Tuesday, July 21, 2015

The Coming Economic Train Wreck......Denial and Delusion!

The Coming Economic Train Wreck

In the year 2000 the Tech-Wreck was unexpected, the NASDAQ market crashed, and $Trillions of paper wealth disappeared.   Most investors were shocked and their savings were devastated.

In the year 2008 the housing market crash and subprime debacle was unexpected, shocked most people, destroyed retirement plans,as $Trillions more disappeared.

Although everyone knows that markets don't rally forever, most of us are shocked when the crash occurs.  ("No one saw it coming.)


In that zone of clarity we realize that train wrecks occur, printing money only increases the wealth of the political and financial elite, our financial leaders have created bubbles in stocks, bonds, and currencies, bubbles always pop, AND BUBBLES ALWAYS POP AND NEVER POP PAINLESSLY.

In 2015 most people realize that we can't get "something for nothing," but our actions often indicate otherwise.  

We are currently struggling in a financial crisis largely caused by leverage and debt. The financial and political elite have assured us they will solve the crisis with more leverage and debt.  Denial and delusion!

The Federal Reserve and other central banks are "printing" dollars, euros, yen, and pounds and they have assured us that Quantitative Easing will help their economies. Denial and delusion!

Central bank and government policies have reduced interest rates to zero or below, destroyed pension fund returns, boosted US student loan debt over $1Trillion, manufactured bond and stock market bubbles, exported much of western gold to Asia, pushed global debt over $200 Trillion, and they have assured us their policies are working. Denial and delusion!

Politicians promise free food, housing, cell phones, income, and much more, and we should know better, but we still elect the politicians with the most convincing "free stuff" promises. Denial and delusion!

Another huge 
train wreck will soon occur. This is not pessimistic or cynical, it is factual.  

The Tech-wreck of 2000 and the financial crisis of 2008 were not one-time isolated events.  Nothing of substance has changed to prevent the next "train wreck" from crashing our stock and bond markets.  Leverage has increased, debt is much larger, and people in the clarity zone hear rumbling ahead.  We are rushing down the wrong track while living in a world of denial and delusion.

Our central bank has been deluding itself into believing it can easily escape from its nearly $4 Trillion expansion of the monetary base and 7 years of virtually free money.  But that is a spurious belief. Bubbles never die slowly and always bring about dire consequences.  The bigger the bubble the worse the backlash – and never before in the history of economics have central banks distorted market prices to this extent.

They will never learn, but why should they?  These institutions are gambling with your money,not theirs.

The only thing currently holding markets together is confidence… and the only thing keeping confidence from being shattered is the belief central bankers will continue to provide a "free put" to all markets. When this trust evaporates, credit will cease entirely.  Without credit, the financial world will stop spinning. This financial disease is going to slay the patient. History is very clear on this point: debt kills.

The debt is not payable. There is no other option. This is not politics, this is math.

There is now a great deal of doubt, confusion and fear in the gambling halls. Our so called leaders who have grown rich on the one-way trades enabled by the money printing central banks and their fiscal bailout adjutants are being suddenly struck by the realization that their rigged game might have some very negative consequences after all. There is a potential for an uncontrolled nuclear financial reaction in this outrageous form of greed driven madness. They have set in motion a cascade of disruption that will shake the corrupt status quo to its very foundations.

Although the world looks messy and chaotic, if you translate it into the world of numbers and shapes, patterns emerge and you start to understand why things are the way they are.


Between the delusion of "something for nothing," and the denial of believing that our financial world was fine yesterday so it must be great tomorrow, lies the clarity of realizing the financial well-being of several billion people is currently threatened.  It was the same before the Tech-wreck of 2000 and the financial crisis of 2008.  AND NOTHING HAS CHANGED!


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