The Era Of Cheap Money Is Ending: "This Is The Calm Before The Storm"

Tyler Durden's picture

Submitted by Mac Slavo via,

We’re living in the calm before the storm.

That much everyone can sense.  The stock market highs and holiday spending spree will soon be over, the inauguration will presumably go as planned, but that’s when everything could start to go off course.

The only question is how the storm is going to stir into a frenzy – there will be a pretext of some kind. What seems certain is that it is past time to get ready for a difficult period. This could be the big, slow squeeze and the long winter.

The economy became immune to stimulus and quantitative easing; the market can only be propped up so long, and the realities of raised interest rates a matter of timing for the Fed to decide. Now, President-elect Trump provides the catalyst necessary for a dramatic rise and fall in the economy.

With the force of the economic avalanche that is poised to fall upon us all, the policies and actions of President Trump will do little to stem the tide of what is already coming; for better or worse, there is little that Trump himself can do even though it may fall squarely on his administration.

There are many putting out the talking points now; the warnings are reaching a crescendo.

Jay L. Zagorsky, Economist and Research Scientist at Ohio State University, is predicting a recession for 2017, in spite of glowing outlooks, that could dominate headlines:

My outlook for 2017 and beyond is that the U.S. economy will likely see another recession.




It could be a sudden trigger like the collapse of Lehman Brothers in late 2008 or just a general loss of confidence.


[…] At the end of very long expansions, banks and finance companies are willing to lend to almost anyone because they become overly optimistic. Some of this willingness to lend carelessly is currently seen in U.S. car loans.


[…] like a game of musical chairs [….] suddenly “the euphoria becomes a panic, the boom becomes a slump.”

Recession, of course, is a euphemism for something much more far reaching… yet the sense of true panic is there. This could be bad.

Regardless, people across the spectrum are warning about the financial blowback that is likely headed our way. Many prominent economists are currently signalling either slow growth, or the onset of a crisis that no Trump could contend with, as RT notes:

Many of the experts said the global trade slowdown, seen during the slight recovery from the financial crisis that started nearly a decade ago, could worsen.


Emerging economies are expected to remain vulnerable… accelerating inflation and a soaring US dollar among the risks to the economic balance.


Dollar strength, weakening other currencies, will influence how emerging markets manage relatively higher inflation, as well as falling business confidence, they said.




“Mr. Trump and his team have promised growth of 3.5 to 4 percent or more, which we see as ‘magical thinking’ unless accompanied by accelerated productivity growth,” said Michael Carey, US economist at CA-CIB.

If these guys are right, the Trump Administration promises of boosting the economy could end up a no go, nothing more than “magical thinking” and an overly-optimistic sales pitch.

Hopefully they are wrong.

Mike Adams emphasized the gravity of this massive monetary shift – it will rock global events, and likely overshadow almost anything else taking place during 2017 and the years that follow it:

The only prediction that really matters for 2017: The global debt collapse begins, followed by the rise of fascist, totalitarian government


At first, I thought about putting together a list of 25 bold predictions for 2017, but in the end I realized only one prediction really matters. It makes everything else almost irrelevant.


The era of cheap money and free debt is going to come to a catastrophic end


To understand the implications of this one prediction, you need to grasp the reality that we are approaching the end of the era of cheap money, endless debt and fiat currency money creation.


[…] For decades, presidents and central bankers kicked the can down the road, printed new fiat currency and spent the nation into financial oblivion. President Obama, America’s first Muslim President, doubled the federal debt in just eight years…


Now, with Trump getting sworn into office on January 20, 2017, the globalists no longer want to prevent the debt collapse from taking place.


The timing of all this is during Trump’s first four years. The plans will be set into motion in early 2017, and the mechanisms for engineering a crash will be initiated almost immediately after Trump’s inauguration. The effects of those actions, however, will take time […] no one can accurately predict the timing of when those actions will release the avalanche of global debt collapse. […] but what we do know is that once the avalanche begins, it will be unstoppable until it hits bottom.


