Sorry for my recent ?barely present? status on the blog and in the comments section. Last Monday my girlfriend’s father passed away and it was a tough one ? drawn out for weeks. Whatever though, it got his ass on the only television show that I ever saw the guy watch in the several months I spent at his house. Check this out. He had quite the sense of humor ? making fun of a drooling, half-comatose vegetable only three days before he became one.
In other news, my recent hobby (okay fine, obsession), has been researching macroeconomics, investing, and paying close attention to prominent forecasters and their take on the future of the American and global socioeconomic system.
Understanding the ?big picture? has been something that I started to develop a keen interest in several years ago. Although I knew and understood only a tiny fraction of what I understand today, in the winter of 2007-2008, I did sit down with my family and gave them a stern warning that ‘things were about to get really weird. I urged them to make moves such as selling their houses and purchasing precious metals in anticipation of dollar devaluation. Turns out that selling the houses was genius. The timing on the metals was a little off. They bottomed in December of 2008, which happened to be the exact time that I finally jumped in. Silver, sweet silver, is up 50% or so on the year. May was the biggest up-month for silver in 22 years.
Stocks? Well, they broke even from January 1st for about 12 seconds before getting obliterated since the Friday before last (which was when I went all in shorting the market at 300% leverage ? to which I’d like to add an emphatic ?biaatch!). Anyway, in light of what my diagnosis for the economic future holds, I can’t sit around and shout about avoiding packaged food and munching plenty of butter when for so many, quality food is about to become out of reach.
1 in 10 Americans is now on food stamps. 1 out of 8 homes are in foreclosure. Using Clinton era calculations, unemployment now stands at 16.4% and is staring 20% by year’s end squarely in the eyes. And as many have heard, the strongest correlation with obesity, diabetes, early death, etc. is not how much steak you’ve eaten or how many cigarettes you’ve burned. Poverty, in the United States, is what links up with degenerative disease and obesity.
I won’t pretend that money has any direct link to health. The high-fiber content of the paper it’s printed on alone is enough to exacerbate any case of IBS. Wealth however, is associated with health because of better education, social unacceptability of junk food (grilled Halibut is rarely served with a side of Cheetos and Mountain Dew at a wealthy person’s party), and purchasing power that allows the upper class to dine on real food and even spend free time shopping for uber-quality foods at Farmer’s Markets.
Anyway, the picture isn’t pretty. This isn’t about positive and negative outlooks either. The bleak economic forecast is a diagnosis given when all the signs and symptoms are gathered together and analyzed. Anything and everything else is pure delusion, or hope ? which is often, admit it, a very foolish emotion (why hope that your home equity will improve when there’s no way in hell real estate will ever be priced anywhere near 2007 levels relative to median income? Only an idiot would ?hope? that prices would come back when they will not, and cannot, and had no business being in the stratosphere in the first place).
Anyway, let’s talk about it briefly, and then wrap it up with what I believe to be the best investment vehicles in the future ? whether you have $1,000 to invest, or $1,000,000.
The economic upchuck of 2008 was very simple and was a long time coming. That’s why people were able to forecast that it would happen and the precise manner in which it would come about all the way back to 2001. Basically, the American economy has blown goats for about 30 years. Instead of falling out of economic power, the United States instead tried to create asset bubbles to have a few last gasps of what seemed like prosperity. An asset bubble is like what we saw in real estate and every single commodity known to man over the past several years. I mean come on. Housing prices doubled while income scarcely moved an inch in the same time period. It was totally fake.
How it happened was painfully simple.
People borrow money to buy houses. To make housing prices increase, you merely have to increase the demand for houses faster than the supply. If people aren’t making enough money to outpace demand, then all you have to do is make borrowed money available to them at really low cost. To make it even easier, you can reduce lending standards so that people can put less money down and not even pay off principal amounts ? but pay interest only. So there we have it, the Federal Reserve, at a time when we had already lent out too much money and had too little savings and too much debt in the first place ? lowered interest rates to 46 year lows and reduced lending standards.
With that, more people could buy homes that couldn’t before. Lower interest meant lower monthly payments on top of not having to fork over much cash up front. This made home prices rise. When home prices were rising, it made lending people money for homes a safer-looking bet, despite the tiny amount of collateral. It also made owning a home more appealing. Heck, you could make money off of living in a house and doing nothing with a low monthly payment and next to nothing down. Put $10,000 down and make hundreds of thousands as your home price increases! Many people made 1,000% or more on their initial investment. Talk about a great investment opportunity ? if you sold in 2007 (like I did).
With increased home values, people spent more of their actual dollar savings (their home equity was their savings account instead they figured), worked less or even quit their jobs to be real estate investors, agents, remodelers or builders, etc. This flooded the economy with tons of money. Income didn’t jump through the roof necessarily, but net worth sure did once you figured in all that leaping home equity.
There was quite a boom, and it touched every sector of the economy, every asset class, retail, and more. Everything was appearing to go up, up, up. People with bucks opened up businesses, companies expanded their operations, big malls sprung up, and companies upped forecasts and production.
But it was all simply based on one thing ? people thought they had a bunch of money. They thought that real estate prices would go up forever. They ignored that a spike in housing prices like that had no economic basis whatsoever, and was perhaps the most clearly defined bubble that has ever been blown. And she blew alright. Personal net worth dropped the equivalent of an entire year’s GDP last year. 2009 is shaping up to add to that total in a big way.
Now the government is intentionally trying to debase the currency to make the dollar amount attached to real estate and other assets stop their horrendous plunge and come back up again. There is no intention to fix the economy by making money via producing and selling things at a profit. Not even close. It’s laughable and sad ? trying to borrow and spend our way to prosperity. What a joke. They want another false wave of prosperity, which will sucker in more dopes that won’t sell in time ? or won’t notice that even though their house is going up in price, it is losing pace along with wages as the cost of everything else increases even faster.
Anyway, all those businesses that were built up around a fake boom must contract and shrivel. The malls that were built must become vacant. The real estate that is rented by retailers, soon-to-vanish, will obliterate more banks (commercial real estate is even more highly leveraged than residential real estate). The jobs that were created must vanish. Nearly every business, most of which are hanging on by a thread at the moment, must downsize ? and most will perish because they overinvested money in anticipation of continued growth. They won’t be able to cover their losses. If the government can manage to create one more bubble, it will be very short-lived and the crash will be immeasurably severe in comparison to what we just experienced.
