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The Fed Disaster Plan — How Bad Can it Get?

************************************* Hi, Grant Linhares here, the Trading Services Director for Mark Skousen. I just have a quick reminder that you are…




Hi, Grant Linhares here, the Trading Services Director for Mark Skousen. I just have a quick reminder that you are in good hands with Dr. Skousen — especially in this volatile market. I would also like to remind you that “Winner’s Circle,” a lifetime bundle of all of Mark’s services, is now open. This is a great opportunity to use all of Mark’s services to navigate and profit in these markets, especially in the new year, at a great price. Simply give me a call at 1-202-677-4492 today, and I’ll give you your personalized quote to join as you get a prorated refund for your current products. But hurry, this offer expires on Dec. 22!


“There’s always a bigger junkyard dog.” — Dennis Gartman (“Maxims of Wall Street,” p. 84)

Earlier this year I warned my subscribers about the Biden Disaster Plan — which was to push through massive deficit spending, causing prices to rise to their fastest level in 40 years.

Then, I alerted subscribers to the Trump Disaster Plan — that kept the Republicans from gaining control of the Senate while narrowly eking out a majority in the House when the new Congress convenes Jan. 3.

And now I’m alerting them to the Fed Disaster Plan — raising interest rates in a fast and furious fashion, causing a bear market on Wall Street, a potential recession and perhaps even a monetary crisis in 2023.

Wall Street has a hard time believing Fed Chairman Jay Powell, and that he’s determined to fight inflation and bring it down to the 2% target rate.

Most Wall Streeters want the stock market to go up and are convinced that the Fed will back down. But so far, every time they have been proven wrong, and the stock market tanks after Powell declares that once again, he’s determined to impose tight money until price inflation comes down, a recession hits or a monetary crisis erupts.

Powell and the Fed (along with Biden and the Democrats) caused massive inflation in the first place through their easy money policies during the 2020-21 pandemic.

Now, he’s facing the music and wants to reverse the trend through a tight money policy. We now have a negative yield curve with T-bill rates at 4.3% and 10-year notes at 3.6%. 30-year fixed mortgage rates are now at 7%.

Negative yield curves are a big deal, since almost every recession has been preceded by a tight money policy, as the chart shows below:

There is a lag, but eventually a negative yield curve causes a recession. According to my gross output (GO) data, we are not in a recession yet, but it could happen in 2023. I’ll have an update on GO on Thursday, Dec. 22.

Tesla and the Bear Market

We’ve been in a bear market for the entire year. Tech stocks, in particular, have been hard hit.

Tesla stock continues to decline and is now down 55% year to date. In early October, I confronted Elon Musk about overvalued Tesla stock (still selling at 70 times earnings) at the Baron Investment Conference. You can watch the confrontation here. It’s gone viral on Facebook.

I raised the question, “Why should I invest in Tesla selling at 70 times earnings when Mercedes Benz, which also makes electric cars, is selling for only six times earnings and pays an 8% dividend?”

Be sure to listen to Elon Musk’s response.

Afterward, I recommended Mercedes Benz stock in my Home Run Trader service. It’s up 15% while Tesla stock has fallen another 25%.

For more information on my Home Run Trader service, click here.

Investors Lost Even More Money in FTX

Bear markets also reveal financial frauds. The Bernie Madoff Ponzi scheme unraveled after the financial crisis of 2008.

Now we are witnessing the FTX crypto scandal. Headquarterd in the Bahamas, FTX was a cryptocurrency exchange (with over 1 million users) and hedge fund started by Sam Bankman-Fried in 2019. In a matter of years, he became a multi-billionaire who, according to government officials and other investigators, embezzled his clients’ funds and committed voter fraud by funding numerous Democratic candidates during the 2022 election.

According to Bloomberg, his net worth fell from $26 billion to almost nothing within weeks, the worst collapse in history.

Did his Parents Play a Role?

Sam Bankman-Fried came from a blue-blood background: His father is Joseph Bankman and his mother is Barbara Fried, both professors of law at Stanford University Law School. Both were with their son in the Bahamas at the hearings to extradite him to the United States.

