News, analysis and commentary for gold traders and investors

"Be Right - Sit Tight"

Jesse Livermore
Gold Market Wire... Gold Market Wire... Gold Market Wire
Gold Market Wire... Gold Market Wire... Gold Market Wire
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Gold Market Wire

News, analysis and commentary for gold traders and investors

The Long View

Will Covid-19 be the Catalyst for an Economic "Reset"?

May 25, 2020 - (Gold Market Wire) - Regardless of your view of Covid-19 - - a "plandemic"; a massive threat that demands continued 'lockdown' (h/t Mssr Focault); or just a grotesque over-reaction by inept politicians being led around by an economically opportunist medical establishment, it is undeniable that the world economy has been severely 'throttled down' in the past two to three months.

That type of destruction, on such an epic scale, provides politicians with a 'target rich' environment for some pretty creative (and destructive) ideas. But there is one, fundamental opportunity that CV-19 could provide that almost all governments in the world, especially in the west, would like to take: The opportunity to default on debt and reset the economy.

The desire for politicians to do this is obvious. They are out of road to kick the can of debt and money printing any further. They truly need a default. In fact, it is their only chance to survive in their positions of power. The problem, of course, will be how, exactly, to default without causing the Bastille to be stormed. War with China is one way... but war with an invisible, if marginally deadly virus, may be another. If the second of the two doesn't work...well, it certainly looks like the first is being held in reserve and kept warm.

It is also worth remembering that this type of 'opportunity' isn't going to come along again soon, so it has to be seized now. It's a once in a 100 years chance. In truth, though callous, it could work quite well, if you're a career politician. A proper default could keep many politicians in power for along time, by surging the crisis and taking control of the economy for the state to run as it sees fit. Maybe governments will start to open restaurant chains on the backs of the destroyed service sector. /s

Default could also crush the EU into a sovereign, new-debt issuing, entity. It could help get rid of Trump. But most of all, it could help the political echelons who have created all this un-payable debt, (because it is completely un-payable, and now, even, un-servicable); by dialing back to zero, through a default, with mass bank bail-ins, destruction of all existing contracts and the creation of an unemployed, permanently penuried population totally dependent on government for handouts... after, which the cycle of politics and debt can all begin anew.

Unless, of course, the Bastille gets stormed, or the public runs amok and starts killing each other, or the west winds up in a war with China and Russia.

Well, risk is the price you pay for opportunity, no?

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