This Time It Is Different
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This document summarizes major economic events from post-WWII to 2008 and their impact on inflation and deflation. It then analyzes the three bubbles of the 2000s (dot-com, real estate, blue chips) that led to the loss of domestic capitalism in 2008 due to excessive debt, consumers being tapped out, and toxic assets. Going forward, it predicts an L-shaped recovery, credit contraction, re-regulation, low growth, and a reduced American standard of living as the new normal, advising readers to prepare accordingly by buying gold and avoiding most stocks and bonds.
This Time It Is Different
- 1. This Time It Is DifferentMarvin R. ClarkManaging PrincipalChief Economist and StrategistJune 30, 2009Scottsdale, ArizonaMonsoon Wealth Management
- 2. International CapitalismBorn: May 4, 197910 Downing Street,London,SW1A 2AA
- 3. American CapitalismR.I.P.Born: August 27, 1859Died: September 17, 2008
- 5. MAJOR CAUSES OF POST WW II INFLATIONGreat Society Programs 1964-1968Vietnam War 1959-1975Suspending the gold standard 1971The 1st oil embargo 1973Inexperienced workforce 1972-1982Antiquated manufacturing facilitiesThe 2nd oil embargo 1979Excessive money supply growth
- 6. MAJOR CAUSES of Post WWII Deflation Falling oil prices 1981-2000
- 7. Falling interest rates 1981-2008
- 8. Deregulation
- 9. Cheap domestic labor 1986-2007
- 10. The information and digital age
- 11. Personal computer 1981
- 12. NAFTA
- 13. Globalization
- 14. The Internet
- 15. Cheap CapitalThe 2000s Cowboy Capitalism
- 16. Leverage
- 17. Exotic investment products
- 18. Lax supervision
- 19. Deficit spending
- 20. Derivatives
- 21. Lowered underwriting standards
- 22. O.P.M. (other peoples money)
- 23. No FearThis Decades Three Bubbles Dot.com stocks
- 24. Real Estate
- 25. Blue chip stocksDomestic Capitalism Lost IN 2008 20th century debt; 21st century cash flow
- 26. Tapped out consumers
- 27. Gasoline shock
- 28. Overvalued real estate
- 29. Toxic assets
- 30. Accelerating wealth destruction
- 31. Saving banks; destroying banking
- 32. TARPThe New Normal An L shaped recovery
- 33. Multi-year credit contraction
- 34. Re-regulation
- 35. Low, low growth
- 36. Higher taxes
- 37. Later on, inflation
- 38. Chinas driving
- 39. A reduced standard of living in AmericaNext Steps Prepare for a real black swan
- 40. Do not worship false green shoots
- 41. Buy gold and TIPS soon
- 42. Avoid stocks and bonds now
- 43. Buy real estate for income only
- 44. Reassess the future
- 45. Dont believe Wall Street most daysMonsoonWealth Management
Editor's Notes
- The collapse in consumer demand is structural, not cyclical.High savings rates are deflationary.Own reliable long-term cash flows.Cash is king.