Joseph Bankman is an expert in tax law (especially issues related to tax evasion) and psychology. He’s a graduate of Yale and Berkeley.

His wife, Barbara Fried, teaches the Legal Studies Workshop at Stanford, which includes a major section on moral/political theory. She was awarded “excellence in teaching” awards three times. She received all three degrees (BA, MA and JD) from Harvard. His sister Linda Fried teaches public health at Columbia University.

Their son, Sam, graduated from MIT.

So, it has not been a good year for the reputation of Ivy League schools. Or the Democratic Party. Or Bitcoin and cryptocurrencies. Or the Bahamas.

Action to Take: I urge investors to play it conservatively as we enter a new year with a diversified portfolio: high-dividend paying stocks, commodities such as oil and gold, and a cash position to take advantage of bargains. Such an approach will cushion the fall and will set you up to see strong gains when the market recovers.

One More Find in my Garage: A Special Edition of My Financial Privacy Book!

As subscribers know, I cleaned out my garage in my Florida house last month and came across several boxes of first editions of past bestsellers, including “Economics on Trial”, “Economics of a Pure Gold Standard” and “Scrooge Investing”. I sold them to my subscribers, and all of them sold out within a day or two.

One box contained 17 copies of a special 1982 private edition of “Mark Skousen’s Complete Guide to Financial Privacy” — all copies are hardback, come with a book jacket and are shrink wrapped in perfect condition.

My privacy book, in various editions, sold over half a million copies. It was my #1, national bestseller.

Although some of the advice is out of date, the privacy book raises issues that are even more relevant today. In this computer age, it’s almost impossible to be a “private investor” anymore. Government and big business are constantly monitoring your every move, your finances and even your political views. China is the worst example, but it’s a big problem in the United States and the West as well.

As Supreme Court Justice Louis Brandeis said, “The right most valued by all civilized men is the right to be left alone.” (“Maxims of Wall Street,” p. 95)

Chapters include “What have you got to hide?”…“How to be an international private investor”… “Safekeeping your valuables”… “Privacy and the tax man” and “The private will.”

I’ve decided to sell these 17 copies for $47 each. I’ll autograph and date each one. When they’re gone, they’re gone. To order, go to

Financial Privacy in ‘The Maxims of Wall Street’

I have several pages in “The Maxims of Wall Street” on financial privacy and the importance of maintain a low profile.

Christmas is less than two weeks away. If you would like to buy one or more copies of “The Maxims,” order them today. Only $20 for the first copy, and $10 for all additional copies. I sign all books and mail them at no additional charge inside the United States. Order at

P.S. I will be holding a subscribers-only teleconference at 2 p.m. EST on Dec. 21 entitled “How To Profit from the Fed’s Disaster Plan.” The event is free for all my subscribers, but you have to register here to be able to attend. Don’t miss out!

Good investing, AEIOU,

Mark Skousen

You Blew It!

Nation’s City Council Votes to Eliminate Bus Fare

“There’s always free cheese in a mousetrap.” — Congressman H. R. Gross

Earlier this year, the Washington D.C. City Council voted unanimously to make bus transportation free in the city, to encourage downtown business and evening activity.

But, of course, nothing is free. Taxpayers will foot the bill, amounting to an estimated $42 million a year. The Washington Metropolitan Area Transit Authority currently faces a budget deficit of $185 million.

Mayor Muriel Bowser has also promised repeatedly to end homelessness in the nation’s capital and has already spent $31 million to get people off the streets and another $114 million to improve local shelters.

But I suspect that the free bus fares will only increase the appeal of the homeless to move to Washington D.C..

The Unintended Consequences of Socialism

In my economics classes at Chapman University, I always warn students about the dangers of offering “free” college tuition and “free” medical services or any other valuable commodity or service. It always results in abuse, fraud, overuse of resources, higher taxes and an entitlement mentality.

Take college tuition, for example. When students don’t have to pay for their college education, they often don’t appreciate its value and aren’t as competent when they graduate and take on a new job.

