by Jeff Berwick, The Dollar Vigilante:
We don’t know if the internet is just enabling us to hear things we previously didn’t hear… of if this is the most predicted stock-market crash in history!
It seems barely a day goes by now where someone hasn’t jumped on our bandwagon and is predicting, or calling for, a major crash.
The latest is Dominic Konstam, global head of interest rates research at Deutsche Bank.
To be precise, he isn’t so much predicting a crash (or shock as he calls it) in the stock market, but is actually saying that it is the only way the worldwide economy can move forward from its current predicament.
He recently said, “Without an external economic shock it is hard to see policymakers being prepared to take dramatic, fiscal action to jumpstart the global economy and bounce it out of a financial repression defined by low and falling real yields to one that at least initially is defined by rising nominal yields through higher inflation expectations.”
He continued, “Ironically the shock that is needed would require a collapse in risk assets for policymakers to then really panic and attempt dramatic fiscal stimulus.”
As of this moment the US stock market is continuing to hit new highs… to the puzzlement of many.
Even establishment bulls like Barron’s are beginning to question how the stock market can be rising in the current environment.
In an article entitled, “Truly Bizarre: Nasdaq Hits New High, Dow Finishes Up This Week Despite Downer Retail Sales” Gluskin Sheff’s David Rosenberg calls the triple highs “bizarre.”
He stated, “This run to new highs in the US stock market is bizarre seeing as the profit picture remains as muddled as ever. This is definitely not an earnings-based rally, It’s certainly not a recipe for long-term stability either.”
The truth is that the suppression of interest rates for the last eight years has not made the economy stronger. It has made it weaker. And the torrent of money printing has only caused a stock and bond bubble that, according to Konstam, needs to be popped if the economy is going to be salvaged.
And, with the US government doubling its debt in just the last eight years alone, it means that interest rates cannot rise without officially bankrupting the US government. I say “officially” because it is already far beyond bankrupt. The last time the US government paid off a penny of its debt was in the 1950s and it just survives by going into more debt at lower and lower interest rates now.
We currently have fake money printing propping up a fake economy backed by fake government statistics.
We can see this fakery in the most recent jobs report where the US added over 250,000 jobs in July. It was just lies, though. These jobs were simply “seasonal adjustment” statistics added by government bureaucrats.
What’s the reality? About a million fewer people with jobs, not an addition of 255,000. What “jobs” are available tend to center around unproductive government work and the new socialist medical “care” system that many are already saying is bankrupt. Then there are ”temp jobs” and “leisure & hospitality” which are mostly restaurant service jobs whose clients are mostly broke Americans purchasing McDonald s on credit cards with the hope that the economy is “recovering” and they can one day pay it back.
These monetary-driven markets have absolutely no relationship to underlying reality. The world is in a depression, not a recovery and corporate profits are going down not up.
When you have a Deutsche Bank analyst stating that a crash, or “shock” is needed to fix things… that’s a pretty bad sign.
Especially considering Deutsche Bank itself hangs by a thread currently, with profits down 99% in the last year and its share price cut in half as the buzzards circle.
Deutsche Bank may be the final piece that brings the whole fake edifice down. Today’s jury-rigged construction of Keynesian, central planning, communist style monetary production and related financial market debasement can’t last much longer.
We’ve stated since last year to prepare for the worst. And, we’ve seen three major market crashes since. Each time, markets have bubbled back up as a result of more money printing and continued interest-rate suppression, which has now done the impossible and gone negative in many countries. It can’t go on forever and we don’t think it will go on much longer at all.
Fortunately, if you anticipate what’s going on, there are ways to protect yourself and even profit from it. That’s what we have done here at TDV, gaining 200% in the last year for our subscriber’s portfolio.
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