As the debt collapse unfolds, we’re going to see the freezing of banking transactions, government payments and food stamp debit cards. The stock market will collapse (or be frozen), pensions will collapse, many banks will implode, the FDIC will go bankrupt, real estate will collapse, international banks will save themselves with “bail ins” and so on. It’s going to be financial Armageddon on a scale no living person has ever witnessed before.

Once that happens, there will be a backlash from the federal government and the emergency infrastructure that could swiftly implement a police state, tight cash and monetary controls, violence, looting and unrest in the streets and short supplies everywhere.

If the crisis is widespread enough, almost any level of draconian measures could be justified.

With nearly 50 million people dependent on food stamps in this country, no job growth, stagnant wages and a hungry, desperate and idle population drowning in debt, there will indeed by unrest as no one in this country has ever seen it.

If they are fueling the fire so that it burns with spectacular destruction, it may be wise to get as far back and away as possible.

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tarabel's picture



Stop Loss Orders will be the chosen instrument of destruction against those who fondly imagine themselves to be safe from the coming fury.

Yen Cross's picture

 Umm. You clearly have little understanding of the optons and spot markets.

 Limit orders are above or below market prices. Stop loss orders, are exactly the opposite. [how can you stop a loss if the trade hasn't been filled?]

  You can have limit orders above and below market prices, depending on whether your're buyong or selling.

----_-'s picture
----_- (not verified) Yen Cross Jan 6, 2017 2:46 AM

"and to the end of 2017 for the first time in history dow reached 100.000"

but sooon sooooooon the market will collapse


"and to the end of 2018 for the first time in history the dow reached 1.000.000"

but soooon soooooooon the market will....

OverTheHedge's picture

I get the feeling that this is a recurring, annual theme, so I tried searching the archive to prove it. Unfortunately, searching then zerohedge archive by date on a very small tablet has defeated me, so I am just going to go with my gut ans say "We are all doomed! Doomed, I tell you!" This time, it might even be true.


Dr. Spin's picture

Hey, this party has been roaring for 46 years. The partiers (us) are getting a bit long in the tooth. The musicians are flagging and the punch bowl is empty. GAME OVER MAN...

Oh, and how exactly does a stop loss order work when everybody is selling and nobody is buying???


MalteseFalcon's picture

A Trump chronology:

1.  Trump does not grow the economy at all.

2.  Trump redirects a large part of the stagnant economy to workers.

3.  Trump ends foreign policy adventures.

3.  Trump drains the swamp, including repealing 99% of all Obama EOs, ending the era of identity politics, diminishing the MSM, ending the attack on the second amendment, ending Obama-care, restructuring the intelligence services, reducing government employee benefits, ending illegal immigration, and getting the FED out of the central planning business.

4.  The economy still does not grow.

5.  Trump re-elected in landslide.

PresidentCamacho's picture

Thanks for educating me. Ill be able to trade rocks in the coming new stone age for maximum alpha.

----_-'s picture

" Ill be able to trade rocks"


i give you all my rocks if you give me all your non paper gold

Crabshacker's picture

Comments like this is what keeps this (me) coming here..

HRH Feant's picture
HRH Feant (not verified) Jan 6, 2017 2:06 AM

Really Tyler? Another Slavo article? Okie doke I am going to stock up on chicken eggs after this article! I promise!

JohnGaltUk's picture

You will eat those eggs after it happens.

I could see these issues back in 2010 and I have prepared myself accordingly.

CNONC's picture

That the global economic system was on an unsustainable path that would ultimately be resolved by a major crisis that would dissolve the post war institutions and modes of government was observable as far back as the early nineties.  The collapse of the Soviet Union was not so much a victory of the West, as a failure of the weakest part of the global system, a portent of things to come.  I began preparing in the mid nineties by trying to become "financially stable."  All my preparations were wiped out in 2008.  I have been preparing in the "prepper" sense since.  I, and you, could be equally wrong this time.  

