I appreciate Herschel allowing the leeway to post items about the economy. Instead of posting articles about the sky falling and The Big Crash that’s always about to happen any day now (one day, those folks will be correct), we’ve tried to provide actionable forward-looking information to give you an indicator of what’s around the corner for the markets that affect you and your family. The object is to offer education and insight into the next several months so you can plan and prepare.

We’ve written a few posts, two here and here, using technical market analysis that pointed to the current recession. This recession we warned you about in the spring is underway (despite the fascists ‘official’ pronouncements to the contrary) and will worsen in the coming months. We predicted the current market downturn and recession based on the analysis of inflation and the formation of technical market patterns.

This time we’re looking at historical information. We’re predicting a stock market second leg lower soon, coupled with a marked economic downturn in the coming four to six months, give or take. The history is boring, and only wonks care, but the fed has been raising interest rates in recent months from the floor of near zero. This will cause a sharper downturn in the coming months into next year. Of course, everything could change tomorrow, but lower stocks and a deeper recession loom.

We think the last month or so in the stock markets have only been a short-term bounce in the ongoing drawdown, and new lows will be seen in the coming several months. As we’ve mentioned here at TCJ, these things create a feedback loop. Cause and effect get muddled, but the trend remains downward, as far as we can tell.

So far, the housing market has remained strong. We don’t think this will hold, again, using historical information. In my area, the housing market has been white hot. I know one gentleman who got 50k over asking before listing. The housing market has been pretty exuberant for the past couple of years in the country’s growing regions. That can’t last indefinitely. Housing is very likely to fall soon as well. Note: often, housing as a market falls relative to itself, which means that it levels off or goes to near zero growth in either existing home sales, new home builds, or both.

We just thought you should know so you can prepare.

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More items of interest in economics:

This article at CNBC constitutes an informal pre-announcement from government outlets of the deepening recession.

Steve Hanke [Johns Hopkins University Economist ] says we’re going to have one ‘whopper’ of a recession in 2023

Source: (Italics and Bold in the original)

Events may show that there are no winners, only survivors and those who failed to adapt.

Some recessions are brief, necessary cleansings in which extremes of leverage and speculation are unwound via painful defaults, reductions of risk and bear markets.

Some are reactions to exogenous shocks such as war or pandemic. The uncertainty triggers a mass reduction of risk which recedes once the worst is known and priced in.

Far less frequently, structural recessions are lengthy, tumultuous upheavals that can set the stage for excellent long-term expansion or unraveling and collapse. In these structural recessions, 10% to 20% of the workforce loses their jobs as entire sectors are obsoleted and jobs that depend on excesses of debt and speculation go away.

In the U.S. economy of today, this would translate into a minimum of 14 million jobs vanishing, never to return in their previous form and compensation.

The old jobs don’t come back and new jobs demand different enterprises, training and skills. Unemployment remains elevated, spending is weak and productivity is low for years as enterprises and workers have to adjust to radically different conditions. If the economy and society persevere through this transition, the stage is set for the reworked economy to enjoy an era of renewed prosperity and opportunity.

If an economy and society can’t complete this transition, stagnation decays into collapse.

I’ve annotated a St. Louis Federal Reserve chart of U.S. recessions since 1970 to show the taxonomy described above.

The drive to never have any pain through natural times of pruning economic inefficiencies will cause the final and total collapse of the system. This article is a pretty good background as a way to understand the economic environment, the crises created by trying to fix problems, and the worse pain of never wanting any difficulties. Of course, we’re a little more jaded about the motivations of those claiming they are just trying to help. You can see the chart and analysis on that website.

Via WRSA, Ukraine may be America’s Lious XVI moment. It’s cautionary to learn history, but governments never realize what they are doing. Maybe this one does and is satisfied with destroying us. The article is about the new swarm of IRS agents being hired. But, interesting and worth understanding is the parallel to France at the close of the US Revolution.

