Stocks Bear Market Rally Nearly Over and Zimbabwe Economic Solutions
Stock-Markets / Stocks Bear MarketMar 26, 2009 - 07: 13 PM
By: Clive_Maund
The bear market rally in the broad US stock market is thought to have about run its course,
although it could run as far as 900 on the S&P500 for reasons set out below. The rally had its
origins in extremes of negative sentiment before it started, so that once it got underway it was
fuelled by short covering and media hype, especially the Obama optimism effect. In particular the
big jump on Monday was portrayed almost as the start of a new bull market. Actually, Wall St had
good reason to celebrate on Monday, for as Dr Housing Bubble makes clear in his article Public -
Private Investment Plan for Dummies , the PPIP as it is known is just another gigantic scam to
funnel taxpayers money into Wall St's pockets.
We should therefore bear in mind that due to this latest highly successful fleecing of the taxpayer
by Wall St, we could see the rally continue even further to the 900 area on the S&P500. However,
upcoming earnings are expected to be AWFUL and this should pull the rug from under this rally
before much longer. So if we see any significant further progress by the broad indices it will be
time to go short.
There are two central problems that prohibit the return to normal healthy growth of the US
economy. One is that natural cyclical recessionary forces have been obstructed for so long that
they have built up to disastrous proportions, especially as speculation and pyramiding via
derivatives have ballooned the excesses to astronomic proportions, and as is already plainly
obvious, these forces are now unstoppable. Like King Canute trying to stop the tide coming in,
the response of the system to these devastating corrective forces is to try to beat them back by
employing more of the excesses that created the problems in the first place. Hence the continued
bailouts and the buying up of Treasuries etc.
This is like a gambler on a losing streak finally going down in a blaze of glory as he throws
everything he has on to the table, only to lose anyway and be shown the door. The ultimate
outcome of all this will be a hyperinflationary depression - money becoming worthless and most
everyone and everything broke and dysfunctional. The other central problem is that the country is
essentially run as a gigantic crime syndicate - corruption at the top, across the government and
throughout the banks and Wall St is now so deep rooted and endemic that there is only one way
that the people can rid themselves of it. Right now, after years of soft living the population don't
have the stomach to do what is necessary to rid themselves of these parasites, and it will only be
when the television flickers and dies and the supermarket shelves are empty that the average
American hauls his weighty posterior out of the armchair with the intention of \"doing something
about it\" only to find himself being taken down to one of the large compounds already organized
where he can meet and chat with plenty of people like himself.
With last week's announcement by the Fed and subsequent developments, the powers that be
have \"nailed their colors to the mast\" and made it plain that they are going to manufacture as
much money as they think is necessary to prevent the system from imploding - in particular to
stop the Treasury market from collapsing and to keep the zombie entities at the center of the
crisis limping along. What they have neglected to mention, and what you have to figure out for

yourself, is that given the magnitude of debt and especially the enormity of the derivative
deleveraging going on, they are going to end up creating blizzards of money to battle the monster,
and that means that we are on the road to hyperinflation.
Yet, despite the intent to exponentially increase the money supply to battle the deflationary
juggernaut, there is no guarantee that they will succeed - on the contrary, due to its enormity,
they are likely to fail, and their obstinate and misguided attempts to block the necessary cleansing
forces of contraction, obstructed for so long that they have built up to disastrous proportions, will
only make the inevitable collapse that much more total, and involve the destruction of Fiat
currencies worldwide, and the forcible elimination of the old order that created this enormous
mess by a deeply discontented populace, who will by this time be highly motivated by a lack of
food, water and electricity.

If someone told you that the the broad stockmarket will double over the next 2 years you might
reply \"Great - I can recoup my huge losses!\" Trouble is, if you sell for your stocks for twice their
current price in 2 year's time and go into town to spend the proceeds you are likely to find that
your dollars will only buy a quarter as much as they would today, or less. Doesn't sound so great
now, does it? Forget the Austrian School of Economics - welcome instead to the new era of the
\"Zimbabwean School of Economics\" which has been field tested and proven in the country which
inspired its name.
Proper application of the schools' precepts will ensure that there is always enough money for
everything - problem with a budget deficit? - no problem, just create the money and pay it off,
problem with insufficient demand for Treasuries? - no problem, just create the money and buy
them, problem with interbank liquidity? - no problem, just pump money into the banks until they
have so much they are throwing it out of their tall buildings by the binload, problem with restive
workers pay demands? - no problem, just create the money and pay them more, problem with not
being able to pay the CEOs of bankrupt companies their accustomed huge bonuses? - no
problem, just create the money and pay them their bonuses, and why not double them?
So we see that there really is no excuse for a liquidity shortfall at all - the problem until now is
clearly that those responsible for creating the money have been too conservative, too timid, they
have not been bold and imaginative enough - perhaps this is because they have not fully realized
the power at their disposal, not fully appreciated that without the restraint of a gold standard, the
sky is indeed the limit - why should anyone who wants anything go without? - especially if they
are big and powerful and have intimate connections with influencial figures in the government.
Fortunately, as the events of the past week have shown, they are waking up to the error of their

ways and starting to see the light. We can therefore look forward to 100% cooperation from the
US Treasury and Fed in the fight to beat back the demons of illiquidity.
The general stockmarket went wild on Monday celebrating the adoption of the Zimbabwean
School model and the unveiling of another plan to siphon taxpayer Money into Wall St. The
Precious Metals sector, overbought after last week's spike, has had to surrender the limelight
temporarily, but don't expect that to last long. Gold and silver are going to go nuts as a result of
implementation of the Zimbabwean School's precepts. This is because an unfortunate flaw of the
Zimbabwean School's model is that it is more difficult to expand the supply of goods and services
in an economy than it is to expand the money supply.
This really is a shame because with so much money flying around many people should by rights
be rich, but instead they are going to spoil everything by bidding up the price of good and
services across the board, so that those who want to preserve the purchasing power of their
money will have to convert it into something whose supply is finite and cannot be significantly
expanded at short notice, the ideal choices being gold and silver. When the world of Fiat
hyperinflates into oblivion the stampede into tangible assets will accelerate and drive a huge
parabolic spike in prices with those tangible assets that are compact and durable being the most
favored, these of course being gold and silver. It is to be hoped that the stewards of the Fiat
money system do not wait until it collapses in smouldering ruins before they restore sanity and
order by reinstating The Gold Standard.
By Clive Maund
CliveMaund.com
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© 2009 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on
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