Dollar Value Sent to the Corn Fields

Maybe this is the next leg down. Maybe it isn’t. In either case, we don’t want to be holding a lot of stocks and real estate when we find out.

If we’re right about the depression/deleveraging…

And if we’re right about the bear market…

You’re probably going to see stocks lose another half of their value. Remember, a correction is equal and opposite to the deception that preceded it. That deception is almost a hundred years old…and has added trillions of (largely fictitious) dollars to the nation’s wealth. An Everest of mistakes has been made. Can all this deception be corrected in 2 years…with the feds fighting every inch of the way? Can problems caused by too much credit be cured by more credit? Can a generation’s worth of mistakes be hidden under the carpet of bailouts? Can the boondoggles be washed away by more boondoggles?

“They do one dumb thing,” said our gardener, speaking of the feds. “Then they do two dumb things so they don’t have to admit they did something dumb in the first place.”

“The whole idea that you can cure financial problems by offering people money that doesn’t exist is preposterous,” adds colleague Simone Wapler.

Governments have been up to this trick for a long time – but especially since the world went on the paper money standard in 1971. Where Americans had a dollar worth a dollar in 1913, today they have a dollar worth 3 cents. What happened to the other 97 cents? Where did it go?

We don’t know. But we’ll take a guess – it went to the place where the feds keep all that money they don’t have.

The Daily Reckoning