The cost/benefit just doesn’t compute. And that’s why healthy, prosperous nations don’t engage in such absurd activities. They don’t need to.

Taxes ultimately represent the government’s ‘slice’ of an economic pie. So when a country is prosperous and an economy is strong, the government’s slice continues to grow because the overall economic pie is constantly getting bigger.

But nations in decline don’t see it this way. For them, the pie is shrinking. So they think the only way to increase their slice is to go after other people’s crumbs.

History shows this is absolutely the wrong move. Raising tax rates, inventing new taxes, and recruiting armies of tax collectors only makes the pie shrink even more.

Their efforts, instead, should be focused on making the pie bigger. But they don’t think that way.

Bear in mind this is all brought to you by the same people who are shoveling your tax dollars out the door to Ukraine $50 billion at a time. It’s very ‘Louis XVI’ of them.

All of these trends—the cannibalistic surge in tax authorities, the anti-productive regulations, the economic scarcity mentality—are all hallmarks of an empire in decline.

Though not a fan of precious metals, this article, via WRSA, points in the right direction. Likely before my lifetime, I did not know that cities once grew up to half of their own food. Localized Production is, beyond any doubt, a foundation of national security. (Bold in the original.)

Now that globalization and financialization are finally unraveling, people are slowly awakening to the national security foundations of localizing production. Home gardens were called Victory Gardens in World War II for a reason. Reducing dependency and increasing local production is national security in a nutshell.

Which makes more sense–air freighting tomatoes thousands of miles or growing your own? Globalization and financialization have so distorted our economy that if it’s cheaper to fly in tomatoes then that’s the “most profitable choice.”

But is maximizing profit really the only “value” we should be calculating? Thanks to an obsessive focus on maximizing profits, our economy has been stripmined of essential production because it’s always cheaper to produce stuff somewhere else where labor and bribes are cheap and environmental controls non-existent.

Localizing Production doesn’t mean just food. Sustainability is a Globalist buzzword for you owning nothing and eating bugs. Real sustainability is your family, friends, church, and team moving to self-sufficiency. Not simply stockpiling goods but production of anything a smithy, craftsman, and what was called home economics can produce. The results of your ability to move in this direction as much as possible may one day soon be tested. But overall, it’s a better life, I say again: it’s a better life, a more meaningful and fulfilling existence locally.

We told you here at TCJ 4 months ago that potential economic trouble was brewing, and confirmed a coming recession three months ago.

One day the US economy will collapse. When you print money to infinity, that’s precisely what happens. The predictions have been wrong so far, except for ’39. Of course, when your personal economy collapses, the rest doesn’t matter. Layoffs and firings during inflation are a feedback loop of economic trouble.

Three reads about the recession, maybe collapse.

Armstrong Economics is worth checking periodically when turmoil starts to appear. First, Argentina, which seemingly collapses twice a decade but, this is on the heels of the recent Sri Lanka collapse. One day, perhaps soon, this is our future.

Argentina’s economy has collapsed. Around 57% of adults in the nation are currently unemployed. The Socialist nation has programs in place to compensate, costing the country around $6 million daily. However, socialism no longer works when you run out of other people’s money. July’s inflation report showed an uptick over 60%.

Next 14 signs the US is about to crash.

It looks like we are going to get official confirmation that a recession has already begun when the GDP number for the second quarter comes out later this week. [Fox News has confirmed]  But that isn’t what we should be focusing on.  Yes, things weren’t great during the first half of 2022, but they are going to be significantly worse during the second half.  Small businesses are starting to fail all over the country, a housing crash of potentially epic proportions has started, layoffs are on the rise from coast to coast and economic activity is really slowing down all around us.  So if you think that things are bad now, just wait, because they will soon be a whole lot more painful.

In recent days we have gotten more new numbers which seem to confirm that a major economic slowdown is upon us.  The following are 14 signs that the U.S. economy is poised to crash really hard during the second half of 2022…

And, The Federalist figures it’ll be worse than you think, which is funny because, although you can’t be entirely prepared for such a thing, anybody paying attention has been waiting for The Big Collapse for years, if not decades.

