Global Recovery 'Peaked' in 2013 and Has Been Declining Ever Since As Measured by PMI

Not everyone can become a waiter or a bartender.  And as more disposable income accrues to the top, and is deployed in luxury goods and the pursuit of rents and acquisition, the rest have lest to spend for goods that stimulate the aggregate demand.

As you know I would ascribe this slow decay in economic activity to the 'top down' monetary stimulus being deployed by the Western central banks, and their overattention to the well being of the largely broken and misdirected financial sector that was in fact primarily responsible for the crash in 2008.  That they corrupted the regulatory process along the way for their own benefit is an ancillary cause at best.

As I have been saying since roughly 2008, the Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Since greed has no limits by its very nature, and since the credibility trap is preventing the one percent and their enablers from engaging in meaningful reform, I conclude that things will continue to get worse until there is a real break in the system that ends the feedback loop of the abuse of power and corruption of public policy.

I believe that the current election in the US, which is surprising to so many establishment pundits, is a clear indication of this.   Now whether it is fruitful change or not is another thing altogether.  We do see that the odds in the post 1930s political changes were a rather mixed bag.

This chart is from Nick Laird at sharelynx.com.

The Imperial Presidency

Gold Daily and Silver Weekly Charts - Smarter Money Moving Out of Equities and Into Gold

There were two items of intraday commentary on the precious metals which you can find by scrolling down.  The more important of them is linked below.   I found it to be a little surprising this morning.

Myron Scholes Sees Stagflation Coming, Stock Declines, Suggests Safe Havens Including Gold and Silver

First Rogoff and now Scholes.  Maybe Mackay was right, that men go mad in herds, but come back to their senses one at a time.

I also found this story to be interesting in a similar vein, although Stanley is not an economist.

Stan Druckenmiller Tells Conference To Sell Their Equities and Buy Gold

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts

Besides the lousy and low quality earnings and the weak domestic macroeconomic news with increasing strains on the world economy as a whole, things look great if you are a member of the one percent.

NAV Premiums of Certain Precious Metal Trusts and Funds

I find it interesting that the Sprott Gold Trust is demanding a small premium whereas their silver trust has a small discount. That is the opposite of how things have been historically.

Other than that, it is safe to say that even with its rally, the precious metals are hardly enjoying an overexuberance in the market.

Scholes Sees Stagflation Coming, Suggests Safety To Be Found In Assets Like Gold and Silver

"But never a truth has been destroyed;
They may curse it, and call it crime;
Pervert and betray, or slander and slay
Its teachers for a time.
But the sunshine aye shall light the sky,
As round and round we run;
And the truth shall ever come uppermost,
And justice shall be done."

Charles Mackay

A banquet of consequence is coming, but I am afraid that justice is taking a more circuitous route, thanks in large part to the credibility trap. And the masters of the feast never seem to be around to pick up the check for their revels.

Myron Scholes, of the Black-Scholes Risk Pricing Model, said in an interview from the Milken Conference this morning that stagflation is the most likely outcome for the economy.

Stagflation! And what did Myron suggest that people invest in to protect themselves? Gold and silver, among other hard assets.  He thinks that stocks are due for a decline.

Stagflation is coming, so buy gold and silver to protect at least some of your wealth. Where have we heard that forecast before?

I think a forward thinking person, looking at the nature of the Fed's serial policy errors and the economic abuses that the monied interests have been inflicting on the real economy for quite some time, could have seen this outcome coming some years ago.

And some did.   But it is nice to see the models catching up.  The only surprise is that it has gone on as long as it has.  Never underestimate the venality of unscrupulous greed, and the power of thinking in herds.

And this comes a day after Ken Rogoff has suggested that the emerging markets invest their surpluses in the safety of gold! Which of course any but the most casual observer knows very well that they have been doing, and in size, for some time.

So there we have two major economic thinkers coming out for gold and silver as safe havens this week. One might be excused if they wonder if these are not statements being made ahead of some event to protect a sage's derrière.

There is one major hurdle, however, to executing that strategy to protect yourself by buying precious metals, as depicted in a single chart of a key market factor below.