The Biggest Threat to Your Financial Wellbeing
by Nick Giambruno
You may recall the international spectacle Alan Greenspan sparked in 1996.
In an otherwise dull and forgettable speech, Greenspan, the Federal Reserve chairman at the time, said the now famous phrase “irrational exuberance.”
Investors thought Greenspan meant the Fed was about to raise interest rates.
Of course, Greenspan didn’t say the Fed would raise rates. Nor did he intend to signal that.
Nonetheless, investors quickly panicked.
US markets were closed at the time, but stocks in Japan and Hong Kong dropped 3%. The German stock market fell 4%. When trading started in the US the next day, the market opened down 2%.
Billions of dollars of wealth vanished in 16 hours… all because one man said two words.
That’s an absurd amount of power for one person to have.
It’s also a shameful testament about the economy. It’s based more on the Fed’s shenanigans than actual production.
After the US president, the Fed chair is the most powerful person on the planet.
By simply saying the right words, the Fed can create or destroy trillions of dollars of wealth in both the US and abroad.
We’re in Uncharted Territory
Throughout the 1920s, the Federal Reserve’s easy money policies helped create an enormous stock market bubble.
In August 1929, the Fed raised interest rates and effectively ended the easy credit.
Only a few months later, the bubble burst on Black Tuesday. The Dow lost over 12% that day.
It was the most devastating stock market crash in the US up to that point. It also signaled the beginning of the Great Depression.
Fast forward to today…
The economy has been on life support since the 2008 financial crisis. The Fed has pumped it up with unprecedented amounts of “stimulus.” This has created enormous distortions and misallocations of capital that need to be flushed.
Think of the trillions of dollars in money printing programs—euphemistically called quantitative easing (QE) 1, 2, and 3.
Meanwhile, with zero and even negative interest rates in many countries, rates are the lowest they’ve been in 5,000 years of recorded human history.
This is not hyperbole. We’re really in uncharted territory. (Interest rates were never lower than 6% in ancient Greece and ranged from 4% to over 12% in ancient Rome.)
The too-big-to-fail banks are even bigger than they were in 2008. They have more derivatives, and they’re much more dangerous.
Allegedly, the Fed has been taking these actions to save the economy.
In truth, it’s warped the economy far more drastically than it did in the ’20s. I expect the resulting crash to be that much bigger.
The Biggest Threat to Your Financial Wellbeing
The mainstream “fake news” media endlessly praises the Fed. It portrays Fed employees as a bunch of selfless, benign bureaucrats trying to save the economy.
In reality, the Fed is the primary cause of most of the harmful distortions in the economy.
You can blame the Fed for…
✔ Unlimited money printing
✔ Artificially low interest rates
✔ The boom/bust cycle
✔ Bailout funds to prop up “too big to fail” institutions
✔ The War on Cash
✔ Cronyism in the financial industry
✔ Various asset bubbles… just to name a few.
If you ask me, the Fed is the biggest threat to your financial wellbeing. Period.
Today, That Threat May Be Imminent
In December, the Fed raised interest rates to their highest levels since the 2008 crash.
This could help prick the massive bubble in the stock and bond markets.
But the threat goes beyond that. Even a small rate increase could also be lethal for the US budget, which is built on credit.
In other words, economic depression and currency inflation (perhaps hyperinflation) are very much in the cards.
These things rarely lead to anything but bigger government, less freedom, and shrinking prosperity.
Sometimes they lead to much worse.
sábado, marzo 10, 2018
THE BIGGEST THREAT TO YOUR FINANCIAL WELLBEING / CASEY RESEARCH
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Etiquetas:
Central Banking,
Interest Rates,
Investment Strategies,
Monetary Policy
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Bienvenida
Estimados amigos,
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Friedrich Nietzsche
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
Lao Tse
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
Warren Buffett
No soy alguien que sabe, sino alguien que busca.
FOZ
Only Gold is money. Everything else is debt.
J.P. Morgan
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Proverbio Chino
Quien no lo ha dado todo no ha dado nada.
Helenio Herrera
History repeats itself, first as tragedy, second as farce.
Karl Marx
If you know the other and know yourself, you need not fear the result of a hundred battles.
Sun Tzu
Friedrich Nietzsche
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
Lao Tse
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
Warren Buffett
No soy alguien que sabe, sino alguien que busca.
FOZ
Only Gold is money. Everything else is debt.
J.P. Morgan
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Proverbio Chino
Quien no lo ha dado todo no ha dado nada.
Helenio Herrera
History repeats itself, first as tragedy, second as farce.
Karl Marx
If you know the other and know yourself, you need not fear the result of a hundred battles.
Sun Tzu
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
Paulo Coelho
Paulo Coelho

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