Authored by Adam Taggart via PeakProsperity.com,
The laws of physics are governed by cause and effect. But there can exist a time lag between the two.
For instance:
Note how the speed of both the bullet and the retracting latex far exceed that of the shockwave or gravity on the water contained inside each balloon.
There’s an observable time lag during which the globe of previously-contained water momentarily hangs there in space.
Then, a beat later, it’s obliterated.
Living On Borrowed Time
I’m unusually focused on time these days as we’re updating Peak Prosperity’s crown jewel, The Crash Course video series.
Originally created in 2008 and updated in 2014, it lays out the macro forces driving the economy and our way of living, explaining why most of them are unsustainable and headed for trouble. That then opens the door to an avalanche of critical questioning about what the future will bring.
Updating the parade of charts and data has been eye-opening for me. When I last did this (early 2014), the S&P had just returned to the same price level that served as the apex for both the 2001 and 2008 market bubbles.
I remember how concerned I was then. How could we have returned to such reckless exuberance so quickly after the pain caused by the Dot-com bust and the Great Financial Crisis? Did we learn nothing from our previous (and recent!) excess?
Clearly not only did we not learn; we didn’t give a crap. With a “hold my beer, you ain’t seen nothin’ yet” bravado, we proceeded to DOUBLE the S&P above the previous bubble highs.
Here at PeakProsperity.com, my co-founder Chris Martenson and I have spilled a lot of ink in the ensuing years, warning how QE (aka central bank money printing), stock buybacks, and record low interest rates have pushed the degree of systemic unsustainability to Bizzaro-world levels. For our most recent analysis, click here, here and here.
But the TL;DR version is succinctly captured by the chart below:
Source: Hussman Funds
A few important things to note beyond the colorful editorial commentary I added to John Hussman’s quality work here.
First, the chart is logarithmic. The y-axis value doubles with each hashmark. Meaning: the current excess is a lot more extreme than it looks at first glance.
Second, the vertical lines indicate ‘dispersions’ which are market conditions Hussman finds are highly-correlated with “steep and rather abrupt market plunges, often representing the first leg of a more extended collapse”.
Notice how rarely they have occured over the past 25 years, and yet they’ve suddenly increased in frequency of late (the most recent took place on Nov 20th).
This is what you would expect to see from a dangerously over-extended system, where prices have been propelled way beyond where they can be sustainably supported. Keep in mind, today’s all-time high prices are occuring at a time when:
- The global economy is in a pronounced slowdown
- US corporations are in an earnings recession
- The year-long US-China trade war will not be resolved anytime soon
- The repo market is signalling something is badly broken in the banking system
- Articles of impeachment are being drawn up against the sitting US President
As we covered in a recent report The Phantom Mania, there’s simply no substance underlying this latest run in stocks. It’s all been driven by multiple expansion, which is a fancy term for “paying more for the same dollar of earnings”, aka, speculating that you’ll be able to sell at a higher price to an even greater fool:
What we are experiencing right now is a ‘time lag’ between the collapse of the argument underlying the 10-year bull market and investors’ recognition of that.
A full decade and some $14 Trillion in newly-printed money later, plus the cheapest interest rates in recorded history, and yet the central banks have not been able to restore growth to the global economy. The experiment has failed.
And what do we have to show for it?
The worst wealth gap in history. An impoverishment of future generations, who will be stuck paying off our recent debt orgy:
What good is Dow 30,000 if 75% of us can’t afford a house or scrape together $400 in an emergency?
Time Is Running Out
And of course, that’s just what’s going on in funny-money land.
In the real world, the resources we rely on to power the economy, sustain our modern lifestyle, and put food into our bellies are rapidly becoming more scarce and expensive.
Energy & Minerals
The world remains extremely dependent on fossil fuels and demands more every year. Yet discoveries peaked many decades ago and our reserve replacement rates are now negative:
As explained in this excellent podcast with petroleum geologist Art Berman, this supply/demand imbalance will predictably escalate throughout our lifetime. And a ‘smooth’ transition to other energy sources is mathematically impossible at this point. Sustained supply constraints and higher prices are inevitable.
