Some economic headlines that are mostly ignored by the financial game shows and mainstream media:
- Fed’s National Activity Index Plunges Back Into Contraction
- US Leading Economic Indicators Plunge at Worst Rate Since 2009
- 40% of companies listed in the USA LOST MONEY in 2019
- Stock Market More Overpriced and Perilous Than Any Time In History
- Central Banks Have Set Records For Gold Purchases in 2018 and again in 2019
- The Increase In The Fed’s Balance Sheet and the Increase In the S&P Average are nearly a mirror image
- S&P Earnings have contracted for the last 4 quarters
- Shipping by sea, rail and truck are all falling along with manufacturing both here in the USA and globally
- Majority of CEOs Fear Persistent Global Slowdown- Most Since 2009
- Federal Reserve Admits It Pumped More Than $6 Trillion To Wall Street IN Recent 6-Week Period- (Wall Street On Parade) Other Headlines Sourced From ZeroHedge
I could go on and on but the fact that we are in a global economic slowdown in the midst of unprecedented debt creation and “money printing” spree by central banks should give everyone a wakeup call. Despite hundreds of trillions in currencies being conjured up out of nowhere and spent to buy stocks, bonds, pay off old bonds and pay interest due on current bonds to pretend that the world can pay the interest on the massive debt load, the economy has been slowing for at least the last 15 months or so. I am not even going to address what our economy would look like without the government transfer payments for food, healthcare and retirement being spent throughout the economy on the back of -you guessed it- more debt!
As I have written before, the numbers to keep the illusion alive have to keep getting larger and larger to have the same effect. Currently, the numbers are so absurd that I can’t help but think we are nearing the end of this experiment. It appears it will end as all have through history. Since those “in charge” likely know that any slowdown in credit creation (let alone a stop) would crash the economy and most markets. They will likely continue to grow debt exponentially and eventually wipe out the value of the currencies being conjured up out of nowhere.
This will allow those “in charge” to pay off their promises. They promised to pay $1000.00 and the “printing” will allow it. They can say they paid off their promise. The unfortunate part for us is that the $1000.00 may buy us a cup of coffee when we were expecting the $1000.00 to feed us for a month or two.
So far, the inflation that we have seen is in asset prices (stocks, bonds and real estate) as well as services like healthcare, education, etc.
One day- likely sooner than later- the inflation in real stuff- the stuff you and I need to live and survive like food, clothes, energy, etc. will also show up because of the downturn of our (and others) currencies because of the actions that those “in charge” are taking now.
I believe this could also lead to anyone counting on living off dividends and interest to be disappointed in a major way going forward as input costs eat into profits. It is unlikely that companies would be able to pass along higher costs to consumers as paychecks are not rising anywhere near what expenses are for the regular guy or gal. In addition if those “in charge” were to allow rates to rise there could be a massive loss in stock, bond and real estate values as well as an inability for most entities to carry (pay interest) on existing debt- let alone ever being able to pay it off. Believe me- the bondholders expect to eventually be repaid.
It is painfully obvious to anyone who takes a closer look that there are VERY few at the top getting exceedingly wealthy at our expense. How? Money gets conjured up out of nowhere and assets are bought with virtually free money. This “money” creates NOTHING. It consumes. This is likely why we saw an initial sugar high in the economy in the early 2010s but economic activity has recently been contracting even though the interventions are getting larger and larger. Without massive interventions in stock and bond markets the main form of keeping the populous as uninformed as possible (A rising stock market and low bond rates which both historically would mean a strong economy) the façade would have been exposed years ago.
In addition, great pains are also taken to make sure we are as clueless as possible about what they are doing to our currencies. Gold, which has been a global barometer since the beginning of recorded history, is as manipulated downward as much as other assets are managed upward. This masks the loss of purchasing power of the currency. Since 1913 the US dollar has lost 97% of its purchasing power- how many are aware of that? (St. Louis Fed) It is not the asset you are buying that changes but the value of the currency. The more it is trusted the more it is coveted and holds value. This would likely be the case if the currency was scarce while the currency would lose value as it becomes so abundant that it is no longer coveted. I believe we are very near this outcome for the US dollar. Time will tell.
I can’t stress enough how important it is to examine where you are investing now, look at current circumstances, and determine how confident you are that your current portfolio matches your goals and aspirations but also how do your future expectations match the information that we see today.
Is the current risk in traditional asset markets worth the current risk?
Does it pay to be “all in” on anything at this point?
Can we count on any traditional thinking when the central banks have basically become the “markets”?
Does it pay to have some assets that generally move in a contrary manner to traditional assets like gold, silver and commodities that are necessary for our survival?
As I have said before, the central banks are buying gold in record amounts, setting records in 2018 and again in 2019- this from the same people who can conjure up any amount of currency they want at any time and buy virtually any asset with impunity. What do the know that they aren’t telling us yet?
My guess is that they know this “printing” does have a limit. My guess is that we may be nearing it. Hence, the gold, silver and real stuff make a lot of sense to me.
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