I’m a little surprised over this economic downturn. First, after espousing how economic expansions usually die from over-speculation ending in a glorious run-up to a blow-off top in commodity prices, but this one looks a little different. Sure, we had a late run up in commodity prices such as oil, copper, and some others but their price gains have been somewhat muted in my humble opinion. I mean we have witnessed very quick escalations in overall commodity prices but then also pretty fast contractions in those same prices. This is unusual, inflation-born commodity price super-cycles are historically long, or at least much longer than this, and usually last into a few years. So thus far I would have to say I don’t think there exists enough evidence out there [despite the media pundits] to suggest that we have seen “the” blow-off top”. Certainly not the blow-off top I had in mind. But let’s say they’re right and we have, does this mean it’s over for hard commodity prices?

If we are at the end of this run-up in commodities, and hence inflationary pressures, some factors could be responsible that we haven’t seen before, making the ending of this economic expansion look much different than any in the past. For example, look at Gold and Silver, two hard commodities that were always considered “inflation hedges”, but yet neither of these have really moved in response to runaway inflation in the United States. We have inflation running hot and that’s fact, not fiction. We’re talking 15%+ in the U. S. alone, once you add food and energy costs back in. But again I ask you, where is all the money that used to pour into gold during times like this? Was it captured and taken hostage by cruise line bookings instead? And look at the world of crypto-currencies, when every 25 to 30 year old swore up and down that it was an inflation hedge. Well, how did that work out for them? LMAO! [I never bought into the argument that a virtual commodity was an active hedge against inflation. Sorry – not sorry for you Millennials.]

So if you’re living here in America, you’re living in an “odd duck” situation. The end of this recent expansion as we knew it, which I will refer to as the “Trump Expansion”, because he is credited for creating it, is not playing out at least in a normal manner. It’s kind of like, remember the old record turntables where you could choose the speed between 33 and 45 rpms? So far the end of this expansion would be equivalent to placing your favorite album on the turntable @ 45 rpms and trying to listen to that. That’s the best analogy for what I’m seeing here, the frequent speed at which our economy is transcending from expansion into contraction. But why? I mean the Federal Reserve literally just began a raising rates what 3 months ago? Wherein 90 days ago they were still involved in Quantitative Easing exercises, which of course was total insanity! [If you take anything away from this article take away the fact that this is the most incompetent Federal Reserve Board ever assembled!]

Has the public suddenly become that astute in detecting business cycles that they also directed their portfolios way in advance of property losses? I doubt this assumption. So what was it? Well, there are other factors such as [leaks] in the system that could explain why gold and silver never made a substantial run during the late phases of the Trump expansion. It’s what some economists would call “monetary leaks” in the system; with the advent of crypto-currency offerings along with the false presumption that this new class of virtual commodity would somehow be a hedge against inflation? That has proved false thus far. My point being that substantial capital investment was made into the thousands of crypto offerings which otherwise would have gone into such things as precious metals back in the day. Adding to this argument is that crypto prices began melting away, falling into thin air really months ago, way prior to the decline in the broader stock market averages. This could have played a major role in not seeing the normal commodity-driven blow-off top I always look for once the fat lady sings and it’s all over. One argument that I like this time around if indeed we are witnessing the end of inflation-led commodity prices is to understand the importance of the “consumer confidence” numbers. I have harped on this idea in other blog posts before, [just type “consumer confidence” in the space bar on my Home Page for more articles that mention this measure]. The level of public confidence will determine more than 90% of spending on about everything. And personal spending is what turns the wheels for our economy. This Democrat Administration has done a terrible job of instilling confidence in the American public. We can list all the reasons such as their constant lies, woke policies, climate change regulations, runaway inflation, all the way down to a man can get pregnant now? You name the most bizarre things and it came directly from this WH. Is this why this particular economic contraction is acting and feeling different than past economic downturns? Maybe so, just might be! 😉