On the other hand, studies have shown that students who pay for their schooling choose their major sooner, get better grades and graduate on time. Economics is all about incentives.

Now I’ll have to add “free” bus fare to my list of bad economic policies.

The post The Fed Disaster Plan — How Bad Can it Get? appeared first on Stock Investor.

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New ways to protect food crops from climate change and other disruptions

“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether…



“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether – because of war and conflict and corruption and destabilization – we do,” said World Food Programme leader David Beasley in an interview with Time magazine earlier this year.    

Credit: NMBU

“There’s no doubt we can produce enough food for the world’s population – humanity is strategic enough to achieve that. The question is whether – because of war and conflict and corruption and destabilization – we do,” said World Food Programme leader David Beasley in an interview with Time magazine earlier this year.    

Indeed, projections show that we are not on track to achieve Sustainable Development Goal 2 of Zero Hunger by 2030. As climate and security crises continue to destabilise our food sources, researchers are taking a critical look not just at how we produce food – but at the entire systems behind our food supplies. In this case, the systems behind the seeds that produce our food crops.    

“Whilst adapting crops to climate change and conserving their variation is essential for food security, these measures are meaningless if farmers do not have access to the seeds,” says crop scientist and food system expert Ola Westengen. Westengen leads the team of researchers from the Norwegian University of Life Sciences (NMBU) who recently reviewed the state of seed systems for small-holder farmers in low/middle income countries. Their findings are now published in the Proceedings of the National Academy of Sciences (PNAS).   

What are seed systems?    

Seed systems are the provision, management and distribution of seeds. They cover the entire seed chain, from the conservation of their diversity and variety development, to their production and distribution, and the rules that govern these activities.  In short, they are the structures that make seeds available to farmers so that crops can be sown, harvested and end up on our plates.    

Whilst a well-functioning seed system will ensure seed security for all farmers, the researchers say that, in practice, it is rarely the case that seed systems function as well as they might. Seed systems can be disrupted by conflict and disasters, as well as by problems stemming from social inequality, lack of coordination or inappropriate policies.      

What does this study tell us that we don’t already know?   

“There are recent innovations and investments by governments and donors to improve farmers’ access to diverse crop varieties and quality seeds,” explains Teshome Hunduma, a seed governance researcher and co-author of the study. “For example, there are now more flexible policies and regulations that encourage diversity in the seed systems used by farmers, rather than pushing farmers to switch to commercial seed systems that focus on less diverse commodity crops – which is the norm.” Commodity crops are those grown in large volume and high intensity for the purpose of sale, as opposed to those grown by small-holder farmers for direct processing and consumption.   

“The study highlights emerging initiatives that are helping farmers to secure food supplies, such as participatory plant breeding,” says Teshome. Participatory plant breeding is the development and selection of new crop varieties where the farmers are in control. Farmers, who know the needs of their farms best, work with researchers and others to improve crops and develop plant varieties that are in line with their household needs and culture, and that are resilient to environmental and climate challenges.    

“Farmers prefer and need different types of seeds, based on diverse social, cultural and ecological conditions,” adds ethnobotanist and co-author Sarah Paule Dalle.       

The study discusses various disruptions to farmer’s access to seeds. Social inequality is one such disruption. How so?   

“A seed system that only serves a segment of a farming society contributes to seed insecurity,” replies Teshome. “For example, commercial seed systems deliver high-yielding varieties of quality hybrid seeds. Whilst wealthy farmers can afford such seeds, poor farmers can’t.”    

“Similarly, whilst commercial seed systems that focus on commodity crops may benefit men who might primarily be interested in market value, such systems have little to offer women who want crops that provide household nutrition and meet their cultural preferences.”   

“This means poor farmers and women do not have the same access to seeds that meet their needs. The result is seed, and thus food, insecurity due to social and economic inequality.”     

