Response to Kyle

[edit]  It’s a little promo-ish, but I did not solicit it and the whole back and forth is important IMO in delineating the boundaries between b/s and rationality…

Gary – I just wanted to say thank you for your very thoughtful public response to my email. I honestly don’t know of anyone else like you who would take the time to do that.

By the way, I like and appreciate your candid style of writing. I would be upset if you ever changed. Your willingness to call it like you see it is refreshing and why I became a subscriber.

You are right. There probably isn’t much on which we disagree, but certain things irk me and I feel the need to say something. I just can’t stand the emphasis placed on the dollar index, which is a completely made-up basket that essentially measures the “strength” of crappy green paper versus other colorful pieces of worthless paper. It’s silly.

That said, I do understand now what you were saying. Yes, people have been fooled into buying commodities and related equities in anticipation of a “dollar collapse.” That is true. Anyone holding coal, iron ore, copper, or oil stocks has been wiped out. And the Sinclair predictions for $50,000 gold and hyperinflation call from John Williams of Shadow Stats by such and such a date are quite lame and not credible at all.

Anyway, I hope you don’t change the way you write one bit. You are like a refuge for us in this age of non-stop BS propaganda.

With his kind permission, I would like to publicly respond to a critique I got from subscriber, Kyle.  This is not the first bone he has had to pick with me and if I am doing my job well, it won’t be the last that either he or others pick.  Now, pissing off subscribers (my customers) is not something I want to do routinely, but I have a way of communicating that is just that, my way of communicating.

In that communication there are all kinds of buzz words and phrases I’ve made up, like Armageddon ’08, Inflation onDemand, Fiscal Cliff Kabuki Dance and probably 50 others over the years that just popped in my head and got popped right down into NFTRH, the websites or both.  Then there is the Federal Reserve and the Outer Limits shtick and a hundred different ways to flog Fed officials (Good Cops/Bad Cops, etc.).

Those instances noted above don’t seem to upset people, but when I mention cults it starts getting dicey because so many of us identify ourselves, through ideology, to firmly held beliefs and cults well, they depend on an ideological grip on their members.  [edit] FWIW, I have my own firmly held beliefs, but I consciously try to make sure they don’t screw me up when managing the markets on an interim basis.

First off, you try writing about financial markets and economics for years without trying to spice it up a little, add your own personality into it and do you know what you get?  You get really dry statistics, observations, extrapolations and opinions.  Part of what makes this fun for me is in the way I express myself.  Those that don’t like it have just drifted away (or flat out turned me off) over the years, I am sure.

But again, provoking your own customers?  That demands attention.  Not that I will change who I am, but I sure as shit will try to explain myself on occasion.  I forget sometimes that not everybody has been reading me since 2004.  My very first supposedly serious article was called FrankenMarket, after all.  It likened Greenspan’s creation of a market to a reanimated corpse wandering the countryside seeking solace and sustenance.

Anyway, what got to Kyle was my mocking of the ‘Dollar Collapse Cult’ and thus, I’ll go point by point to clarify.

I apologize in advance because this is not going to sound very nice. I don’t mean to be disrespectful, but this needs to be said. Your continuous mocking of a completely made-up “Dollar Collapse Cult” is ridiculous. First of all, why do you assume that anyone calling for a collapse in the dollar is referring to the arbitrary USD Index?

I don’t.  I am not even so much talking about the US dollar as I am about cottage industries.  As noted to Kyle… “I call the Dollar Collapsers a cult, I call those unquestioningly doing everything Sinclair says a cult and now I also call the Dollar bull anti-gold cult a cult.”  This latter group seems to have elevated Martin Armstrong – formerly touted by Sinclair over and over again when he was bullish on gold – as the authority in charge.

If you know nothing else about me and if you take your precious time to read what I write, then you should understand that I hate cottage industries and I hate dogmatic belief in most anything.  A nihilist?  No.  A rejecter of undue and unquestioning reverence toward other humans and their ideology?  Yes.

I personally don’t give a damn how many Euros or Yen I can trade my dollars for. I care about purchasing power and how strong the dollar is relative to the things I need, like food, electricity, etc. To say “gold has firmed during this most violent phase of USD strength” is completely backwards. If the dollar is falling against gold, then I guess it isn’t that strong is it?

I totally agree.  Gold does nothing; it doesn’t firm, it doesn’t weaken.  It just is… unlike paper currency.  As I have said for a decade now, it’s all the other stuff that is in motion.  Gold just sits there.  It is value, which is sometimes marked up and sometimes marked down.

By the govt’s own phony numbers, one dollar from 100 years ago has the equivalent purchasing power of about three cents. Let’s use gold as an anchor and see how “strong” the dollar is…the gold price was $20.67 when the Federal Reserve was created. At around $1,300 today, the dollar is down like 6,000% versus gold. If that isn’t a collapse, then what the hell is?

Again, I agree.  Why do you think I am a gold bug?  Because of the effervescent joy it brings to my heart being involved in seeing a slow degradation of a society’s financial system?  I would love a world where I did not perceive gold as an absolutely necessary monetary defense tool.

Let’s take this to the extreme to show the truth of the matter. If the Fed printed $50 trillion tomorrow and the ECB and BOJ printed $1 quadrillion in their respective currencies, would the USD strengthen against those currencies? Most definitely! But it would also absolutely COLLAPSE against real goods, equities, etc. This so-called “Dollar Collapse Cult” doesn’t need to prove anything because the dollar has already collapsed and its descent toward its intrinsic value of ZERO continues every single day.

Again, the words preaching and choir come to mind.  But day to day, week to week, month to month and in the most recent bear market, year to year management are what I do.  The US dollar, like all paper currency is abused and debased.  But I don’t want to lose a single one of those worthless paper bills that I don’t have to lose.  Not when I can exchange that paper for things of value when that paper goes through cyclical appreciation vs. other paper and as in the last 6 months, vs. most everything else.

I am not a numbers guy.  That should be readily apparent after all these years.  I am not a facts and figures learner.  I am a visual learner and I value psychology over everything else.  That is why I try to write in a colorful way.

I see people taking the gold cult’s most cartoonish slogans to heart and losing their capital… others talking about the death of the dollar, while somehow implying that the Euro or any of the other currency basket cases (admit it now, there were pitch men left and right touting commodity currencies and Euros as a solution to the coming “dollar collapse”; they also touted commodities and resources… how’s that working out currently?) was a solution.

Now, most recently and as noted several times of late, we have a new ideology driven by a ‘we won’t get fooled again’ (by the gold bugs) mantra that follows Armstrong, talks a lot about deflation and is all in behind the strong dollar and the damage and unthinkable lows it is going to bring gold to.

Same cult, different ideology.  I strongly dislike both of those words and that is reflected in the way I write.