When Chaos Returns, the Simple Things Become Valuable

Many of the same folks right now who are saying that Jay Powell and the current Fed simply must stop raising rates, lest the system break, were also saying, back in 2008, that the entire banking system needed to be bailed out lest the world would end. 

What they did not tell you was that, back in 2008, there were many regional banks who did not engage in brazen gambles that the major banks did, and they were in a solid position to take over assets from (what were then) the insolvent, bankrupt firms you all know and love. They also did not tell you that America has the most sophisticated bankruptcy laws in the world, to the point where we have dedicated United States Bankruptcy Courts which could have handled the largest banks in the world declaring bankruptcy. Would it have been fun for bulls? No. Would it have wiped out lifestyles for folks used to living on easy street? Yes.

But would the world have ended? Categorically no. 

In other words, all of the fear-mongering that the world was over was rubbish.

And the same applies now. Alternatively, even if it is true that the system is about "to break," I would counter what, exactly, type of system did we have to begin with? The answer is a doomed one, and one worth redoing. 

Of course, with former Fed Chair Ben Bernanke receiving the Nobel Prize for Economics this morning there is still a strong belief that Bernanke saved us all.

In reality, we are only now starting to see the horrifying consequences of said Fed (and Congressional) policies. Bernanke will not be remembered kindly by history by the time the next few decades pass. In the meantime, soft commodities, as quaint and boring as they may seem, become uniquely valuable in a world with inflation in the West, a hostile Russia, supply issues, and declining tryst in major governments and institutions. 

Note that the bull case for, say, CORN (the Corn Fund, below on the daily chart breaking a tight base higher) is not predicated on any one thing but rather the sum of the parts. Corn, wheat, beans, other softs, are necessary for a modern world.

And to think of a software company or any given growth stock as being more valuable or worth of your capital is living in the past decade or two--The future belongs to the basics.