Some experts believe that recent interest rate hikes will translate into a modest decline in growth, but such claims lack evidential support.

Hold your loved ones close, spend time with them now, tell them you love them, and look heavenward to the author and finisher of our faith, Christ Jesus. God will get His glory.

Romans 3:10-26 (Psalm 10:6-7, Isaiah 59:7-8)

I went to a Buc-ee’s. It’s quite an operation. One leaves trying to wrap their mind around what is or is not America and wondering what will become of us. The gas was 10 cents higher than the other stations on the Interstate, but nobody seemed to care or notice; it’s a Buc-ee’s, so presumably, that makes it worth it. Without exaggeration, this one must have more than 100 gas pumps, every lane full; cars, SUVs, or pickups with boomers dragging a fifth wheel.

I’m not sure what the attraction is. The people seem to be there only to be there. Everything was slightly overpriced, and although the food looked pretty good, it was only gas station food. But Buc-ee’s is more than a gas station; it’s a relationship. The BBQ sam’mich was going as fast as they could make them by the dozen.

The lady at the checkout, local as they come, said it’s flat out, non-stop; there must be thousands of people coming and going every day. They’ll pay you $20 an hour to work the overnight shift. She seemed a little slow, but professing Christ, she’s my sister and probably has a more faithful love for the Saviour than I’ll ever know. All some need is a crumb from the Master’s table (Matthew 15:27). God rarely calls those from the high lofts – if that’s you, salvation is no small gift; don’t waste it (Luke 12:47-48).

It’s hard to know if the people going there don’t care about inflation and the state of things in the world, or perhaps that’s the point of stopping at a Buc-ee’s on your road trip; to forget the world. There was no sense at all of the death of America or the irony of the place as a symbol and type of the commoditization of the consumer being a nail in the coffin of the West by ending the tangible work of making and building things. The country’s going to hell, actual, but hey, let’s head to the Buc-ee’s out by the Interstate!?!

There’s a section for T-shirts and hats and Buc-ee’s gear. No, I didn’t get a Buc-ee’s T-shirt. Maybe a twinge of regret since I’m not against self-deprecating humor. An area with very overpriced “local” stuff with a State or nearby tourist attraction theme to it. Many self-serve soda dispensers with Buc-ee’s brand of cola, root beer, orange, and the like. They make their own dessert fudge right there and have other areas with things like that. And, of course, a section of regular snacks like Cheeto’s and Coke in a can for those who need a known degree of danger to their health delivered in a familiar size, shape, and color.

On private property, which sole purpose is to make money, it’s often a tricky business, pretending to browse while not angering a money spender. I was quite the novelty among those from far-flung midwestern and northeastern states. A real live Christian, openly discussing salvation in Christ Jesus and handing out literature about the human soul’s condition and relationship to its Creator. A real oddity, curious looks of wonder all around. Christians really exist, rare, but we saw one at the Buc’ee’s, didn’t we, honey, and it asked me about heaven.

“There is none that understandeth, there is none that seeketh after God.” – Romans 3:11

There is none righteous, no, not one. Nobody understands; none seek God, for it’s the Almighty that calls to them and draws them and makes the previously unaware begin to see His purposes; nobody seeks God but that God reveals Himself. You can talk at the Buc-ee’s to a midwestern tourist all day long about Christ, but they can’t hear you until God speaks to them.

“There is no fear of God before their eyes.” – Romans 3:18

Holy God stands before all men, observing their every thought and deed, but neither can they see Him.  So few now care for the things of the Almighty or ever consider His ways. How does a civilization turn Godless and survive?

And so America tells itself what is said by all those about to suffer a fall: “He hath said in his heart, I shall not be moved: for I shall never be in adversity.” – Psalm 10:6. A fitting verse for an afternoon at the Buc-ee’s, overwhelmed with abundance.