Political-economic factors have driven the globalization of food systems over the last decades, which also includes seed systems. “Seeds have become big business”, say the researchers. According to studies quoted in the article, the four largest multinational companies in seed trade today control about 60% of the ~50 billion USD global commercial seed market. The large private actors have the power not only to shape markets, but also to influence science and innovation agendas and policy frameworks.     

This can be problematic, say the researchers, when private sector research and development typically focuses on the most profitable crops, such as maize and soy. Crops grown and consumed by subsistence farmers are thus largely neglected, and the potential of crop diversity – the foundation of agriculture – remains largely untapped. Technology that could help develop more robust varieties remains hypothetical.   

How does the ownership of crop diversity threaten food supplies and what can be done?      

The term crop diversity refers both to different crops and different varieties of a crop. According to the Global Crop Diversity Trust (one of the world’s primary international organizations on crop diversity conservation), securing and making available the world’s crop diversity is essential for future food and nutrition security.      

“Plant breeders and scientists use crop diversity to develop new, more resilient and productive varieties that consumers want to eat, that are nutritious and tasty, and that are adapted to local preferences, environments and challenges,” explains Benjamin Kilian, a plant genetics expert at the Global Crop Diversity Trust. The Crop Trust, together with the Norwegian University of Life Sciences, implements the major project from which this study emerged: Biodiversity for Opportunities, Livelihoods and Development (BOLD). Coordinated by Kilian, the project supports the conservation and use of crop diversity to strengthen food and nutrition security on a global scale. It builds on the Crop Wild Relatives project and is funded by the Norwegian government.   

“In the BOLD project, researchers work with genebanks, plant breeders and others in the seed value chain to co-develop seed systems that are both resilient to climate stresses and inclusive of small-holder farmers on the frontline of adaptation,” adds Westengen.     

Will access to seeds in the vulnerable areas that you are studying be improved in time to make a difference?   

“We hope so, if we make the right moves to include small-holder farmers in seed system development,” says Dalle. “A well-functioning seed system should also be resilient. That is, it should withstand shocks such as drought or pandemics and breakdowns or disruptions such as war and conflict.”    

“To do this, the system should promote a diversity of seeds, both local varieties and those improved to better adapt to stresses. It should also involve diverse groups of people such as farmer cooperatives/groups, and both public and private companies to increase the choice of seeds and seed sources. During lockdowns in the COVID-19 pandemic, for example, farmers’ own seed systems enabled access to seeds in developing countries when the activities of private companies and agro-dealers were restricted,” explains Dalle.   

Westengen summarizes: “Our study highlights links between the crucial work of the Global Crop Diversity Trust and the farmers on the frontline of adapting our food systems to climate change. It is an argument for co-designing seed system development in full cooperation with farmers and other actors in the seed system. This way, efforts can meet the needs of various groups of farmers in different agroecological contexts. There is no one-size-fits-all; if there is one natural law in biology, it is that diversity is key to future evolution. That also goes for seed systems – and food system development.”   

Navigating towards resilient and inclusive seed systems by Ola T. Westengen, Sarah Paule Dalle and Teshome Hunduma Mulesa was published in Proceedings of the National Academy of Sciences (PNAS) this week. PNAS is widely considered one of the most prestigious and highly cited multidisciplinary research journals.   

About the Norwegian University of Life Sciences (NMBU)  
NMBU’s research and education enables people all over the world to tackle the big, global challenges regarding the environment, sustainable development, how to improve human and animal health, renewable energy sources, food production, and land- and resource management. 

 About the Crop Trust 
The Crop Trust is an international organization working to conserve crop diversity and thus protect global food and nutrition security. At the core of Crop Trust is an endowment fund dedicated to providing guaranteed long-term financial support to key genebanks worldwide. The Crop Trust supports the Svalbard Global Seed Vault and coordinates large-scale projects worldwide to secure crop diversity and make it available for use. The Crop Trust is recognized as an essential element of the funding strategy of the International Treaty on Plant Genetic Resources for Food and Agriculture.  