Barring some kind of U.S.-born miracle invention/technological breakthrough, a positive outlook would be a crash similar to what the Soviet Union experienced. Anything painting a prettier picture is sheer hype.
That’s what happens when you live the good life with borrowed money (like maxing out your credit card despite not having a job). As a country, we now have almost 4 times the amount of liability and debt that we do income ? or GDP. To top that off, GDP is plummeting and debt burden is rapidly ascending. Medicare, social security, and Obama’s new genius idea for national healthcare are all noble ideas. It’s a noble idea for me to spend $1,000,000 on my credit card to give to charity ? but guess what? I can’t afford that. I don’t have that money. It’s not mine to spend.
But let’s say that I did borrow a million dollars and can’t pay it back. Let’s use something more tangible though. Let’s say I owe someone 10 apples but I only make 1 apple per year. Making 10 apples per year is totally impossible ? a laughable amount compared to my standard income of 1 apple. There’s no conceivable way I can ever pay 10 apples. I have 2 choices: I can either say, ‘sorry? and declare bankruptcy, or I can cut my one apple into 10 pieces and hand that over instead. The latter, is what the Federal Reserve is destined to do. We’ll pay all those bills, but in an underhanded way.
Ludwig Von Mises, the Weston A. Price of economics, built a foundation of truth that can never be tarnished. He knew that credit expansion was always doomed, that all economies that underwent credit expansion had to eventually deleverage, and that deleveraging could only occur in two ways ? mass bankruptcies and credit contraction or by stealth default via currency devaluation.
The latter technique will be the route taken, as has always been the case when any country has run into this problem.
In the long-term, there is absolutely no doubt that buying real things is the ultimate defense against inflation. Silver and gold are the most practical and accessible. The safest (boring!) way to invest in them is to take possession of the actual metal yourself. For practicality’s sake, gold is superior ? silver is heavy as hell if you buy a large dollar amount of it. If you buy coins, instead of bars, there is no capital gains tax, fyi.
Most people prefer ETF’s, exchange traded funds that track the price of gold and silver and are traded with the click of a button just like stocks. Most investors dig this because they can sell it at its peak, buy it up on the ?dips,? and make greater profits on the ride up. ETF’s are not considered a sure thing by any means though.
Gold ETF ? ?GLD?
Silver ETF ? ?SLV?
You might also consider ETF’s for oil (USO ? on it’s way down right now though, be careful) and especially natural gas (UNG), the price of which is still absurdly low and destined to go higher eventually.
Other people like buying gold and silver mining company stocks. This can work out quite well, but when the stock market is going down in general, prices can stay somewhat suppressed. There’s no doubt that if the stock market goes up while inflation ignites (which will happen someday, although don’t look for it in the near future), the biggest gains will be had in mining stocks. Some of my favorites during the recent rally have been: TLR, HL, CDE, PZG, BAA, AGT, TMGOF, NG, and a handful of others. They are all cheap and highly volatile ? just like I like ?em.
You can also buy options futures, which is a little more complex, but if and when inflation is really raging, options will bring home some serious bacon ? 500% gains per contract (dude, bacon would be the best type of money ever!).
You can also buy bullion (bars), have it stored so that you don’t have to yourself, with big companies like Monex. They charge a bunch, are considered unsafe as many claim they don’t actually have all the metal that they claim to have, but you can certainly rake in some big dollaz if you do some 300% leverage when you are quite sure that the price is headed up. Don’t be too stubborn about selling once you’ve made some gains though. I just got burned recently on that one.
When it comes to stocks, there’s only a couple you really need to know about if you ask me. When the market is going up, like in the recent stock market rally from March 9th until the Friday before last, there is no better buy than ?FAS,? a leveraged ETF. It saw increases of over 400% while the market jumped 40%.
When the market is headed down, which I believed the short-term peak was reached the Friday before last, ?FAZ,? an anti-market ETF is quite robust, as is ?SRS,? an ETF that shorts real estate (bets against it). You can almost count on 10% gains for every 200 points the market drops. I’m expecting FAZ to at least triple between now and the time the market retests the March lows of DOW 6500-ish, which I believe it will by August. Just be quick to get in and get out. These are all about timing and you can totally lose your ass if you start to get swept up in the excitement.
Anyway, I apologize in some regard to the die-hard nutrition geeks that wander by Bloggie-Style. This is probably not what you bargained for. But good health and good food on Maslow’s Hierarchy of Needs, surprisingly, comes in behind money. Why? Because money is the ticket for most of us to purchase good food, take stress-relieving vacations or at least not work 3 jobs to make ends meet, stress out about whether or not you’ll be able to feed your family, and have spare time to do this kind of independent thinking.
I’m far from being the almighty on investment advice, and I certainly can’t openly state that you should take any kind of investment advice from me ? which obviously carries incalculable risks, but if the interest is there, and the desire to protect and even increase your personal wealth lurks within you, then take action. Get in the friggin? game!
If I’m wrong about all this, then what do you have to worry about? It means the economy has come roaring back, there are jobs-a-plenty, the stock market is going up, and anyone with a love of what money can do and a decent head on their shoulders can find a way to support themselves amply. Even if you lost some dough, getting it back would be easy. But if the shizzle really starts to sizzle, you better be prepared, because once that wealth is lost it will be harder than ever to regain it. Being prepared isn’t negative, it’s smart. It’s fun, confidence-boosting, and empowering.
Just remember, when inflation finally does hit in a year or two, no amount of stored up money will be safe. The money might not be going anywhere, but the purchasing power of that money can evaporate as if someone is throwing it in a bag, wad by wad.
Be careful, be smart, take action ? and maybe you can keep that modern day luxury of health pursuance going even in the worst of times. That’s what I plan to do.
And before you write me off as a dumbass, consider that Saturday night I was asked where I would put a million dollars on Monday if someone gave it to me. I said, I would use every penny to buy as much FAZ as I could get my hands on. FAZ was up 15.5% on Monday, which would have brought in $150,500 in a single day.
