E-Mail 'The Myth Of The Eternal Market Bubble And Why It Is Dead Wrong, by Brandon Smith' To A Friend

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1. Brandon Smith hails from The American Redoubt. I’ve been following Brandon ever since 2011. It was on cold snowy Montana night in Perkins restaurant when Brandon introduced many Oath Keepers and Patriots to: a plan for a “global economic reset” to replace the U.S. dollar as the world reserve currency, China’s role in a global currency, Yuan, IMF’s Special Drawing Rights (SDR’s), Baltic Dry Index etc. Brandon was probably the youngest guy in the room. But he immediately commanded the respect of the rest of us.

   Any financial analyst can attempt to explain ‘what IS happening’. Brandon Smith PREDICTS ‘what WILL happen’ and supports his predictions with facts. Critical to his success is that Smith takes an all-inclusive view of the world relative to not only the financial realm but also political, societal, global government forces, historical perspectives etc. It is no wonder that he has arguably a track record second to none.

2. Yes, but what can I do about it? I know I’m going to get hosed but most of my savings is locked into IRAs and 401K accounts and I can’t cash out without paying at least 35%. I still have a mortgage, and that isn’t likely to change without liquidating PMs and my other investment accounts. And I really would prefer not to be another ex-pat in a third-world pseudo-democracy. Instead of banging pots and screaming “the sky is falling”, tell me some concrete things I can do to protect what I have worked a lifetime to achieve.

   1. @BinWY

      The concrete things are there. You just have to make the decision to do them even if the short term is painful. Kind of like ripping a Band-aid off. In your own post, you give enough information that I can tell your situation is similar to what mine was. Why are you holding PM’s if you still have a mortgage? PM’s don’t really make you money, they simply hold value. Every time you pay interest, your money is losing value. I would sell the PM’s and cash out the 401k/IRA and get out of debt first. Get a second job if you have to just to get out of that mortgage. Without debt, start rebuilding your portfolio in investments that make sense for your situation.

   2. @BinWY, if you think the market is going to drop significantly in the near future, you could move funds within your IRA or 401k to cash or assets that you think might perform well, such precious metals mutual fund or ETF. You could also do some research or seek the advice of a professional who can help you pick funds that might outperform in the event of a collapse or a downturn.

      It’s important to keep in mind that the stock market has collapsed and the economy has gone into recession many times, but it has always recovered again — at least so far. So if you have cash, you can buy assets post crash and really make some money during the subsequent recovery. You’ll quickly realize that timing both points is the key to doing this successfully.

      Even in the event of a total economic collapse where the dollar becomes value-less, you could still own assets that retain some value and help preserve some wealth when the new normal is established. Your house is one and farm land a second, but beyond that if you own shares in a gold mining company that owns mines with proven gold reserves, those will probably still have value after the collapse, even if the value is no longer measured in dollar. Study what happened in Russia, Argentina and other countries that saw their economies collapse and learn what you might need to do first to survive physically and second to survive economically.

   3. There is no easy solution but i remember an excellent article right here on the blog about investment in farmland and rental units in which the author slowly divested himself from paper assets and moved to those areas and also precious metals which was direct ownership. Ive always liked the tangible items too.

3. I don’t understand this recession chart, yet I do understand similar charts of cycles over time. But this one has t-notes on top in blue and sp idx on bottom in maroon according to its legend. Why isn’t the same class across the 0% on both top and bottom? Does it describe a mass behaviour of shuffling from equity to debt instruments?

   I’m not ussually the dumbest guy in the room, but that all depends on who else is in the room.

4. YES!!!,
   The bank can’t take your house if you own it outright. Get out of that mortgage. Everything else is just extra cheese on that burger.

5. You’re right – the bank can’t take a house which is mortgage free, BUT your friendly local property tax collector can if you fall behind in your ransom payments. You own nothing – you are merely renting from Big Brother

   1. Thanks Harry, you are right. And it is already going on. The government will drum up “taxes” you owe and the court will agree and not even bother to cite the law when you ask for the applicable law that makes you liable or subject to the taxes. Your property will first have a lien and then they will take it.

6. Pay off the mortgage. Save up the taxes for 5 years worth. Keep the tax-stash at the 5 year level. With the slow collapse, that should be enough to keep you going until the bottom falls out of everything.

   If there is a complete collapse, the taxes aren’t going to be collected anyway, no one will have the money to pay property taxes. What is your county government going to do, confiscate all the land, throw everyone off and twiddle their thumbs until something magically changes? Nope. How would they pay their employees? Oh wait, there won’t be any employees, because there won’t be any money. But that assumes a total financial collapse.

   Barring that, never, ever vote for a tax increase. Never, ever vote to renew any expiring taxes. Convince your friends and neighbors to do the same. Get them to convince their friends and neighbors not to vote for any new taxes or any tax renewals. Most of the services that your county or local government provide could be provided on the free market, as needed, rather than ongoing payments, forever and ever, for services you rarely use. All this requires knowledge on your part and the ability convey that knowledge, make the case.

