As we kick off what promises to be another wild trading week, today a 50-year market veteran spoke with King World News about everything from Paul Volcker and the tumultuous 1980s as well as the ultimate threat to the global Ponzi scheme.
John Embry: “This morning things remain in the metals markets remain in lockdown. The U.S. stock market is giving every indication of wanting to break down, and given its technical condition, lack of volume, overvaluation and deteriorating fundamentals it should break down. However, the Plunge Protection Team, which has been around since the 1987 Crash, has been working overtime virtually every day to prevent the market from coming unraveled….
“The problem is that they can only deny reality for so long and when it finally intrudes on their fantasy the outcome is going to be extremely unpleasant. The whole state of the markets got me thinking over the weekend and I concluded that what most people now view as normalcy is in fact a long-running asset inflation, which is not sustainable.
Paul Volcker And The 1980s
I was involved in managing money institutionally in the U.S. stock market from the mid-1960s through the early 1980s. At that point in time you had bull and bear phases which culminated in Paul Volcker’s staggering administered rate rise at the beginning of the 1980s that was undertaken in order to squeeze a deeply imbedded inflation psychology out of the system.
When Volcker succeeded, the money printing started up again but instead of going into real things it began pouring into financial assets starting with the bond market bottom in 1981 and the historic stock market bottom in the summer of 1982. People that prior to that the Dow couldn’t clear the 1,000 level for 16 years. I remember that period like it was yesterday.
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