If you’re looking for an investment guru, I recommend Marc Faber above all others. He seems to be the only big time investor that really understands the big picture, the long-term, and can even make accurate short-term predictions.
Austrian-school economists that base their theories on Ludwig Von Mises are pretty badass too, and include guys like Peter Schiff, Ron Paul, and Thomas Woods. Max Keiser is certainly the man too. His site is an excellent news source on what’s really going on.
P.S. ? My political views? complete condescension and ridicule for both as if each side represents an ass cheek, or in the words of renowned Trends Forecaster Gerald Celente? ?I’m a political atheist. If you have a strong party affiliation, I wish you the best in thinking your way out of it.
http://www.zeitgeistmovie.com !!
Hi Matt,
I have been reading your blog for the past half-year and found it bery thought-provoking and instructive.
You synthesize information well, and communicate it clearly and coherently.
I am also an investor and follower of the Mises/Austrian school of economics.
I do not agree with the prevailing view that inflation will come roaring back.
I came to that conclusion by following the blogging of Mike Shedlock, another Austrian School economic commentator/investor.
He gives strong arguments for deflation in the next few years, and was one of the rare ones to predict it last year.
His analysis is thorough and very insightful.
Here is the address of Mike's blog: http://globaleconomicanalysis.blogspot.com/
Best wishes, and keep up the good work!
BTW I also have a blog (in French though) at http://tbonemitch.blogspot.com/
The problem with the Austrian school gold bugs is that many of them would have had you in gold throughout the 80s and 90s as well. A stopped clock is good twice a day.
For some really interesting macro insights, check out Fred Foldvary's Geo-Austrian synthesis paper:
http://www.foldvary.net/works/geoaus.html
He nailed this recession.
—
Problems with gold:
1. easy to steal
2. you cannot eat it
3. you cannot rent it out or live in it
4. you don't get that much leverage
In the long run, real estate is the better inflation hedge — which is why is got stupidly over-bought a couple years ago. This year, I just got into real estate; bought my first house after years of renting.
Longer term, th world is growing more prosperous. A billion Chinese are going to want more hamburgers. I'd buy farmland in depressed areas if I had gobs of money to invest.
As for politics, check out evil plan to launch a new political party:
http://www.holisticpolitics.org/NewParty/
On a side note…
HAPPY BIRTHDAY CHLOE! :-)
It just depends on your preference. Gold does not require finding renters, it's easy to sell (click of a button depending on how you're in), you do not have to water it's lawn, it doesn't have appliances that leak, you can't stain it's carpet, and so on. Sure, no one's going to pick it up and run off with it, but they degrade over time. If you don't mind doing those things, great. I do.
Plus, I think housing prices will go up with inflation, but so will interesnt rates, and unemployment and poor economic growth will linger on. A house might appreciate by 50%, but the money might lose even more value – giving one the appearance of gains even when there is loss. This has already happened. If you bought real estate in 2000 and sold it in 2007 you would have a lot more dollars – but you wouldn't be able to exchange those dollars for more gold, which tripled in price during the same time period – without a need for upgrades or realtor fees.
Gold and silver aren't going anywhere just yet, but it's safer to be jumping in and out of them right now than most things, as the general trend is up. Stock market. Not so much. The general trend has been down since fall. Gold is a mere 10% off it's all-time high priced in U.S. dollars.
This is precisely why I love Marc Faber. He is a gold bug that can at least acknowledge that it is overbought at the moment.
Once again Carl, priceless photos. Would you sue me if I did some copywrite infringement on your millionaire costume this Halloween? The "Will Invest for Food" sign is still my favorite though.
And Harper, thanks for your review of the Sugar Fix the other day. I agree. His research on fructose is outstanding, but he should have shut the hell up instead of regurgitating mainstream dogma.
I have much respect for Austrians (particularly Hayek and Schwarzenegger), but that doesn't make gold an investment. Gold is a currency with the unique characteristic of being an inflation hedge against fiat currency. But that's all it is – it's certainly not an investment. If you want to be a currency trader, have at it. Get a job with a bank trading it if you really feel crazy. But it's not investment advice.
As for the rest of the advice – meh. Prognostications of Doom are not likely to be prophetic. During an inflationary period the only thing you don't want to be is a creditor (which includes holding cash positions). Being a borrower is actually not the worst thing, as your debt payments will fall relative to income. The best thing to be is a holder of assets priced in the currency that's inflating – particularly a marketing skill. Assuming you have any marketable skill at all your income should stay relatively abreast with changes in the price levels; there won't be perfect sync, but ballpark sync will happen. As an attorney I expect my billable rate to roughly track inflation even before accounting for further expertise I acquire over the next several years. Same for carpenters, accountants, doctors, etc. Folks who export to other countries will also do well, as you can sell your services for less money (in their prices) while keeping a low cost of living here in the USA (Make Outsourcing Work for You!).
The next best assets are stocks (in companies that have pricing power) and real estate (once it returns to the historical trend line of 1% real growth). Utilities, for instance, will do just fine in an inflationary environment. Same for food and (yes) mining stocks. Real estate has a good possibility of falling below the trend line before reaching equilibrium, but that's a buying opportunity for the wise. Only stocks totally dependent on importing goods will be in trouble (think Nike with all those shoe factories in Vietnam, or Apple Computer which hasn't built a computer in 10 years or more).
The only thing that will get expensive will be goods from overseas (because their price levels are priced in foreign, non-inflationary currencies), but America is actually pretty self-sufficient. We export food and our manufacturing capacity is unmatched (despite what you may hear, we do produce a lot of stuff right here in the USA). The only thing we really have to import is oil. It would be better if we didn't, but it's not insurmountable that we do. Worst case scenario is that oil goes to $200 and everyone installs solar and wind generation profitably, Colorado's oil shale turns the taps on, and synthetic oil from algae and cellulose gets real attractive.
America is not screwed. You know who's screwed? China and Japan. They lent us all this money which is about to be devalued, and we're about to stop importing their goods as they get more expensive. Sucks to be them. The only real cost to us will be increased borrowing costs. That's a real costs, but it's not "Run for the hills! Buy rice and shotgun futures!" bad. Maybe it will force spending discipline on Congress, which is no bad thing.