7. Article is pretty heavy on disparagement. The graph had me fooled also til I read the commenter above that it is comparing apples and oranges in differing years. Best I think to follow a scriptural (in my humble opinion) financial plan of dividing your portion in multiple ways — then then wisely dealing with rebalancing. In my case I feared and did not understand the stock market (did you know the Pinta and Santa Maria were owned by stock financed companies?) so I was in BONDS all during the 90’s and missed a huge huge profit….but when stocks tanked in 2001/2002 — and my BONDS went up by an incredible 40% in some cases, I was smart enough to “sell high” and “buy low” — the S&P500 went to 750…and i bought bought bought. it went to 1200 or higher and I sold sold sold. THen it went to 750 again (2007 or so) and I bought bought bought — now it is, what, 2800??? think what that did for me — and that’s of course only a portion — I have land, food, pointy lead things and long steel and short steel things which I’m very good with now, thank you! I also purchased some ability to farm, make my own power and water and yada yada yada. Best advice I can give is to learn from elders, work hard to understand EVERY asset class, then then listen to Solomon’s advice. i can’t eat my lead or the 1’s and 0’s in my accounts…..you better have some seed! But having multiple figures in the accounts makes it far easier to pay the property taxes and live for the time being.

8. HJL, Big John, Charles K, Yes! Get out of current debt ASAP, stay out, and save up to pay future debts, especially taxes. Having a government is no guarantee that you will live under proper rule of reasonable laws, but having no government, might guarantee that you won’t. But even the best government can’t operate without some form of income.

   The corrosive effect of dishonest money (“unequal weights and measures”) is slowly dissolving this nation into just another broken-down Socialist “paradise.” The CONgressional trick of farming out to a foreign banking cartel — (creating money out of nothing) a power that they were not granted in the Constitution, might seem “unConstitutional,” but the Just-Us’es, have never explicitly said, thereby speaking volumes.

   Until and unless the Citizens of this nation bother to inform themselves of how they are being gradually enslaved by the Federal Reserve Scam, they will continue to lose their remaining control over their nation, until eventually, their clearest understanding will be no more than a conversational topic behind the barbed wire.

9. Catherine Austin-Fitts claims there is 21 Trillion missing in the government accounting. How can we have markets or economic advice that mean anything when nothing is solid and real?
   My guess is the world is awash in debt. As emerging markets can no longer pay their debts as interests rise those that have the ability will flee their market and look for a safe haven. I expect the US market to be the last man standing as people with assets liquidate and try to preserve it in the US market. I don’t think anybody knows for sure what is going to happen so I am diversifying. I am also making my health and fitness my number one priority and learning all I can about staying a healthy old geezer and building strong relations with family, friends, and god. I think we will all need help, those who think they can buy their way out may not get as far as they imagined if they are all on their own.

   1. From one “old geezer” to another, thank you Robert. Your post adequately sums up what I wish to make my priorities…..Diversification, health and fitness, strong relations with family, friends, and God. Very well said Robert! I wish you well and thanks for the advice!

      TWB

   2. The US has some of the worst, most undercapitalized banks. Banks in other jurisdictions are far stronger and better run,money will fly there at the speed of a keystroke at the first sign of collapse.

10. A fixed rate mortgage is good insurance against inflation, especially if the mortgage rate is locked at a historic low. Another aspect to consider is property taxes. I would not want to own property in a state that does not have strong restrictions against property tax increases. Some states such as Illinois and Texas are already experiencing rapid property tax rate increases and I expect that trend will only worsen. For example, a friend who lives in Austin, TX paid 210K for a house in 2011 and saw his property taxes increase from 5K/year to 9K/year from 2011 to 2018, roughly a 10% increase per year. And other states such as New Jersey and the small states in the northeast have always had very high property tax rates which continue to increase.

    1. @Zac

       How exactly is a fixed rate mortgage “good insurance” against inflation? By my calculations, if you have a 30 yr home mortgage of only $150,000 and are only paying 3% interest, you will have paid over $330,000 by the end of the loan. That’s an effective loss of 50% of your money. An interest rate of 6% brings the value to over $430,000. That means you will pay more in interest than the value of your home. The mortgage is not a hedge against inflation. The mortgage is debt. The home might be a hedge against inflation since it’s an asset (depending on location), but if you have a mortgage on it, you don’t own it, the bank does. A home in Silicon Valley would have been a great investment – a home in Detroit, not so much.
       How much better is it to have the asset without the debt?

       1. Hi Hugh

          Your figures for interest at 3% seem high. I went to the mortgage amortization calculator at bankrate.com. For a $150,000 loan at 3% for 360 months (30 years) the interest paid is $77,666.18, so the total paid on the loan at the end of 30 years is $227,666.18.

          At 6.0% the interest is $173,757.28, bringing the total paid on the loan to $323,757.28.

          By way of historical context, the third home I bought was in 1981 in Idaho. The prime rate was 20.50%. My loan rate was 18.5% variable. Yes, it could have gone higher. I had to refinance that loan 4 times before it was paid off.

          1. Don’t forget the mandatory insurance and other things that is rolled into your primary mortgage. When you own it outright you have much choice about your coverage. My own mortgage even had an unemployment insurance on it that was mandatory. Ugh!

             1. -Hugh

                According to my inflation calculator, if I bought a house for 150K in 1988, it would be worth 320K today, assuming it was in good shape and the neighborhood did not deteriorate. In a sense my purchasing power would be preserved. It’s as if the 3% interest that I pay the bank comes back to me. I could be wrong, but that’s how it seems.

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