Trillions Anew: If The Fed “Wins” This Battle We All Lose - a podcast by McAlvany ICA

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The McAlvany Weekly Commentary

with David McAlvany and Kevin Orrick



Trillions Anew: If The Fed “Wins” This Battle We All Lose

April 8, 2020



"We’re talking about instinctive preservation. We’re talking about a desire to avoid pain. And these are things which, although we cannot see the future, as you rightly say, we don’t have a crystal ball, we do know some of the more predictable aspects of human behavior in light of the pressure points created by monetary and fiscal policy. So what are we looking at for market outcomes? These again, are the predictable aspects of human behavior, and where Dalio thinks, we do agree, gold makes a tremendous amount of sense. "



- David McAlvany



Kevin: You and I were talking last night, Dave, about how this is such a strange period of time because it is not normal, what we have considered normal, and even our sleep patterns – you’re not going to be running that Ironman that you thought you were going to be running because that was cancelled. And your body is now catching up. You are actually sleeping more hours than you probably were. But you mentioned to me something last night that I really related to, and that is, I’m sleeping harder when I sleep, but I’m waking up 3:00 or 4:00 in the morning and my mind is just continually processing. And I’m wondering it is it not rewiring for a new normal, trying to figure out its future memories of something it has never really encountered before.



David: There is a lot of processing going on, and there are times that sleep is actually not an easy thing for me, I’m just processing so much. You remember when we went to the conference in Austin and we met Doc Parsley, ex-navy seal doctor who came up with sort of a concoction of tryptophan and melatonin and all natural stuff to be a sleep aid? On my goodness (laughs).



Kevin: Yes, I do.



David: Well, right now I don’t even need Doc Parsley, I’m just crashing at the end of the day. And as you said not because I’m over training here, but yes, I think there is a process of figuring out a new normal. And when the future is not crystalized I think fear is something people deal with that all too common. And Covid-19 is, we would all like to acknowledge, is a temporary concern. You have stress that exists, and to a great degree, it is here because we really don’t know just how temporary it is. And so that is the point, we really don’t have an end to it.



So the future remains clouded. We have the stay at home orders that are temporary. But again, what does that mean exactly? Is it another few weeks? Is it months? And the economy – we have a full stop for the economy. This was never a factor, even during a World War when consumption might have been curtailed and redirected and certainly production was redirected, geared toward the war effort. Employment was very robust, even in the context of a national crisis like that. Marc Faber in his most recent letter quotes Joseph Schumpeter, and Schumpeter says, “Our analysis leads us to believe that recovery is sound only if it does come of itself, for any revival which is merely due to artificial stimulus leaves part of the work of depressions undone, and adds to an indigested remnant of maladjustments, new maladjustments of its own.”



Kevin: What it really reminds me of, Dave, we’re talking about sleep cycles. If you cheat the sleep cycle for long enough, it will kill you. In a way, we have cheated, if you count these adjustments of the economy down as a sleep cycle, we have tried to shorten them with a form of caffeine, central bank caffeine. Look at the stock market – somebody says that’s the new normal...

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