sure is gradual. We suspect that that means the sudden part will sure be sudden, but we are not soothsayers. Still, the signs are all there.

“What signs?” you ask. We’re glad you asked, because that’s what the communications below answer. In a complex economy like America’s, there are scores, if not hundreds, of metrics assembled by various entities to measure progress, regress, opinion, history, and momentum. Finding them is tedious. Monitoring them is time-consuming. And interpreting them is the job of fools, sycophants, and sages.

Finding the wise analysts is half the battle. How do you know when you’ve done so? Well, the first sign is counterintuitive: Sages recognize their limitations. Omniscience belongs to God alone. The wise strive simply to find out what He has done and explain it accurately. They likely strayed beyond this mandate at some point in the past and finished the episode with egg on their faces. That helps foster and maintain the first requirement of a sage: humility.

A second sign of wisdom is that wise people seek wise counsel from many sources. Surveys or indexes that have long track records of accuracy and predictive utility are key. Commentators with estimable track records, who know whereof they speak due to humility of their own, wise counsel, sound thinking, and experience, are also invaluable.

Wise advisors also study history and human behavior carefully and extensively. They know that both are instructive, but not indicative. Current events and people are of the same type as historical events and people, and they are bound by the same natural laws, but they are different in important ways.

And sages have been around a while. It’s been said that good judgment comes from experience, and experience comes from bad judgment. That’s true only for teachable people, but, at any rate, it involves time. Intelligence can be had at any age. Wisdom is for those who have fought a few battles.

All of this is to say that it pays to make use of the time leading up to cataclysmic events wisely. Going broke gradually both gives time to prepare for the sudden conclusion and gives clear indication that it is coming. The unwise deem such a gift of time as a guarantee that things will continue as they are—particularly when the gradual part is soooooo gradual.

Don’t be like them. Study with the analysts below, who understand the times. No one knows how much time remains before America’s economic bubble pops, how bad things will get when that happens, or how many other events it will spawn—such as war, revolution, or other catastrophic dislocation.

Even if we hope none of that happens—and we do—history and human nature offer us a cautionary tale.

Key Takeaways:

  • The BRICS might be throwing bricks, but they live in a glass house
  • America has a homeless crisis for its people; China has a people-less crisis for its homes
  • If Major Kong were an economic expert: “Should be a soft landing”
  • Banks fighting an uphill battle in the rain

The McAlvany Weekly Commentary: David and Kevin announce the arrival of the Vaulted Silver program—a crucial adjunct to the Vaulted Gold program that has been operating successfully for several years now. Both programs allow incremental investment in their respective metals of any dollar amount at any time, high liquidity, and extremely high safety, all with the value preservation traits of the precious metals involved. The hosts also discuss the BRICS (Brazil, Russia, India, China, South Africa) countries’ meeting in South Africa, which also includes Algeria, Bahrain, Egypt, Iran, and Saudi Arabia this year. Many analysts expect this group to come up with an alternative to the dollar as the global trade currency, but David has a different take on the matter. Don’t miss this program for his analysis.

Credit Bubble Bulletin: Doug discusses the “year of the bond” as money continues to pour into bonds. Favorable Consumer Price Index prints have caused the trend to continue and increase. He also discusses China’s economic woes, beginning with its developer difficulties. Country Garden, once the largest real estate developer in China, “has become a proxy for financial contagion in an industry that accounts for about a quarter of the country’s gross domestic product.” But local governments have also taken on an astronomical amount of debt, and now threaten the national economy as well. “One Goldman Sachs estimate puts the total local government debt pile at Rmb94tn ($13tn).” Beijing is therefore “sending teams of officials to more than 10 of the financially weakest provinces to scrutinize their books.”

Hard Asset Insights: Morgan takes us with him for time travel this week. “Let’s take a moment to hop into Emmett ‘Doc’ Brown’s DeLorean, supercharge the flex capacitor to 1.21 gigawatts, accelerate to 88 mph, and do some time traveling to examine ‘soft-landing’ narratives past. Then we’ll jump ‘back to the future’ to apply lessons learned to our modern market moment—lessons that might help us safely navigate the uncertain seas ahead.” It’s a compelling trip. The “soft landing” delusion seems to infect the thinking of one generation after another as they face downturns in the economy. This imaginative trip through history assures us that, though this time might be different, it won’t be because crowds are logical and have assessed things dispassionately in the cold light of day.

Golden Rule Radio: Tory and Rob again join Miles for the program this week. They begin with silver and a bit of a surprise since last week’s program. They expected the silver price to continue to the lower bound of its long-term trading channel, but it bumped up by roughly 10%. It has since headed back down, and will likely hit that lower bound in time. The hosts believe it will not break out higher until there is a major event of some sort—which will likely affect gold even more than silver. Tory discusses the investment triangle’s three components—growth, savings, and insurance—and their relevance to current events. If the triangle is properly balanced, it will often manifest one leg that is weak while the other two are strong. The hosts also discuss the many challenges banks are currently facing, and the toll it is taking on their fiscal health ratings.

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