# One On One With Karl Denninger



## UncleJoe (Jan 11, 2009)

Forget about the outcome of the Greek elections. The only thing that matters, according to Karl Denninger of Market-ticker.org, is math. Denninger thinks, "The powers that be are lying about the solvency of institutions and this is doomed to fail."

He still thinks the financial crisis "detonates before the election," and "layoff numbers start going back up." If the U.S. isn't careful, we could be looking at a sudden 50% to 75% cut in the federal budget. Greg Hunter goes one on one with Karl Denninger.


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## BlueShoe (Aug 7, 2010)

Some people are saying before the election and the year end. Some say in 12 months the stock market could lose 60 to 90 percent and gold to 3000 to 5000. Denniger is a bit of an alarmist. I don't trust him to time markets unless other trusted sources say the same things. 

When Bernanke said we wouldn't monetize debt and then he turned around and monetized debt, Karl was shrieking to "get your money out of the dollar right now!" That was 3 yrs ago I believe. What's the saying, "Bulls and Bears get fat, but pigs get slaughtered." Don't be greedy. Don't time highs and lows. Judicious investment.


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## machinist (Jul 4, 2012)

I've read Karl's stuff for several years and respect what he says a lot. I am less concerned with timing than I am the direction of events. Timing is almost impossible to predict, from what I've seen. He correctly says that the unwinding of all the bad credit out there (mortgages, Greek and other government bonds), will go poof when everyone loses confidence that they would ever be paid back. That is a deflationary event. Then, we get bank runs, and banks go poof, like the movie, "It's a Wonderful Life". Nobody buys anything much and businesses close, like the 1930's.

The problems for predicting the outcome we'll have, show up when we have to factor in the reactions of central banks and governments, since that is still undetermined. If at some point (looks inevitable to me) nobody will buy government bonds, then the govt. will have to live on its' income like the rest of us. Karl says that would mean a 50% to 75% cut in government spending, instantly. Those on the government dole would scream bloody murder. 

The alternative is for the govt., complicit with the central bank (Federal Reserve) could create massive amounts of money out of thin air and pass it out to the people, immediately followed by hyperinflation. This is the last shot at can-kicking, and it doesn't last long before the dollar would be worthless. 

So. What will they choose? I'm betting, along with Johm Williams of Shadowstats, on money printing and high, if not hyper-inflation. Say, the dollar devalues by half, or maybe down to 1/5 of its' present value. Argentina did this a few years back and devalued their currency by 3 to 1. If this gets out of control, then we get a Zimbabwe or Weimar Germany event where the urrency becomes worthless. My guess is based on what central banks are doing now creating money from nothing and giving it to banks and governments. Also, they have done it before in the US. Twice. Once to finance the Revolutionary War with "Continental Dollars". They became so worthless that a colloquial phrase endured into the 1950's, "Not worth a Continental damn", reflecting that time. Later, Lincoln issued "Lincoln Greenbacks" to finance the Civil War and it happened again. He was trying to escape the clutches of the bankers who wanted to charge him 20+% interest for war loans. IMHO, it was those bankers hwo had him shot for making that attempt to circumvent their control of US govt. money. John Kennedy tried something like that, too. 

The hedge against deflation is to hang onto every cent now, because prices will be lower later like real estate has done. The hedge against inflation is to spend/invest now in hard assets (land, durable goods, food, preps, etc.) so you don't have to pay outrageous prices for those later. Choose your poison, and better hope you are right. 

If I'm wrong, I lose a lot. If I'm right, I lose, but not so much. Looks to me like everybody is going to lose to some degree. In any case, like the old curse, "we live in interesting times".


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## BlueShoe (Aug 7, 2010)

Jim Sinclair coined the phrase "QE to infinity", as the answer to the question, "How do you see this ending?", and a lot of people in the industry are on board with that statement. That's what the central banks have shown and that's what central banks are predicted to do all the way down the drain.

Central banks have more tricks up their sleeve that some of these guys don't take into account, or are even aware of. That's why they can't time the market like they think they can. The banks aren't playing fair.

Central banks are to the point of pushing on a string again. The can has been kicked down the road and now they've caught up to where the can is. What will they do? Everybody knows what they're going to do now. 

I'm reminded of Dave Ramsey screaming on the radio once a month through 2007 and 2008 that the stock market will not crash. That Robert Kiyosaki (sp) is a loon. That the economy will not fail because the small number of high risk loans and foreclosures couldn't cause this to happen. Then he stated the number of these high risk loans and did the math on air as proof. Unfortunately Dave didn't know two things: (1) corporations were lying. (2) he didn't know about derivatives in the financials markets, because the wheels came off the bus. Dave needs to stick to what he is good at, and that is talking people out of debt. He's an idiot on investments and financials markets.


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## machinist (Jul 4, 2012)

Yes, Jim Sinclair, Chris Martenson, Gonzolo Lira, and particularly, Marc Faber are on board with the "printing" thing, although the money creation is digital entries and printing is metaphorical now.

Faber says to hold gold, but not IN the US. Faber, however, has for some time been saying it would take a while yet, maybe another 2 years, maybe not. Wisely, he won't commit to timetable.


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