Gead's picture

No.... invest in chickens/hens - think 'futures' (and get one good rooster for long term market stability). You'll have all the eggs you need in short order.

Nobodys Home's picture

If you can't raise chickens here's whole egg powder on sale at a really good price..the equivalent of 94 extra large eggs:

and no, I am not an endorser, just a satisfied customer.

Amalgamated Tang's picture

I think the era of totally worthless currency is coming.

Milton Keynes's picture

Suppose we have a major recession? 

Do they go to negative rates?

Do they jack rates as unemployment rises? 

JailBanksters's picture

Money should have an expiry date like eggs and bread

You have to use it before it expires or it's worthless and goes off.

They certainly could do this with Cashless Money, thank god.

Who want's old stale money just lying around doing nothing.

blargg's picture

Money should have an expiry date like eggs and bread

You have to use it before it expires or it's worthless and goes off.

So basically fiat?

dogfish's picture

I hope that the USA declares bankruptcy.

spdrdr's picture

If Trump can weild his way through the current and ongoing civil administration, there will be a political pivot towards fiscal stimulus measures.

This takes control of the working economy out of the hands of the Fed, but the benign servant of fiscal stimulus is a particularly dangerous master when the benefit does not "trickle up" to those accustomed to receiving the largesse of Government programmes.  Always, without fail, fiscal measures lead to corruption.

Expect an extraordinary effort to log-jam and forestall any such measures.  Expect much more social unrest, and unfortunately, expect Trump to inneffectually flail his arms at his inability to get anything done.

I tend to agree with many posters here:  The USA is fucked, and bring on the reset!




quadraspleen's picture

I got lots of Tuna steak. And gold. And a BB gun. I ordered a water filter but it didn't come yet.


quasi_verbatim's picture

The tuna will make you glow, like your gold, but not in a nice way.

DanDaley's picture

As long as that BB moves at about 3,000 fps.

Rocco May's picture

Fake system, fake democracy, fake politician, fake financial system, fake economy, fake currency, fake wars, I think even the self-proclaimed elite do not know how that ends. The whole system consists only of bubbles. The communists/ bolsheviks have always fucked the people.

Fireman's picture

Co££ap$€ now and beat the prepper rush!

5 stages of collapse. Get ready for USSA'S "Yeltsin Years."

Stage 1: Financial collapse. Faith in “business as usual” is lost.

Stage 2: Commercial collapse. Faith that “the market shall provide” is lost.

Stage 3: Political collapse. Faith that “the government will take care of you” is lost.

Stage 4: Social collapse. Faith that “your people will take care of you” is lost.

Stage 5: Cultural collapse. Faith in “the goodness of humanity” is lost.


Onward to the the co££ap$€ of worthless Pentacon protected fiat filth and the execution of the banksters and political whores that peddle it!



Batman11's picture

We placed our faith in markets, which probably wasn’t the smartest idea mankind has ever come up with.

Markets can exhibit irrational behaviour as was first seen in the Tulip Mania of 1600s Holland.

The first question should be.

What mode is the market in?

1)    Price discovery.

2)    Bigger fool mode where everyone rides the bubble for capital gains.

The Tulip Markets of 1600s Holland were in mode 2 where everyone rides the bubble for capital gains and those poor unfortunates that can’t find a bigger fool get stuck with all the losses.

Why does today’s economics assume markets reach stable equilibriums when historically this is not the case?

Look at these poor unfortunates who didn’t ask the question above.

“Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.

Ben Bernanke can see no problems ahead in 2007.

Both used neoclassical economics and believed markets reach stable equilibriums but these events are nearly eighty years apart.

You would think that someone might have noticed a problem with the “Efficient Market Hypothesis” after the bust or the crash of the Japanese real estate market in 1989.

When you staff the top positions with ideologues who ignore real world events, the whole thing is going to crash and burn, it’s inevitable. 

With almost every market in the world in mode 2, the fun is just  beginning.

The Central Bankers call it the wealth effect; I would call it abject stupidity

Asset price inflation never creates real wealth - the way it's always been since Tulip Mania.