Meanwhile real GDP will continue to grow as long as we keep innovating. The paper profits of yesteryear will not return (hopefully), but more real wealth is created in America than any other country bar none. That's not hope – that's just assuming that the things that have worked for 300 years (counting the British Colonial period) will continue to work.
Sorry Brock, but I think most of things you just stated are totally wrong – particularly the part about China and Japan being screwed.
Over 70% of American GDP is internal spending – we buy our own crap. We buy all that with perceived wealth from home equity (gone), and jobs (going). Without internal spending, we are doomed, because the U.S. cannot compete with markets like China or Vietnam in any productive capacity – not until we are willing to work for a quarter an hour.
America is also by far the poorest nation in the world if you subtract debt and liability from GDP (the debt and liability is what pays for GDP anyway, so it's totally artificial).
China is the richest.
What you're saying is that a man who makes $1,000,000 per year and has $4,000,000 per year of increasing debt is wealthier than a man who makes $100,000 per year and only spends $50,000. Actually, the million dolla man is losing 3 million a year and the 100 grand man is netting 50 grand a year.
It's the guy who has more money than debt that lives through the bumps in the road.
And it is the doomsday guys who have been most prophetic. That would be Nouriel Roubini, Peter Schiff, Mark Faber, and Gerald Celente – 3 of which are referred to as "Dr. Doom."
Having said that, you can have as rosy of an outlook as you like, but you should still prepare for the worst – and real estate just isn't going to be where it's at. Entire neighborhoods in Detroit have already been abandoned. That's where the rest of the country is heading. Inflation or not, real estate prices will not keep pace if there is no demand, no jobs to support a home payment, and so forth.
Thanks on photo comment. Feel free to use the costume idea. (BTW, I finally have a new post on P2BR, one on Obama's massive subsidies to the rich.)
Regarding gold, it might be due another jump soon, but as a long term strategy, it stinks. It is only about 15% above its peak from 1980. Meanwhile, the Dow is up by a factor of between 8 and 10 from 1980 prices. (OK, I was pointing out worst case market timing for gold. But even if you caught the 1982 bottom for gold, you'd still be way behind the stock investor.)
The real power of real estate now is that the market has not priced in future inflation yet for mortgages. 30 year fixed interest rates are around 5.5%. If inflation goes up to 5.5%, that's a 0% real interest rate — but you get the tax deduction from the nominal 5.5%. Plus, if you live in the house, you don't have to pay rent.
In some markets, real estate is still pricey because of these factors, so it is not the guaranteed value people thought it was. But the secular trend is good in many markets.
Matt,
You seem to have had some success at trading recently, but trading and economics are not the same topic of expertise.
Your analogy about the two earners would be correct if they were all priced in the same currency, but in the real world this is not the case (and that matters – a lot). The Chinese, saving 40% of GDP, bought dollars (they're our creditor), and dollars are going to inflate away (i.e., fall in value, from the Chinese's point of view). They're going to lose money on that deal. This trend cannot continue indefinitely (and won't), but for now the rules that apply to Argentina and Russia simply don't apply to the USA.
Meanwhile, our productive capacity in most products competes quite well with Asian nations (Nissan, Toyota and Honda don't produce cars in the USA out of charity, and Dell has never outsourced manufacturing for reasons having nothing to do with patriotism). Despite what you may have heard, American manufacturing produces more volume and value today than at any point in our history. It's just the number of people that are employed doing it that has fallen, just as agriculture fell from 80% of employment in 1800 to the 1% it is today (but again, we grow more absolute food with 1% than we ever did with 80% – it's called efficiency).
Further, you speak of jobs disappearing as if our economy hasn't gone through structural readjustments before. This happens every single time there's a boom & bust, and we create new jobs and industries every single time. Has our ability to innovate and create value been sucked out of our collective brains? I see no evidence of this.
Lastly, you're just off your rocker if you think the US economy hasn't created gobs of value during the last 30 years. Microsoft? Google? Intel? Genentech? Do these names ring a bell to you?
You've drunk the Austrian Kool-Aid. It's good stuff (clearly superior to Keynes' General Theory), but it's not perfect or complete. A lot has happened in economic thought since Mises. I'm gonna go with Warren Buffet and bet that our recession may last a little longer than normal, but in the long run the US economy (and real US assets) are the best bet in town.
Gobs of value yes, just like the million dollar man raking in big bucks…
But debt on a personal and national level is far, far higher in relation to GDP and personal income than ever before in any nation's history.
We're not just going to think and innovate our way out of it, hence my usage of the word "miracle" in the post. That's what it would take.
This is no normal recession, downturn, or restructuring. It takes money and capital investment to create a boom out of the ashes that remain. Coming out of depression I and II (1921-22 and 1929-39) was totally incomparable. American citizens did not have mortgages, 2nd mortgages, home equity loans, or credit cards. They were forced to live within their means. The government also did not have a liability to income ratio of 4 to 1. America was also the global hub of manufacturing and industry like China is today.
There's a huge difference. Today we don't have capital and savings on a personal and national basis like we once did. We instead have debt, debt, and more debt and don't have anywhere near the infrastructure or reserves of a country like China – which could lose every penny of its savings and still be in good shape because they are not in debt. They have already written off their doomed bond holdings and are accumulating assets instead, such as oil and gold.
Buffett might be a billionaire, but that's only because he was very aggressive during good times. He's made some of the biggest mistakes of any investor since the collapse began. I wouldn't get too hung up on his every word. He obviously has underestimated the power of this contraction.
The California-based raw dairy company "Organic Pastures" purchases Cream and Colostrum from conventional, feed-lot, non-organic, grain-fed dairies!
This means, a product being sold as "raw organic dairy from pasture raised cows" is actually of inferior quality, (even though it might be raw) and comes from cows fed antibiotics, raised on grains, and with a greater danger of bacterial contamination (E.coli risk is much higher in cows fed grain)
The owner McAffee has many times admitted that this has occurred in the past (buying from other dairies), when they ran out of milk to make cream and colostrum, but he says that this practice is over now. But this is not true! He is still breaking the law and marketing his products as organic/pasture fed, when they are NOT.