“Whose mouth is full of cursing and bitterness” – Romans 3:14. Compare with: “His mouth is full of cursing and deceit and fraud: under his tongue is mischief and vanity.” – Psalm 10:7

Is that you, a sinner, dead in your trespasses, self-assured yet utterly self-deceived, blind to God? A man can curse God without ever speaking a word.

“15 Their feet are swift to shed blood: 16 Destruction and misery are in their ways: 17 And the way of peace have they not known” – Romans 3:15-17 (see Isaiah 59:7-8). It is an apt description of the American leadership we’ve come to know, realizing they are taking us where almost none but the hopelessly useful idiot dare go.

The place was packed with people, but there was still room to move and browse. Are they conscience, wandering through life, or simply taking a break from the soon-coming and man-made wreckage?

But I did meet a brother in Christ who was missing several front teeth. I know this because I asked him about his eternal station and saw the biggest unashamed smile light up half complex; that man knows Christ, and from what he’s been saved. It never gets old, that smile of the true believer, the blessing of the almighty by His Spirit living in their heart, the wonderfully fearful, and nowadays ever more rare called of God, appointed unto salvation to service of Him. He moved here from England as a child, an Air Force vet, and a good guy. ‘Round these parts, missing teeth don’t mean dumb; that’s just Hollywood.

His Church is a large one, down to about 50 core people as they search for a new Pastor. As hard as that sounds, it appears to be a good thing: find out who’s committed, purge the chaff, gather the dead branches and burn them up, get new leadership, reset, and serve with purpose. He was there just for the spectacle of it all. Neither of us was disappointed.

We talked by a display of beef jerky, a prominent item, being both road food and guy food. It caught my stomach’s attention. I told him we had about forty; that is the core where I go, serving the Lord with consistent purpose. I’m blessed beyond measure to be among folks who love the Lord, seek the lost with the Gospel, work for Christ with purpose of heart and mind, and are training the young. It’s a rare thing where I go, having been to dozens of Churches, many just like the Buc-ee’s, full of tourists who, for the life of their eternal soul, couldn’t explain the purpose or meaning of what their Church exists to accomplish and why they are there or who profits.

Departing from my new friend and heading for the Beef Jerky counter, I got $15, half a pound worth by weight, of the “sweet and spicy,” which was neither sweet nor spicy. And it got eatin’ in the vehicle on the freeway after leaving; this is what one dutifully does with beef jerky on the road. Not dry, somehow, although under spiced, it was pretty tasty. Since they said we couldn’t eat cows anymore, I ate it all ’till I felt a little gurgly in the belly. I still eat dead cows; price is no object if it means one more good ol’ methane-loaded cow fart to make a liberal cry.

I don’t know if America will make it. I suspect not. But my new toothless Buc-ee’s friend and I, we’ll make it. The rest may burn like a roman candle, but we’d like you to know; that you can make it too.

“24 Being justified freely by his grace through the redemption that is in Christ Jesus: 25 Whom God hath set forth to be a propitiation through faith in his blood, to declare his righteousness for the remission of sins that are past, through the forbearance of God” – Romans 3:24-25

The EPA has long been rogue.

The Environmental Protection Agency (EPA) is preparing to cite the United States’ largest oil field for violating ozone pollution standards, a move that will threaten the end of oil and gas production in the region.

According to the Texas Governor’s Office, the proposed regulations will directly affect the Permian Basin, the largest oil field in the United States, accounting for 95,000,000 gallons of gasoline per day or 40% of the oil produced domestically.

This would be just one more move from Biden’s administration to impact the lives of every American by reducing the fuel supply and causing gas prices to soar well beyond Biden’s record of $5 per gallon.

Just get a Tesla and eat the bugs.

It’s not called the Visual Capitalist for nothing. Go see the charts and graphs.

To understand how interest rates influence inflation, we need to understand how inflation works. Inflation is the result of too much money chasing too few goods. Over the last several months, this has occurred amid a surge in demand and supply chain disruptions worsened by Russia’s invasion of Ukraine.

