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evetsm

Don't Bet Against An Investor With Annual 30% Returns For 25 Years

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Stanley Drukenmiller thinks it's all over. In 1981 with risk free rates at 15% we entered the golden age of investing. If that was the golden age, what with rates at zero and below ? Unlike the pre-stimulus period, when it took $1.50 to generate a$1.00 of GDP, it now takes $7.

the growth in operating cash flow peaked 5 years ago and turned negative year overyear recently even as net debt continues to grow at an incredibly high pace.Never in the post-World War II period has this happened. Until the cycle preceding the great recession, thepeaks had been pretty much coincident.Even during that cycle, they only diverged for 2 years, and by the time EBITDA turned negative year over year, as it has today, growth in net debt had been declining for over 2 years.Again, the current 5-year divergence is unprecedented in financial history!

If we have borrowed more from our future than any time in history and markets value the future, we should be selling at a discount, not a premium to historic valuations. It is hard to avoid the comparison with 1982 when the market sold for 7x depressed earnings with dozens of rate cuts and productivity rising going forward vs. 18xinflated earnings, productivity declining and no further ammo on interest rates.

http://www.zerohedge.com/news/2016-05-07/stan-druckenmiller-endgame-his-full-apocalyptic-presentation

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Druckenmiller said that while the Fed and policymakers have no endgame, markets do - hinting that one is rapidly approaching - and suggested that everyone should liquidate their equity holdings and buy a certain 5000 year old shiny asset, which as we reported earlier this week, is Druckenmiller's "largest currency allocation."

http://www.zerohedge.com/news/2016-05-07/stan-druckenmiller-endgame-his-full-apocalyptic-presentation

Let us not ignore the 800 pound gorilla in the room that Druckenmiller mentioned: Gold.

Edited by Silverfinger

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The largest holders of US debt is US citizens. To default on them would be massively deflationary.

And to make them whole, massively inflationary.

The money was spent, unwisely. The only moral option is default.

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These people really dont understand what a central bank does do they.

Oh well, their loss.

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These people really dont understand what a central bank does do they.

Oh well, their loss.

No, they know exactly, to their advantage and safety.

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