About the BOLD Project 
BOLD (Biodiversity for Opportunities, Livelihoods, and Development) is a major 10-year project to strengthen food and nutrition security worldwide by supporting the conservation and use of crop diversity. The project works with national genebanks, pre-breeding and seed system partners globally. Funded by the government of Norway, BOLD is led by the Crop Trust in partnership with the Norwegian University of Life Sciences and the International Plant Treaty. 

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A Federal Reserve Pivot is not Bullish

An old saying cautions one to be careful of what one wishes for. Stock investors wishing for the Federal Reserve to pivot may want to rethink their logic…



An old saying cautions one to be careful of what one wishes for. Stock investors wishing for the Federal Reserve to pivot may want to rethink their logic and review the charts.

The second largest U.S. bank failure and the deeply discounted emergency sale of Credit Suisse have investors betting the Federal Reserve will pivot. They don’t seem to care that inflation is running hot and sticky, and the Fed remains determined to keep rates “higher for longer” despite the evolving crisis.

Like Pavlov’s dogs, investors buy when they hear the pivot bell ringing. Their conditioning may prove harmful if the past proves prescient.

The Bearish History of Rate Cuts

Since 1970, there have been nine instances in which the Fed significantly cut the Fed Funds rate. The average maximum drawdown from the start of each rate reduction period to the market trough was 27.25%.

The three most recent episodes saw larger-than-average drawdowns. Of the six other experiences, only one, 1974-1977, saw a drawdown worse than the average.  

So why are the most recent drawdowns worse than those before 1990? Before 1990, the Fed was more active. As such, they didn’t allow rates to get too far above or below the economy’s natural rate. Indeed, high inflation during the 1970s and early 1980s forced Fed vigilance. Regardless of the reason, higher interest rates helped keep speculative bubbles in check.

During the last 20 years, the Fed has presided over a low-interest rate environment. The graph below shows that real yields, yields less inflation expectations, have been trending lower for 40 years. From the pandemic until the Fed started raising rates in March 2022, the 10-year real yield was often negative.

real yields wicksell

Speculation often blossoms when interest rates are predictably low. As we are learning, such speculative behavior emanating from Fed policy in 2020 and 2021 led to conservative bankers and aggressive hedge funds taking outsized risks. While not coming to their side, what was their alternative? Accepting a negative real return is not good for profits.

We take a quick detour to appreciate how the level of interest rates drives speculation.

Wicksell’s Elegant Model

A few years ago, we shared the logic of famed Swedish economist Knut Wicksell. The nineteenth-century economist’s model states two interest rates help assess economic activity. Per Wicksell’s Elegant Model:

First, there is the “natural rate,” which reflects the structural growth rate of the economy (which is also reflective of the growth rate of corporate earnings). The natural rate is the combined growth of the working-age population and productivity growth. Second, Wicksell holds that there is the “market rate” or the cost of money in the economy as determined by supply and demand.

Wicksell viewed the divergences between the natural and market rates as the mechanism by which the economic cycle is determined. If a divergence between the natural and market rates is abnormally sustained, it causes a severe misallocation of capital.

The bottom line:

Per Wicksell, optimal policy should aim at keeping the natural and market rate as closely aligned as possible to prevent misallocation. But when short-term market rates are below the natural rate, intelligent investors respond appropriately. They borrow heavily at the low rate and buy existing assets with somewhat predictable returns and shorter time horizons. Financial assets skyrocket in value while long-term, cash-flow-driven investments with riskier prospects languish.

The second half of 2020 and 2021 provide evidence of Wicksell’s theory. Despite brisk economic activity and rising inflation, the Fed kept interest rates at zero and added more to its balance sheet (QE) than during the Financial Crisis. The speculation resulting from keeping rates well below the natural rate was palpable.

What Percentage Drawdown Should We Expect This Time?

Since the market experienced a decent drawdown during the rate hike cycle starting in March 2022, might a good chunk of the rate drawdown associated with a rate cut have already occurred?

The graph below shows the maximum drawdown from the beginning of rate hiking cycles. The average drawdown during rate hiking cycles is 11.50%. The S&P 500 experienced a nearly 25% drawdown during the current cycle.

rate hikes and drawdowns

There are two other considerations in formulating expectations for what the next Federal Reserve pivot has in store for stocks.