Similarly, many of the most important ores and minerals necessary for economic development are in even worse decline:
Source: Visual Capitalist, US Geological Survey
The Biosphere
As a consequence of human industry’s ever-increasing need to consume and the pollution that results, life on the planet is dying off at an unprecedented rate (short of a giant meteorite extinction-level event).
World animal populations are dropping at an alarming pace:
Source: World Wildlife Fund Living Planet Report
As are insects:
Source: Statista
As are aquifers and forests:
Source: Drovers
Source: climatepro
Ourselves
The above statistics clearly show that we are dismantling the underpinnings of the ecosystems we depend on to live. Thus, we have become an existential threat to ourselves.
So should it comes as any surprise that we’re already seeing a diminishment of our health? And even of our ability to self-perpetuate?
Source: JAMA
Yes, our lives today still run largely as we’ve always been used to. But given the data above, how long (or brief) will the remaining time lag be before the ramifications begin to hit us at force?
Time To Get Busy
I guess it comes down to a simple choice, really: Get busy living or get busy dying.
So concluded Andy Dufresne in The Shawshank Redemption. And at this stage in the story, the decision is really that binary.
Society for its part is committed to the “busy dying” path. It’s still clutching tightly to Business As Usual. Like an alcoholic who has yet to admit to himself he has a drinking problem, it won’t address what it refuses to recognize.
So we can expect the status quo of consume-and-pollute to continue on for some time. Most likely it will be pursued until it simply proves too painful than the remaining alternatives. By which time our other options are likely to be materially worse than they are today. That’s the bad news.
The good news is that conscientious, critically-thinking individuals like you can choose to get busy living.
There is much you can do during this time lag to invest in resilience and install regenerative models before the next systemic crisis is upon us.
Whatever time we have left, and it may very not be much, is a gift. Use it.
Many of the best defenses — like fitness, community, and valuable skills — require time to acquire. You can’t simply buy them off the shelf the way you can, say, a water filter or a backup generator. Once time has run out, you either already have them in place or you don’t.
In Part 2: How Best To Use The Time Remaining we provide our advice for prioritizing and allocating your precious time capital, as well as share with you what and Chris and I are most focused on in own personal preparations.
Included along with this are several hours of excellent video clips of experts from our recent educational live events and webinars, available to-date only to premium subscribers.
Click here to read Part 2 of this report (free executive summary, enrollment required for full access).
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The article is rife with false data. A couple of minutes research shows that. Why take the time to write a 3,000 word essay (and a follow up) without doing the most basic fact checking?
@hardscrabble – Can you elaborate a little bit on what parts are false data? Did you mean the portion of the article about the market and the economy? Or the portion of the article about the environment and biosphere?
I used to follow Chris Martenson and Peak Prosperity pretty closely. I’ve gotten away from it in the last 5 years or so – TBP is really the only place I go for Doom Porn – I’ve gotten burned out everywhere else. But as far as I knew, he (And, by extension, Adam Taggart) wrote articles that were factual and data based.
Although, I know he’s been claiming insect apocalypse for a while now. So, beats the shit out of me. Anyway, if you could elaborate on your thoughts, I’d appreciate it. Thanks.
PS – I came within one hair’s width of calling you “@hardscramble” because I always thought that was funny. Sure do miss Billy and Billah’s WIfe.
I don’t know about other areas, but here in the Midwest I’ve never seen more butterflies of varied species than I did this past Spring. I even commented to the wife how many there were compared to years past.
