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Thursday, January 7, 2016

Commodity Prices Collapse...Population Growth Decelerating...Disorder Becoming the New Norm

Global Population growth is decelerating and will continue decelerating indefinitely...Global credit, debt, and leverage are moving to the inverse as the substitute for the missing growth (thanks to central banks decades of interest rate cuts).


The fall in commodity prices is breath taking... Below are those commodities which broke down in '11 and have only kept falling...

 70% Decline
70% decline 

 50% decline 
60% decline 
55% decline 
45% decline 
55% decline 
68% decline 
  • Rubber < -81%>
  • Iron Ore < -75%>
  • Uranium < -75%>
  • Zinc < -64%>
  • Fertilizers < -65%>
And then there's these late '12 peakers...
60% decline
40% decline 
 65% decline since '08...50% decline
The dollar bottoms in '11...moves in '14
Those that fell with the dollar in '14
76% decline from '08---73% from '14
85% decline since '08---70% from '14
45% decline 
60% decline 
40% decline 

The Federal Reserves policies incented massive overinvestment in everything, including commodities production.  US and global debt has run it's course but the depression to clean out all the massive overcapacity will likely be one for the ages.

And below the last vestiges of "recovery" and "normalcy"...but the head and shoulders breaking down now looks a bit ominous for those who believe in markets.

All this seems to be indicating the world economy is slowing rapidly and the deflationary, depressionary, depopulating impulses are set to overwhelm central bankers.  Central banks can make money cheaper but that can't make more people.  Some very serious stuff is now upon the world and far worse is almost sure before we can ultimately hope to turn a corner in some sort of reset.  I really don't know of anywhere to sit this one out or how to make your millions of the trouble to come.  I think it's likely a prudent goal to simply survive it...and then focus on how to thrive on the way out and afterward.


  1. Could you create a post that centers around the housing market? would love to see your thoughts.

    1. Perhaps do one yourself? Demographics and immigration are big factors in creating demand. Psychologically, expectations of future price increases leverages the demand into a frenzy. However, the ease at which banks will lend for house purchases creates the price trend.

      So, there you have it. Increasing house prices are mainly dependent on expectations of increasing house prices. This helps lenders lend and borrowers to borrow.

      So, to buy or not to buy. To sell or not to sell. It really depends on what your expectations of everyone else's expectations are. Which sums up today's financials markets too. Best of luck in your financial guesses.

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  3. Pretty clear the Fed's mission was to ensure continued inflation in the markets, and allow deflation in everything else. There is no more slack in the economy to accept additional debt/QE, so now the goal is to reduce input costs by deflation. This may allow people whose average wages have stagnated to continue to consume, and allow companies to maintain profit levels when demand has stagnated (due to stagnant wages).

    The issue is, material input costs are so minor, I don't see much benefit to either group. Taxes, fees, rent, mortgages and other overheads take outsized chunks of the money feedstocks companies and individuals utilize.

  4. Civilization is cyclical. We appear to be at the peak of Industrial Civilization. It was fun while it lasted; now it's time scale back down and ride out the consequences of two centuries of excess. We aren't the first people to be in this position. Ask the Romans c. 476, the Hittites c. 1176BC, or the Sumerians c. 2200. What goes up must come down.

    My attitude is to enjoy the many benefits of living in the industrialized west while they're still around while learning the skills necessary to be a part of a resilient community. One can't let oneself fall into depression over impending collapse. Life goes on (even if, as your post points out, there will be fewer of us living as time marches on).

  5. Amazing, I have concerns about deflation without noticing we have been deflating for years. I knew about oil, gold and copper but not cotton and the rest. Thanks Chris.

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