Please, help spread the word. Copy and paste this message on dairy forums, dairy blogs, etc, if necessary.
Oh and I'm sure you'll all ask for "soruces",
Well, here's one:
http://www.rebuild-from-depression.com/blog/2008/04/the_elephant_in_the_raw_milk_r.html
In this discussion between owner McAffee and Amanda, McAffee admits that he bought cream from other dairies and sold as the Organic Pastures products. He says he got his milk from other organic dairies. This is not true.
He also says he only took the cream and returned the milk to the conventional dairy for pasteurization. (Wow, that really does sound logical)
This practice is still going on today at OP (organic pastures), and if you have been to visit the farm (as I have) you will see that the cows are given a lot of grain supplements, and there are days when they are not allowed outside on "fresh pasture" at all.
If you ask McAffee, he of course will deny this. Just search around on Google for other specific conversations with Mark/OP reports, and you will see that his stories are contradicting and he is misleading.
First, just read everything on the site I provided a link for above, and if you can find more, please share it here.
Please, Consider not supporting this dairy, not buying their products. This will only promote empty claims and false labels. Even the website looks over-promoted, artifical and fake, and if one skims through it enough, one will see that details are actually very vague. For example it is admitted on one of the sites on organicpastures.com that their cows do eat some other supplements but grains. And its not only alfalfa, trust me, its much worse.
I am very serious about this and will provide more "internet proof" soon. Otherwise I suggest you visit the farm and have a good, long face-to-face chat with McAffee to see his true character. You might even get the truth out of him.
Oh and I'm sure you'll all ask for "soruces",
Well, here's one:
http://www.rebuild-from-depression.com/blog/2008/04/the_elephant_in_the_raw_milk_r.html
In this discussion between owner McAffee and Amanda, McAffee admits that he bought cream from other dairies and sold as the Organic Pastures products. He says he got his milk from other organic dairies. This is not true.
He also says he only took the cream and returned the milk to the conventional dairy for pasteurization. (Wow, that really does sound logical)
This practice is still going on today at OP (organic pastures), and if you have been to visit the farm (as I have) you will see that the cows are given a lot of grain supplements, and there are days when they are not allowed outside on "fresh pasture" at all.
If you ask McAffee, he of course will deny this. Just search around on Google for other specific conversations with Mark/OP reports, and you will see that his stories are contradicting and he is misleading.
First, just read everything on the site I provided a link for above, and if you can find more, please share it here.
Please, Consider not supporting this dairy, not buying their products. This will only promote empty claims and false labels. Even the website looks over-promoted, artifical and fake, and if one skims through it enough, one will see that details are actually very vague. For example it is admitted on one of the sites on organicpastures.com that their cows do eat some other supplements but grains. And its not only alfalfa, trust me, its much worse.
I am very serious about this and will provide more "internet proof" soon. Otherwise I suggest you visit the farm and have a good, long face-to-face chat with McAffee to see his true character. You might even get the truth out of him.
Hey,
I've been following your blog for about a week and reading through the older posts. It's nice to see someone open minded and logical, looking for answers in regards to health. I thought you were spot on with this post about finances, but I was more writing a comment to talk about diet.
I had thought for a while that the body wasn't some sinister machine that automatically added an appropriate amount of fat per excess calories above calories burned, but you really put it into better terms. It's amazing how competetive eaters can be so thin eating so much, but all it boils down to is metabolism (more or less). I've incorporated some of your suggestions, but was hoping for clarification and am still unsure on some things.
I'll start with going back a bit. My mom tried to feed me "healthier" food in my first year, giving me a whole wheat cake for my first birthday. After that it went to more typical food: sodas, cake, and various processded foods, but fortunately my mom kept what was available to a reasonable point. I drank hardly any milk growing up and a doctor deemed me as lactose intolerant (no tests, just their guess); I'm still not sure how true that is, and what my limits are with milk. I was definitely somewhat overweight around 8-11, but never cared much about it at the time. Around 12 I think I had a reasonable weight, but I really don't remember. At 13, I was eating more than ever (lots of deserts and sugars), and was definitely overweight. Not sure what happened, but at one point I wanted to lose weight. Somehow I lost my appetite and lost about 65 pounds in 2-3 months. I was probably eating about 600 calories a day. For being 6'1" (I weighed 205 when I started losing weight, and was not that muscular) I know that was quite unhealthy. I didn't care about what I was eating, I just restricted the intake. That probably kept up for 6 months, but I don't really remember. I still thought I was fat after losing the weight because I would get bloated, although I didn't consider that at the time. Eventually, I slowly decided to become "healthy", in addition to not overweight. I associated protein with health intially, and looked for higher protein content. Later on, I looked for higher fiber content. I shunned butter, and refused to use it or just about any oil. At the same time, I was having about an energy drink a day, so not a very good mix. My caloric intake was probably okay at the time, but nutritionally, my diet was horrible.
Around late 14, I started quiting caffeine (I had started and stopped at different times), but still had a mostly FDA-approved diet. I thought health was in low-fat cream cheese, 99% lean turkey meat, and in whole wheat, double-fiber bread. Was I ever wrong. I also had a lot of psylium husk fiber, and was notorious for clogging the toilet :-/. Definitely not healthy.