Localized, anecdotal and meaningless worldwide regarding your neighhood butterfly sightings
there was attempts to contact the appalachian angel but they fell flat on their flat ass trying…
Pretty much everything in the biosphere section is complete bullshit. “…localized, anecdotal and meaningless worldwide” is how EWS put it when someone spoke about increased sightings of butterflies, that’s what the report he based his comments was all about (Sanchez-Bayes Wyckhuys). Their field of study was the effects of pesticides on fauna in 26 locations on Earth, not done annually, in the middle of extensive Big Ag corporate farming operations, etc. And then stating as if it were an empirical fact that we are currently experiencing a species die off that is just short of a “…meteorite (sic) extinction level event…”. It’s just an unhinged, hysterical fantasy with ZERO peer reviewed evidence to back it up. Go ahead, see if you can find a comprehensive list of the species that are supposed to be disappearing. It doesn’t exist. If that’s the first thing I looked into and found to be so egregiously incorrect, how do you think the rest of it stacks up? It’s like the AGW crowd, all the hand wringing and fainting couches in the world can’t keep up with these zealots.
Oh, please. There are more frogs and snakes around my place than you can shake a shovel at.
But here it is: there are too many damn people in the world. And Africans are breeding like rabbits, and there is no stopping them. Without reducing the African rate of population into negative territory, the situation re population, and hence resource consumption/reduction, will be really bleak.
“and there is no stopping them.”
sure there is. end welfare/afdc/snap/ebt/section8. that’ll stop it.
well, not on a dime, and there’d be lots of violence ….
Wait a minute now…thr’d be what you say? That would be so terrible.
You can stop perpetual hordes of idiots?
sure. stop feeding them.
(‘course then you’ll have to fight them off, but only for a few weeks.)
Lots of problems get solved with billions of people being deaded.
eliminated != solved
SHTF will thin out the herd. what kind of country we end up with may not be that good.
“what kind of country we end up with”
strongly suspect it would be largely empty. and if china is still functional they’ll dump a few dozen millions ashore.
Large and empty sounds good to me. Breeding room. Keep our tech advantages for ourselves. See that army of savages. They got spears. This here is one of my machine guns.
“large and empty sounds good to me”
did you miss the part about a few dozen millions?
You must fight someone. I don’t think the Chinese are as interested in conquest as you think. The want to be #1, but zenophobia and separateness is something they prize highly. Yes, a scary scenario. They are not post-Industrial if we don’t give away are technical advantages. They may never be post-Industrial. Look at the Japan funk of lost decades.
Too late? Waiting does what exactly to improve our odds? Want respect. Gotta win some fights. Wanna live? Gotta win some fights. The Chinese are busy with their own quarrels. ‘Tis better to role the dice sooner than later. I’m sure. I have studied history. I know how this works. The winning men are warriors to some degree.
“conquest”
not as a matter of conquest, but as a buffer zone and as a suppression of previous enemies. like one chinese commenter posted, “we sent out expeditions in the 1450’s and found nothing, so we withdrew. we won’t make that mistake again.” I’m sure the chinese are very big on not making the same mistake twice.
and the chinese communist party ruling class families have lots of surplus people available to do this. right now in china there are 40 million males who, because of female infanticide during the “one child” regime, will never find a chinese wife, so they’ll go looking elsewhere, and they won’t care where. a few million half-breed chinese in california, not good enough to live in china but who still feel attached to it, would suit the chinese communist party ruling class families just fine.
Africa is an easier target. Perhaps a richer target too. This does not get better waiting. Yes, we could all be dead. Let’s not try then. You don’t know what the Chinese will decide to do. To make serious war on us, they would have to ‘agree’. Those in Hong Kong and Taiwan do NOT want to fight us. They want to be something like us and in friendly relations with us. The Communist government may or may not have enough stability to wage war. So what? The die is cast. Instead of dreading what will come, try to be dreadful. The only stupid thing you can do is not win when you in fact you could have. Don’t spread that around like a jewel of knowledge. Have ye any testosterone? Fighting very uncertain future projections is no way to win. The time to decide how to fight this hypothetical is only when it’s not hypothetical. You have good points, but not emotionally. Game theory applies. Americans’ asses on the line might be good for morale. Nevertheless, hell, if I’m dreaming of this sort of thing, who do you think I’d like to something to most of all? It ain’t the Chinese. Imagine what a deloused American population would be like socially. You presume there could not be a sudden fix for that. I think there could be. If only enough Americans were angry enough to want to do the right thing, if you know what that is, weather permitting of course.
