01/03/2016

Peddling Fiction - by Jeff Fitchett

Everything in the economy must be awesome because the Dow Jones Industrial Average is up over 300 points today!  Reuters reported that; "Wall Street Surges as data points to economic recovery".  Bloomberg followed up with; "US stocks rally with emerging assets on data, Chinese stimulus".   CNBC added; "Dow adds 300 as oil rises, Apple rallies 4%". Perhaps I've been peddling fiction given my bleak outlook for the US and pretty much every other nation globally.  

Obviously I'm being facetious about the headlines and my comment about me peddling fiction.  The truth is, media organizations are the ones peddling fiction.  They remind me of a group of cheerleaders trying to excite a stadium full of screaming fans: USA, USA, USA!  We all know that the financial markets are rigged.  Take a look at this chart courtesy of Yardeni.com  and ZeroHedge:

The red line shows global economic growth and the blue line shows the performance of the S&P 500.  The shaded area highlights QE3 (aka: Federal Reserve printing money out of thin air or also known as financial market rigging).  It is interesting how the markets can correlate and then magically deviate. Last I checked, it is impossible to create economic growth merely by lowering interest rates and flooding a debt burdened society with more money.  

The moral of this story is to ignore the presstitute media, realize the left right divide that is American politics, sell stocks and bonds into this rally and prepare for unpleasant times that are progressively getting worse day after day. There are two eventual outcomes: debt defaults (deflationary depression) and hyperinflation.  Remember, every year debt must increase by the principle amount plus interest from the previous year.  When debt fails to grow, defaults occur. Stocks, bonds, real estate and other assets collapse in price.   Central banks have been encouraged by politicians to print money, buy debt, lower interest rates and force more money into the financial system to keep the appearance of; "all is well". Monetizing debt has always led to higher inflation and in many cases hyperinflation.  

All is not well and this is going to get very ugly.  The longer the mantra of; "extend and pretend" goes on the more severe the eventual fallout will be. Anyone who dismisses my remarks is either not informed, willfully ignorant or they have vested interests in this sham we call the financial markets and economy.  Think for yourself.  

No comments:

Post a Comment