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Eventually, I learned about gluten free and decided to try it for the bloating. It might have helped some, but not significantly. I then read Allergies: Disease in Disguise. The book advocated eating 70% raw food. I did more reading and decided a 100% raw foods diet would be "optimimum", and transitioned over in a couple weeks. I would have 2/3 (initially, 1/3) cup of soaked buckwheat with fruit for breakfast, 2/3 cup soaked nuts blended with vegtables on top of cabbage or lettuce, and something close to lunch for dinner. They were actually quite tasty and had marginally more variety than that, but it definitely got boring towards the end. I felt healthier initially, but was extremely gassy. At about 5 months, the gas went away (just reminds me of the Fiber Menace site saying that the excess fiber can kill off intestinal bacteria). I started reading some of WAPF's stuff at the time, and fortunately had raw milk, raw meat, raw eggs, and raw cheese at times (not very often). I would still be bloated most of the time (only time I wasn't consistently bloated was when I got salomenella from raw eggs and had awful diahrrea for a week). Towards the end of my raw food days, I developed dots on the top of my feet and ankles. My hands were so cold and would be freezing through a whole volleyball game. I developed chillblains on my right hand. I guess that would be fairly obvious hypothyroidism. My will towards food has always been quite strong, and I never "caved" into something I thought was not raw. I only developed cravings towards the end, mostly just for cooked food in general. Bowel movements were not very good, once a day if I was lucky (but at least not clogging the toilet). Finally, I decided to read up and find if cooked food wasn't so toxic after all. With some references from Wikipedia, and Beyond Veg, I finally concluded that just because raw food has enzymes does not make it always more digestible. I was on the raw foods diet from maybe 15.8-16.7 (I'm 17 now), and started back on cooked food with some butter (I had been reading WAPF), boiled eggs, and boiled the nuts I had soaked before for lunch. I felt just fine, and my health started to improve in the days afterwards. Anyways, my diet was mostly WAPF-compliant. I still get bloated and have too-seldom bowel movements, but consider my diet to be quite reasonable. Jumping forward a bit, I still have the dots on my feet (not nearly as much though), my hands are only marginally cool now, and the chillblains are gone. I recently started incorporated some of your suggestions, mostly by getting more calories through coconut oil. Within a few days, my bowel movements seemed to be finally fine and I had more energy. I felt great. I've recessed a bit the past couple days after running out of coconut oil (not sure if it was related, but it seems to be great for the thyroid), and think I've gained a couple pounds :-/. Many thanks to your suggestions though; eating more really does seem to be better.
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Anyways, I was wondering more about how needed starch is, whether less protein is better, and if there should be any special changes before eating more calories to increase metabolism. It would be quite nice to lose a couple pounds, speed up my metabolism, have regular bowel movements, and not get bloated. I think I have fructose malabsorption, lactose intolerance (I have gotten stomach aches from even raw milk), and possible gluten intolerance. I'll try to get my temperature one day for a better guess at my metabolism. In a nut shell, my current diet has lots of butter, coconut oil, meat, occasionally potatoes, a soaked grain breakfast, some vegtables, and the occasional fruit.
You do a great job with the blog posts, and I appreciate that they aren't just references to your paid site. (In my opinion,) I think you may be understating the importance of nurtition itself, but I'm really not sure and it's amazing how people with a fast metabolsim can eat just about anything and be healthier than those on a healthy diet with a slow metabolism. It would also be nice to hear more of how your daily diet goes after the FUMP experiment, but these are just a few suggestions that I'm really not sure on. Thank you so much for posting what you've learned on your blog. It has been quite helpful to me and many others. Your suggestions have definitely improved my health.
Thanks!
–Teran
Teran,
You're going to be just fine young stallion. You are young and will rebound quite quickly once you get back to dietary sanity.
Coconut oil is great for speeding up the transit time via metabolic stimulation, but so is starch and overall calories. My suggestion to you is to simply focus on eating more – including ample starch, a little animal protein at each sitting, and as much fat as you can tolerate, mostly from butter and coconut oil.
Don't sweat quality or heat-treatment so much. It is secondary. The calorie, especially with a good balance of macronutrient sources, is your best medicine. The rest is 'details.'
Over time, many of your concerns and intolerances will hopefully clear up – freeing you from dietary prison and allowing you to lighten up and live a normal life with normal eating habits. That is the goal, don't ever settle for less, and move persistently in that direction.
You will also be able to build muscle and burn fat much more effectively over time, so don't pay any attention to what may happen to your body for the first few months. It will be inconsequential when measured against the time scale of your entire lifetime.
Monitor progress by taking your morning body temperature under the armpit. 98 is the goal. 2-3 poops a day should become a reality for you by that time. That is another fantastic ovrall gauge.
Thanks for the feedback and best of luck…
Peter,
Take that frustration out on Monsanto, not Organic Pastures. Who cares about a little grain in the diet? It is incalculably insignificant in comparison to what else has been going on in the food industry at large over the past 50 years.
Plus, organic pastures stuff tastes horrible anyways. I prefer butter that does NOT taste like a fermented jockstrap.
Matt, so you eat pasteurized putter? You buy raw from a local coop?
Can you please recommend a brand? I've been looking for a good butter for years!
IMO all raw butter tastes like I want to vomit.
But I actually liked the Organic Pastures raw cream – got a sweet taste. Too bad its from 100% grainfed cows and conventional (non organic). And too bad Mark McAffee is a liar and is breaking the law. Oh well
Oh and pasteurized sweet (unsalted) butter, such as the Strauss brand also tastes "weird"
I liked the taste of some imported butters (from Europe) but they have best before dates into 2010, which probably means not only pasteurized but Ultra Heat Treated.
Peter, I'm glad you took my advice and looked into the source of yuor dairy products. It really sucks that this guy is parading his stuff around as "grassfed" when its feedlot. Raw dairy from a feedlot is truly scary. Your chances of ecoli on other really scary $hit being in the milk go way up when cows are raised like that.
I think this is important given what Matt just wrote about the economy going all to hell. Every dollar counts right now, and you probably paid more for Organic Pastures than you would have for the cheapest supermarket milk. That's good money thrown away on a bad product. I would encourage you to contact the campaign for real milk and try to get to part of a buyer's club so that you can end up paying less and finally get the quality you've been looking for.
The silver lining of the mushroom cloud that is our economy is that a lot of people are looking into growing their own food. I know people who are not big nutrition geeks who are organic veggie gardening because its basically free.
As for telling everyone to panic and sell their houses, I'm not so sure about that. Where I live (Minnesota) the demand for houses has been very stable, because we still have more people living in the area than we have housing. It's rents that are going up, up, up. The housing prices haven't dropped much at all. The houses that are for sale on our street are still being snapped up–not as fast as they were at the peak of the boom a couple years ago, but within a week or so of being listed. Our house is paid for because we busted our butts to do that way, way ahead of schedule. We are in it for the long haul, when we retire, probably another 20 years at least. Will it eventually be worth what it was when we bought it? Who cares, at least we'll have a place to live during whatever economic tsunami hits us. If we sold our house, invested all our money in gold wouldn't we be more vulnerable to inflation at the whims of some landlord raising the rents through the ceiling?