With inflation rates hitting multi-decade highs in some countries, many central banks have announced interest rate hikes. Below, we show how the inflation rate and policy interest rate have changed for select countries and regions since January 2022. The jurisdictions are ordered from highest to lowest current inflation rate.

Raising interest rates is a fine balancing act. If central banks raise rates too quickly, it’s like slamming the brakes on that car speeding downhill: the economy could come to a standstill. This occurred in the U.S. in the 1980’s when the Federal Reserve, led by Chair Paul Volcker, raised the policy rate to 20%. The economy went into a recession, though the aggressive monetary policy did eventually tame double digit inflation.

However, if rates are raised too slowly, inflation could gather enough momentum that it becomes difficult to stop. The longer high price increases linger, the more future inflation expectations build. This can result in people buying more in anticipation of prices rising further, perpetuating high demand.

Allow me to translate. We always mess this up, which is what we’ll do again this time.

Note: This post is categorized under Survival.

I don’t know much. Maybe they have something up their sleeve? We were here at the dot com crash in 2001 and the housing bubble crash ’08-09, but we had average inflation both times.

Option #1, Leave interest rates mostly untouched from here; let the inflation run. This would be very bad, but perhaps it’s the best option? Demand will ease, and prices or alternate forms of payment or both will gradually correct the problem. Compounding inflation will cause years of trials, and it could go hyper; it’s a risk. Although this is the best option, it’s the worst option for TPTB. It means doing nothing and losing legitimacy. (We know, we know.)

Option #2, raise interest rates; currently, it’s just under 1%. This will crash the stock market and the economy with it. They have already done this some and signaled the potential for more. If they choose this option, they should raise it to a 4-5ish percent range over the next 18 months and be done with it. Two to four years of hard times, probably less. Real Americans just don’t care; they roll up their sleeves, get to work, and solve problems. Of course, TPTB hates this idea because it means that they’re not running around claiming to solve everything. This might even be a better option than #1 if the Government were honest upfront about the road we had to take and let us solve our own problems locally.

Option #3, make war. Not whack-a-mole with goat herders, millions dead war. Not that those wars weren’t real to the folks involved, they weren’t of the type where all resources are focused on one national task. This is the worst option for you and me. We get rationing worse than a crashed economy, with no attempt to address the underlying root of the problem. The problem is a currency with no real value because inflation is used to pay the debt. They borrow at today’s dollar and pay it back with inflated (lower value) dollars five years later, but they never stop borrowing either. They’ll choose war; it’s how the money changers and war profiteers settle international accounts; no, not grudges, ledgers of debt to each other.

Well, they do have at least one other.

Option #4, which until recently, nobody would have recognized, but they could starve us all. That solves almost all of their problems and satisfies the money changer’s greatest desire, a provocation to jealousy of you, which is the hatred of Jesus Christ for being right (Romans 11:11). What was Jesus right about, you say? Every. Single. Word!

Note: These posts are categorized under Survival and tagged Economics to warn you of economic trouble ahead.

Over a month ago, we warned you of hard times coming. Earlier this week, we warned you of the potential for recession.

Major stock market indexes are the last to move lower. They are comprised of the largest companies that can weather slow economic times better than most. So, the problem is not yet readily apparent.

The underlying stock market, however, is entering into free-fall. There are over 5000 stocks worth owning, and they are getting sold indiscriminately. This will bleed into the major indexes soon.

“Official” recession is probably less than six months away; it’ll be this fall. Of course, you likely already feel it with the pinch of inflation. The US stock market remains the world’s best forward indicator of economic booms and busts. Everything could change tomorrow, but things look as though they will get stormy soon.

Discuss this with your spouse and dust off your plan, filling gaps and shoring up where necessary. As we mentioned earlier, these things take on a life of their own; it’s hard to know where this ends. Remember that fear is not of God, and knowledge is the foremost essential tool for survival.