"Every day brings another reason why the Federal Reserve should hold off before raising interest rates... First and foremost there was the recent plunge in stock prices."
Will she raise or will she not? As financial markets focus on whether we will see a Fed rate hike this week, investors may be in for a rude awakening.
Usually, we don’t stop to think about how the whole economy works together. A major reason is that we have been lacking data to see long-term relationships. What we are doing now is building debt to unsustainably high levels, thanks to today’s high cost of producing energy products. This can be turned around. To do so would require immediate production of huge quantities of incredibly cheap energy products - that is oil at less than $20 per barrel in 2014$, and other energy products with comparably cheap cost structures. Of course, such a low-price, high-growth scenario isn’t really sustainable in a finite world either.
The world today sits upon a very precarious point. One thing that’s not a “guess” is the way nations or economies have dealt with economic turmoil. History is far too littered with varying forms of “war” as not only the response, but also as the direct consequence of failed economic policies. Either of their own making or brought about by another. It doesn’t matter whether self-inflicted or not. The end game is the same: Currency war, Trade war, Diplomatic war, right down to actual combative kinetic war.
One survey recently recorded the highest level of expectations for a market rally in its history. If indeed a cyclical top in stocks has been formed, or is in the process of forming, this data series will likely require either a greater crash or, more likely, much more time to fully correct its bullish excess. We would not be surprised if such a scenario unfolded. If that’s the case, you’ll really see what a hated market looks like.
If you want a nation of criminals, treat the citizenry like criminals. If you want young people who grow up seeing themselves as prisoners, run the schools like prisons. But if you want to raise up a generation of freedom fighters, who will actually operate with justice, fairness, accountability and equality towards each other and their government, then run the schools like freedom forums. Remove the metal detectors and surveillance cameras, re-assign the cops elsewhere, and start treating our nation’s young people like citizens of a republic and not inmates in a police state.
The USD strengthening since last July is the core driver of the global recession. Is the Fed insane enough to deepen the global recession by raising rates and pushing the U.S. dollar even higher? Who wins if the USD strengthens due to the Fed raising rates? In a globally interconnected economy, nobody wins.
"All this points to weaknesses in domestic and international policy arrangements - arrangements that have so far been unable to constrain sufficiently the build-up and unwinding of hugely damaging financial booms and busts across countries.Hence a world in which debt levels are too high, productivity growth too weak and financial risks too threatening. This is also a world in which interest rates have been extraordinarily low for exceptionally long and in which financial markets have worryingly come to depend on central banks' every word and deed, in turn complicating the needed policy normalisation. It is unrealistic and dangerous to expect that monetary policy can cure all the global economy's ills."
Seeing the market crash from a few weeks ago, it is clear how quickly the market can ferociously hurdle in front of one's risk models. Risk models that failed to safeguard against risk when it mattered the most. Models that left many large hedge funds hemorrhaging - top funds which by definition were supposed to protect their investors in the August tumult. Instead when markets broke bad, a lot of things "went wrong"; and stayed that way.
It’s well-known that you have to make a declaration if you physically transport $10,000 or more in cash or monetary instruments in or out of the US, or almost any other country; governments collude on these things, often informally. But we've recently had some disturbing experiences crossing borders with coins...
Positioning across the world's most-levered financial instruments has never been this crowded. With such extreme positioning across the equity, vol, and bond complex, it would seem no matter what The Fed does in September, there will be blood.
Behind the veneer of “all is well” being promoted by both world Governments and the Mainstream Media, the political and financial elite have begun implementing moves to prepare for the next Crisis.
The 2008 global financial crisis was centered on mortgage debt. There was too much of it that couldn’t be repaid. When the value of the collateral – homes – headed down, the bubble popped. Today, consumers have about the same amount of debt. But now the excesses are in auto loans and student debt... and again, the collateral is falling in value.
The topic of immigration has become increasingly pressing but, unfortunately, the libertarian movement has not reached a consensus on this issue. But it should be easy, considering how government is at both ends of the problem: government is the number one reason people choose to escape their countries, whether because of governments’ war or devastating poverty due to the lack of opportunities in regulated markets; and government is the reason ordinary people, in a desperate state because their lives have been forcefully uprooted, have a hard time choosing where to lead their lives in peace. The desperation is due to the so-called “failings” of their own governments, and augmented by ours.
Spoiler alert: none of these scenarios end well...