At the start of the Bush II administration I read articles predicting a second great depression, worldwide within our lifetimes. There were some voices out there in the wilderness warning that this endless cycle of cheap credit wasn't sustainable. Combined with nearly universal unregulation in key finacial sectors our economy is one screwed pooch.
I say back to the land people. Eat the rich as long as they're grass fed!
Oh Peter, I'd like to add that if you want to stop this "grassfed shyster" you should send the information that you provided us to your local newspaper, TV stations, co-op newsletters (bring it to the attention of your co-op manager) and any local bloggers in the area that may do any kind of investigative reporting. (Our local free paper still does investigative journalism, a lot of via the web now). Most TV news stations are dying for stories with a consumer spin and most of them have tip lines. A few TV cameras showing up in this guys "pasture" will shut him down quick.
You have the right to be pissed off. You were ripped off!
This is not big news. Most coop owners know that Mark Mcaffee is a liar
Only Organic Pastures milk (whole or skim) are actually from their own farm. Their cream, butter and cholostrum is outsourced: i.e. bought from conventional, non-organic, feedlot farms.
They bring in the cream from these feedlot farms and make the butter on their own facilities. It's disgusting, and very tough to prove they are actually breaking the law – because if you go to the Organic Pastures farm, you'll see their cows in open pastures. You just can't see: half of their products are not being produced from the dairy from these cows.
You have to catch him while his bringing the milk in from other dairies. But that's probably done by night
Matt, why do you think people should be having 2-3 poos a day? What has led you to this conclusion? My digestion has gotten steadily better over the past year or so. It started out great when I was on the Primal Diet but got "crappier" once I added back in some carbs like potatoes. Now its not perfect but still great and getting better. But I definitely never have more than one poo a day and sometimes it is 1.25 days between poos (I havent had regularly more than 1 poo a day since I was on SAD like 2-2.5 years ago). Im not constipated or anything. So why should I have more than one, much less 3 in a day? Thanks!
-Drew
Drew:
it depends on the fiber content
Jennythenipper:
thanks for your response
I would still appreciate it if some people from in here would write emails to Mark Mcaffee or call him and say: "I know you are using cream from other dairies from your products".. He will of course deny this over the phone, but maybe it will scare him into changing something about it.
Who can recommend me a good brand of pasteurized butter? I've tried Strauss organic and Organic Valley so far (both the unsalted/salted and uncultured/cultured varieties). Cultured butter definately tastes more normal than uncultured.
But I still don't like the fact that it's pasteurized. Can anyone tell me if it's ok to eat supermarket butter once in a while as the only fat source?
Thanks
It's ok to use supermarket butter once in a while as the only fat source.
Is it really? Wow, freedom!
I have lightened up about such things as pasteurized vs. raw, grassfed vs. grainfed, and so forth. In the big scheme of things, I don't think those are very important details unless you are really some kind of major dietary perfectionist.
I eat supermarket butter (organic valley) most of the time and drink pasteurized organic half n' half from time to time. The local farmer's market just started up so I'm hitting more local cheeses.
True Drew – as long as your bowel movements are moist, small, easy to pass without straining, and come with enough frequency to know that your food's not spending more than 24 hours or so in the digestive tract, then how many you have per day is no big deal.
But a diet that's not low fiber and not low carb that results in 1 poop per day or less is highly unlikely to yield bowel habits that fit that description.
Just make sure it doesn't get progressively slower. If it does, make some adjustments. For now, it sounds like you're just fine.
Matt what farmer's market do you buy your cheese/milk/raw cream from?
Do you shop at Santa Monica farmers market or that coop in Venice that has Amish raw dairy (From Pennsylvania)?
Matt – do you use salt on stuff?
I'm really curious to hear your stance on salt.
Personally, I don't have a salt shaker, and don't use salt anything. BUT I buy salted cheeses which I enjoy.
If I begin to salt my food, I develop HUGE thirst and I drink lots of water. This in turn causes bloating, extreme urination and bad taste in mouth (like a vinegar taste in my mouth)
BY THE WAY could you give your trusty CAlifornia readers some good sources of dairy/meat/etc? Or do you, yourself, just buy supermarket products most of the year (where do you shop by the way, I wanna stalk you! Just kiddin.. But do you usually go to upscale places like whole foods or do you shop at middle scale places like Trader's Joe/Henry's/Ralphs, or do you shop low scale like Walmart?
Thank you!
To the salt thing: I have used a long time a very small amount of salt in my diet and it was OK for a period of time. But over time i developed a weak digestion on low salt and my body felt overall weak, not much energy. So i started to eat about 2-3g per day and experienced nothing but positives. But i am also interested in Matt's opinion about salt.
Fred, are you sure the salt did all of that (extra energy, really?)
You need to isolate your variables. I bet you did more to your diet than just add salt. Maybe you even changed your lifestyle when you started adding salt (being outside more, got a new friend/girlfriend?). All of those things would contribute to more energy, but not just adding more salt. That's ridiculous IMO
Anonymous,
yes i am sure it was the salt, because it was the only variable i have changed.
Still, I think you guys are drifting from the main suspect – you know..thyroid! Not to get too focused on to salt or not to salt – here's something Ray Peat wrote..he's awesome
"Since respiratory metabolism, governed by the thyroid hormone, is our main source of carbon dioxide, it's obvious that thyroid deficiency should impair our ability to regulate water and solutes, such as salt. An organism that illustrates this function of thyroid is the young salmon, when it leaves a freshwater river to begin its life in the ocean. As it converts its physiology to tolerate the salty environment, its thyroid hormone surges. When it's mature, and returns to the fresh water to spawn, its prolactin rises sharply. In experiments with rodents, it has been found that drinking a large amount of water increases their prolactin, but the same amount of water, with added salt, doesn't."
http://raypeat.com/articles/articles/water.shtml
"alt, which helps to maintain blood sugar, also tends to lower adrenalin, and hypothyroid people often lose salt too easily in their urine and sweat. Measuring the pulse rate before and after breakfast, and in the afternoon, can give a good impression of the variations in adrenalin. (The blood pressure, too, will show the effects of adrenaline in hypothyroid people. Hypothyroidism is a major cause of hypertension.)"
http://raypeat.com/articles/articles/hypothyroidism.shtml
He's all about saying we have salt-taste buds for a reason. Also, though, the kind of salt you use could effect you. Just like if you eat any kind of dairy product with some added gums and things of that sort it can make people assume it's the product, and not the actual additives, that cause reactions. Anyway, what I've come to understand is to focus on the causation of why someone might be reacting in such a way (supposedly) to salt or food or water.