“You have good points, but not emotionally.”
I prefer to approach problems rationally, and have learned the hard way to focus on worst-case in order to cover all the possibilities.
gman, you can’t cover all the possibilities of the worst case. Our immediate male ancestors betrayed us for too many generations. People of ‘faith’ require absolutes. Perhaps you comfort lies only in the afterlife. You won’t find it here. That’s a feature not a bug. There is nothing more to be gleaned by analysis. Do or die. We get weaker the longer we are unable to respond to the slow decline of us.
“How could we have returned to such reckless exuberance so quickly after the pain caused by the Dot-com bust and the Great Financial Crisis?”
simple. if you want to get money by skimming other people’s, there’s nowhere else to go.
“Did we learn nothing from our previous (and recent!) excess?”
sure. “get it now while the getting is good”. and given that the “unsustainable” has been sustained for 11 years now, that attitude has worked well.
..and then I agree with the gman. I don’t understand how I can agree down the line on some substantial things and then the other guy turns away from his own logic and I completely disagree. I just don’t get that!
“and then the other guy turns away from his own logic”
some reasons are:
1) he’s still in a learning phase, and hasn’t quite yet faced up to the truth.
2) he’s trying to mislead you – get you to follow along with him, (“yeah, I agree with that … yeah, I agree with that too …”) and then suddenly lead you down another path as you follow him out of habit. fact 1 “agree’ fact 2 “agree” fact 3 “agree” false conclusion “agree” ….
3) he’s trying to get a message out, but has to mislead his editor (who to save time reads only the conclusion). “see, my conclusion is what you specified.”
This sounds really bad. Buy gold, right?
learn to farm.
while you still can.
I bet most everybody here is over 50. Serious question: Who’d want to live if totally isolated and 17th century technology? I don’t know why there isn’t more interest in testosterone animal expression and sovereignty. I really don’t. Wait. Did I just answer my own question? I think I’d want some payback experiences so long as I’m under 60, but who knows? Tis better to burn out than fade away, right? Can’t get lucky fading away.
“Serious question: Who’d want to live if totally isolated and 17th century technology?”
… don’t know. speaking from my generational perspective, it wouldn’t matter if anyone wanted to or not, they’d try. but this new generation … has been deliberately misled and deluded, and is very weak, and has a very high suicide rate even now in the best of all times. so, I don’t know. but I’m quite certain that the ones who do survive will be the ones preparing now.
https://new-pioneer.subscriptioncore.com/
Can’t eat gold and it is meaningless in a teotwawki situation until things eventually begin to stabilized and civilization reforms
People will need a garden to grow their own food to survive the GSM famine starting maybe 2020; less than 5% will ever make the slightest effort. A couple generations ago, half the people had a garden.
I plan to eat red meat. It will be plentiful. Think old-school Chinese.
I think you need two special things to garden: (1) unmolested dirt, and (2) time. The only thing I have unmolested is between my legs. Everything else is pretty much system molested.
That is an arrow hitting the three balloons not a “bullet”. Cant get that right then i am not reading the rest of the article.
That’s what I suspected it was but let myself get talked out of it.
The number of my days were known to God before I was formed in my Mother’s womb.
Hussman quality work. Ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha .
The cartoon with the massive looming debt mountain…and the Father holding his children’s hands saying: “Someday all this will be yours” made me grit my teeth.
That is what motivates me to prep in all ways for all contingences, the two generations whose hands I have held.
THE FED IS ABOUT TO DO THIS…BECAUSE WITHOUT IT, A TOTAL MELTDOWN WILL OCCUR. (11 minutes).
“conscientious, critically-thinking individuals like you”
(shiver) oooo, I feel so special ….