First, the graph below shows the maximum drawdowns during rate-cutting periods and the one-year returns following the final rate cut. From May 2020 to May 2021, the one-year period following the last rate cut, the S&P 500 rose over 50%. Such is three times the 16% average of the prior eight episodes. Therefore, it’s not surprising the maximum drawdown during the current rate hike cycle was larger than average.

rate cuts and drawdowns

Second, valuations help explain why recent drawdowns during Federal Reserve pivots are worse than those before the dot-com bubble crash. The graph below shows the last three rate cuts started when CAPE10 valuations were above the historical average. The prior instances all occurred at below-average valuations.

cape 10 valuations

The current CAPE valuation is not as extended as in late 2021 but is about 50% above average. While the market has already corrected some, the valuation may still return to average or below it, as it did in 2003 and 2009.

It’s tough to draw conclusions about the 2020 drawdown. Unprecedented fiscal and monetary policies played a prominent role in boosting animal spirits and elevating stocks. Given inflation and political discord, we don’t think Fed members or politicians will be likely to gun the fiscal and monetary engines in the event of a more significant market decline.


The Federal Reserve is outspoken about its desire to get inflation to its 2% target. If they were to pivot by as much and as soon as the market predicts, something has broken. Currently, it would take a severe negative turn to the banking crisis or a rapidly deteriorating economy to justify a pivot, the likes of which markets imply. Mind you, something breaking, be it a crisis or recession, does not bode well for corporate earnings and stock prices.

There is one more point worth considering regarding a Federal Reserve pivot. If the Fed cuts Fed Funds, the yield curve will likely un-invert and return to a normal positive slope. Historically yield curve inversions, as we have, are only recession warnings. The un-inversion of yield curves has traditionally signaled that a recession is imminent. 

The graph below shows two well-followed Treasury yield curves. The steepening of both curves, shown in all four cases and other instances before 1990, accompanied a recession.

Over the past two weeks, the two-year- ten-year UST yield curve has steepened by 60 bps!

yield curves rate cuts and recessions

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COVID-19 impacted smoking assessment rates in community health centers, necessitating a closer examination on how procedures can be adapted

COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted Credit: Annals…



COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted

Credit: Annals of Family Medicine

COVID-19 Impacted  Smoking Assessment Rates in Community Health Centers, Necessitating a Closer Examination on How Procedures Can be Adapted

Researchers from Oregon Health & Science University and OCHIN,  a large nonprofit network of community health centers, extracted electronic health record data from 217 primary care clinics between January 2019 through the end of July 2021, which included telehealth and in-person visits for 759,138 adult patients aged 18 and older years to determine how monthly rates of tobacco assessment had been affected by the COVID-19 pandemic. The team calculated the rates per 1,000 patients. The team found that between March and May 2020, tobacco assessment monthly rates declined from 155.7 per 1,000 patients down to 77.7 per 1,000 patients, a 50% decline. There was a subsequent increase in tobacco assessment between June 2020 and May 2021. However, assessments remained 33.5% lower than pre-pandemic levels. These findings are significant given the fact that tobacco use can increase the severity of COVID-19 symptoms.

What is Known on This Topic: While there is plentiful evidence on the impact that COVID-19 has had on primary health care seeking and delivery, little is known about how the pandemic affected tobacco use assessments and cessation programs.

What This Study Adds: The decline in the rate of tobacco assessments during the onset of the COVID-19 pandemic was substantial and rates have yet to return to pre-pandemic levels. Given that tobacco use can exacerbate COVID-19 symptoms, researchers recommend careful examination of procedural changes to adapt care delivery to support community health centers, specifically tobacco cessation efforts.

.Impact of COVID-19 Pandemic on Assessing Tobacco Status in Community Health Centers

Susan A. Flocke, PhD, et al,
Department of Family Medicine, Oregon Health & Science University, Portland, Oregon
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