Can anyone help me, please???
Should raw cream be liquid or thick? Yellow or white? And should it taste sweet?
I've tried the raw Organic Pastures cream: it is very liquid in form, completely white, and tastes very sweet.
Buying raw cream from farmer's market, I've realized that the cream sold there is much more thick (like it's been whipped even though I don't think it has), it is yellowish in color, and it does not taste sweet.
Is it normal for cream to be this thick? Do you think they added carraanegan to it?
I've also purchased raw butter (imported from another state – I can't really find raw California butter other than the Organic Pastures brand which tastes like rotten cheese) – I'm eating great quantities of this butter, like 1/2 pound per day, easily. Is this too much, Matt? I'm not getting fat or anything.
I'm also concerned that the farmers add vegetable oils or worse: hydrogenated fats to the raw butter, maybe to cut production costs (since it's what this country knows to do best). Is this something that is normally done? Would it be easy to taste if the butter contained veggie oils or hydrogenated fats? I'm really worried about this, since I'm eating so much of this stuff, all my friends say I'm weirdo and I'm beginning to feel like that too!
The raw butter I am buying the farmers say come from organic/pasture fed farm in another state: it is in a glass jar and it only says: "butter" on it. It is unsalted. There are listed no ingredients or nutrition facts label, as on supermarket products.;; I guess this is why I worry. Should I trust the farmer who is selling it to me – believe him that it's only cream and cultures the butter is made of – or should I buy supermarket butter to be on the safe side, since it has to by law declare all ingredients.
Please help me out here!
If you know a safe source of well tasting raw butter/cream in California, please tell me here! I am always reading Matt's blog.
Correction: carrageenan
Peter:
"Who can recommend me a good brand of pasteurized butter?"
I like Anchor brand butter from New Zealand. Has a deep yellow look and tastes good.
Some also like Kerrygold (Ireland.)
Thanks for the reminder Chloe. She's right. Focusing on salt and butter quality is pretty far from relevant. It's not part of the big picture at least. Drug avoidance, including sugar, and focus on the glands and overall hormonal landscape should come first and foremost. Once that's perfected, then one can worry about the little things – although they probably don't need to at that point.
I don't think organics and what not are really that big of deal, but local farm food is undeniably superior from a taste standpoint, which I trust a lot. I trust the tongue more than the mind in most cases – barring of course substances, such as white sugar, that are verified as addictive. That changes things.
Most butter I eat nowadays is Organic Valley pasteurized.
I eat plenty of celtic sea salt.
For the past year, most of my red meat has been low grade supermarket meat (or high-grade if you're judging based on fat content, which I do).
Supermarket pork and chicken can actually be leaner though, which is why it doesn't taste all that great compared to really good pastured stuff.
Good cream should be thicker than cream cheese. There's no carageenan in it. The best cream tends to taste pretty sweet.
Thicker than cream cheese? Youve eaten cream cheese before, right? Its pretty darn solid, even at room temperature. Cream can definitely be thicker (it really depends on the cows and what they eat, I believe) but I would say a bit more thick than milk but nothing like cream cheese (I buy raw cream/milk from a local farmer and have made my own cream cheese on several occasions)
-Drew
The cream I've had is hard to get out of a jar with a spoon. It's almost like hard ice cream.
I concur with Matt (mostly – it depends on your cream cheese) on the consistency of good cream. I buy pastured raw (unhomogenized) cream from an Amish chap nearby. I can eat it with a fork. I'd say it's thicker than whipped butter but a bit lighter than the Philadelphia cream cheese you buy in the store. It's about the same (or slightly thicker) than the real cream cheese you can make at home though.
Depends on how fresh the cream is. If it stays a few days in the refrigiator, it gets hard. Very hard after 1 week. The first 2 days after it came out of the cow, though, it should be liquid, almost like milk (the stuff that floats on top of unhomogenized milk)
really? I have never heard of cream hardening. The cream I buy doesn't do that, it just turns into sour cream after like ten days.
The unhomogenized milk I buy has a thick, firm layer of cream at the top. You need to pierce it with a knife or a chopstick to get through it. I also buy unhomgenized cream which has this same, thicker, layer at the top and yes, the longer its been in the fridge, the more likely it is to get so solid you need a knife to get it out of the jar. Unfortunately, since it's pasteurized, it is rancid at that point rather than useable sour cream.
I'm switching to raw milk, just so that I don't dump out so darn much milk and cream. I've been able to make cottage cheese successfully with milk that is pretty close to being spoiled (at the point where it just smells a bit off, and hasn't effected the taste yet).
But really as chloe said, its the additives in most commercial dairy products that were upsetting me, not the milk or the pasteurization.
My main reasoning for going pasture fed where possible is that the industrial feedlot/battery model is pretty evil overall for our environment, for our bodies, for the animals involved. Really when something is that soul destroying can it really be good for you?
I think about the way many people regarded sugar in the 19th century (because of its association with slavery) as an evil product associated with decadence and luxury, made at the expense of expense and misery of a great many people.
It's sad that so many people today turn to veganism as a solution to the horrible way that our food is raised. Veganism, as far as I can see merely feeds into the whole industrial food model by being so heavily reliant on processed soy protein.
As for eating "cheap" supermarket meat, versus the grassfed stuff, I think you could probably do really well cost-wise by buying a large quantity of grassfed meat (like a side of beef, elk, bison, etc.) and deep freezing it.