PP vs. real gold bugs

General Discussion on the Permanent Portfolio Strategy

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Libertarian666
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Re: PP vs. real gold bugs

Post by Libertarian666 » Sat Mar 21, 2020 10:35 am

pmward wrote:
Sat Mar 21, 2020 10:27 am
Libertarian666 wrote:
Sat Mar 21, 2020 10:23 am
pmward wrote:
Sat Mar 21, 2020 10:09 am
This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.
Of course you are assuming that MMT is valid.
What if it isn't?
It is valid in the short to medium term. I totally believe the day will eventually come that they paint themselves in the corner (hence why I have a 20% gold allocation and believe that gold will be the best returning PP asset of the next decade). But monetary stimulus alone carried us for 10 years. MMT certainly should be able to carry us for a few more years at least (maybe even another decade... or two), especially done in a global fashion. The bill has to be paid eventually. But they can kick that can down the road much longer than anyone can think possible. Back in 2009, nobody thought that monetary stimulus could go on and carry us for 11 years like it has with no inflation. Keep an open mind is all I'm saying. Common sense and logic left the room a long time ago.
I certainly have an open mind about when the whole thing will blow up.
No one can know that with any degree of accuracy, because the timing is partly psychological.
And timing is always the hardest thing to get right.
I just think this is the big one.
pmward
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Re: PP vs. real gold bugs

Post by pmward » Sat Mar 21, 2020 10:40 am

Libertarian666 wrote:
Sat Mar 21, 2020 10:35 am
pmward wrote:
Sat Mar 21, 2020 10:27 am
Libertarian666 wrote:
Sat Mar 21, 2020 10:23 am
pmward wrote:
Sat Mar 21, 2020 10:09 am
This isn't 2008 though. In 2008 all the stimulus went to the banks. Now we are getting fiscal stimulus, and the bar for fiscal seems to be getting raised every day, and has bi-partisan support. Fiscal is a whole different animal altogether. We are literally testing out MMT as we speak, as the central banks globally are all providing liquidity at the same time as the governments are providing massive fiscal stimulus. The fact that this is a global synchronized effort and not just the U.S. also makes the potential for economic explosion in the recovery all the more likely.
Of course you are assuming that MMT is valid.
What if it isn't?
It is valid in the short to medium term. I totally believe the day will eventually come that they paint themselves in the corner (hence why I have a 20% gold allocation and believe that gold will be the best returning PP asset of the next decade). But monetary stimulus alone carried us for 10 years. MMT certainly should be able to carry us for a few more years at least (maybe even another decade... or two), especially done in a global fashion. The bill has to be paid eventually. But they can kick that can down the road much longer than anyone can think possible. Back in 2009, nobody thought that monetary stimulus could go on and carry us for 11 years like it has with no inflation. Keep an open mind is all I'm saying. Common sense and logic left the room a long time ago.
I certainly have an open mind about when the whole thing will blow up.
No one can know that with any degree of accuracy, because the timing is partly psychological.
And timing is always the hardest thing to get right.
I just think this is the big one.
Totally agree that the timing is the hardest part. When will the recovery be? Is this virus going to be gone for good in the summer? Is it going to come back in the fall? Is it going to be a yearly recurring thing? Are we going too get a vaccine next year? Will herd immunity eventually kick in? These unknowns make the timing impossible. I'm prepared for a typical 1-2 year bear market. Though I wouldn't be surprised if it ends sooner, if those questions above get answered in the best possible scenario. I do not think this is "the big one". I think there is still too much firepower available from fiscal stimulus, QE, and deficit spending. As long as that firepower is available they can kick the can down the road. When they run out of that firepower, which one day is inevitable, that will be "the big one". At that time we won't just have to pay up for the current crisis of the time, but the decades of can kicking will have reperations due as well. If I had to guess I would say we are still at least a decade away from reaching that point.
pmward
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Re: PP vs. real gold bugs

Post by pmward » Sat Mar 21, 2020 11:38 am

Just came across this article. It is rare, in that I pretty much agreed with everything stated. Highly recommend reading this. He also came to the conclusion that while this crisis is going to be rough in the short term, it will be in the rearview within a year or two, and that "the big one" is still years away: https://unherd.com/2020/03/covid-19-has ... ded4b883a5
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