by Jeff Berwick, The Dollar Vigilante:
I’m not sure Trump is aware of this Jubilee year, but he certainly understands that the stock market is at a highly dangerous level.
“Interest rates are artificially low,” Trump told Fox in an interview, HERE. “The only reason the stock market is where it is is because you get free money.”
That is absolutely true and unheard of to be acknowledged by a front-running Presidential candidate. He then warned of “very scary scenarios” ahead for investors.
It’s an obvious-enough warning. Central bankers continue to build a pyramid of debt by printing trillions in aggregate. Since 2008 and the beginning of the current slump/depression, the US money supply alone has more than doubled. The money hasn’t helped the economy… in fact it has made it worse. But it’s sent stocks and bonds into the stratosphere.
The only trouble is that this kind of artificial market inflation always ends in disaster. Prices and interest rates are meant to be discovered, not planned; and they contain vital information for entrepreneurs and investors. Trump obviously knows that much.
So does William White, a top financier with the Bank for International Settlements who warned earlier this year HERE that debt levels were unsustainably high and that neither countries nor individuals were ever going to be able to pay back what they owed.
He was quoted in a UK Telegraph article, as follows:
“The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians. The next task awaiting the global authorities is how to manage debt write-offs – and therefore a massive reordering of winners and losers in society – without setting off a political storm …”
I was surprised when I first read his quote because he actually mentioned a debt Jubilee. It’s fairly apparent that the elites orchestrating the latest financial disasters want people to be aware of the Jubilee event that we’ve discussed at length.
Trump didn’t mention Jubilee but he certainly sees the catastrophe being created worldwide. He’s not a big fan of the Fed, either, and previously indicated back in May that he would “most likely” replace Janet Yellen. But, to be sure, he still wants the Federal Reserve to remain as the central bank of the US… if he didn’t, he wouldn’t have made it this far.
Price-to-earnings ratios and conventional measures of value are massively inflated. Interest rates are suppressed at all-time historic lows and actually have been pushed into the negative in some cases – as hard as that is to believe – by print happy bankers.
Corporate profits peaked in 2014 in the US and have been trending down for almost seven quarters. In many cases revenues and profits of top Dow companies like MacDonalds and Caterpillar have been stagnant since 2011 while their market capitalizations have doubled. And what are they doing with their shrinking profits. Not investing in fixed capital. They are buying back their stock to boost share prices. There’s simply no justification for the markets to be at all-time highs. The world is in a quasi-depression and stocks, especially, would reflect it if central banks were not frantically pumping money into the world’s economy.
Janet Yellen and the Federal Reserve know how bad it is. Why else would they keep interest rates at or near 0% for 8 years? If there were real journalists in the mainstream media they would ask this question of Ol’ Yellen, “Stock markets are at all-time highs, why are you too scared to raise rates 0.25%?”
Of course, she wouldn’t give a straight answer. But, the straight answer is that stock markets are at all time highs BECAUSE they’ve held interest rates so low, so long and printed up trillions in currency units. If they hadn’t, the stock markets would be somewhere in the neighborhood of 50-90% lower and the US government would already be bankrupt.
Instead, they continue to keep the game going just a little while longer. But the longer you play this game the more destruction will come as a result.
The Bank of England just cut rates by 0.25% and expanded its QE program to 60 billion pounds (including the purchase of corporate bonds). This is a significant move since the last rate cut for the BOE came in 2009. And to combine the cut with quantitative easing is even more significant.
It’s not so much a move as a kind of controlled panic. And it collapsed the pound against the dollar when it was announced.
Of course, lies surround the rate cut. Governor Mark “The Con” Carney justified the news by explaining the easing was the fault of Brexit!
Say what? The British seek to free themselves from the corrosive authoritarianism of the EU and somehow Carney and others interpret that as a disaster demanding further frantic debasement.
Carney emphasized he stood ready to “act in exceptional circumstances” and made a huge downgrade in growth forecasts, cutting growth expectations for 2017 from 2.3 percent to 0.8 percent.
This is just the beginning. His easy money stance is shared around the world. Central banks are reacting in unison, pumping more and more cash into an already stuffed world economy.
The US Federal Reserve, for instance, was going to raise rates three or four times in 2016. It hiked a paltry 0.25% once in 2015 and stopped after markets crashed. Meanwhile, China continues to loosen but hasn’t formally cut rates since mid-2015.
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