The wealth is there, the bubble bursts and then its gone. 

GreatUncle's picture

When that bubble burst though and then its gone, they joined all the bubbles together.

When it pops, it goes rapidly to zero like was fast happening around 2008-2009 until they stepped in.

That action became more of the problem I don't think they can do it again.

Does the UK sovereign debt include the £450 billion sitting on the BOE's books as QE if you are never taking it out.

Do it again that will resoult in excess of £1T total sitting on the BOE's books and FED / ECB in the same position.

Batman11's picture

Max Keiser takes it back to S&L loan crisis when the Greenspan put began and each successive bubble grew larger.

(or was it 1987 crash?).

The Central Bankers have been at it a long time and they are on the verge of destroying everything.

The financial sector are like puppies and you need to rub their noses in their own excrement to teach them how to behave, if you let them get away with it they will never learn.


Break_the_Bank's picture

"Both used neoclassical economics and believed markets reach stable equilibriums" 

What happens when equilibrium is not allowed to occur via interventions and manipulations? We are going to find out when TPTB lose control, as they must. Controlling markets must ultimately fail when "investors" lose faith in the illusion being presented and reality is revealed. Then markets will find their equilibrium which will result in hyperinflation, revealing the dollar's true value when faith in fiat collapses. 

Oldwood's picture

There is no profit in equilibrium. Markets need to neither rise nor fall but they must do BOTH if the profit.

Nunyadambizness's picture

I was introduced to the "Efficient Market Hypothesis" in college and knew it was bullshiite from the word "go".  When I asked if that was true how did Warren Buffett make his billions, I got blank stares and incoherent rambllings from my professor.  IMHO it falls under the same theories as the "beta" of a stock, among others--I guess "perfessors" need to justify their own existence.

HenryHall's picture

>> we’re going to see the freezing of banking transactions, government payments and food stamp debit cards.


No. Social security retirement and food stamps will always be there. It's just that the freshly "printed" dollars with which they are paid are worth less and less until worthless.

And it will all be blamed on Trump even though there is nothing he could do (even if he wanted to) that wil prevent the collapse happening on his watch.

didthatreallyhappen's picture

true, to infinity and beyond.  people on SS don't riot, they just starve and die.  people on EBT cards.... well, that will be interesting when they can't feed themselves on EBT$

GreatUncle's picture

Same as it ever was, recession, been living it for 8 years.

2017 the same, the recession just a name for ...


2 plays, both actually cancelling each other out, not allowing people to spend with less money generates deflation by falling demand where the FED at the same time tries to force the inflation to achieve higher values.

FED should just pay the fucking government and be done with all this shit and you can cancel the fucking debt in the process, it became meaningless since 2008.

Or, my favourite, drag both sides out now and start beheading with a brand spanking new guillotine if we all chip in.

falak pema's picture

Not for the 1% !

No recession for the top bankstas! 

Lets see how this pivot changes that beanstalk.

wholy1's picture

"Cheap" money -  A non sequitur? "Cheap" [fiat debt-encumbered] CURRENCY eventually worthless - yes.

Indelible Scars's picture

The markets, as if the fucking markets rule the world. Fucking bunch of crooks have been stashing billions for nine years now. What a joke. Chicken little bitch. Go away. Shoo.

falak pema's picture

The Pax Americana hegemony is dying and Trump knows it and has now decided the Obama medicine (QE/ZIRP of FED), as follow on to Bushist and Clintonista mayhem via 1% er globalism, is unsustainable.

He will now, as Saint Augustinian God Emperor of the West (and the East as China is caught in the global model under the reserve monetary gun), pull the rug from under the NWO WTO fed globalist model singing : Its every nation for itself and may the Devil take the hindmost !

And yes, the world is now about to change. Who the winners and the losers will be is still uncertain.

One thing is sure : once the fiat cake starts to collapse in currency/trade war cross fires, those with hard assets (Energy, RM, arable land, skilled manpower to move to fourth revolution paradigm change)  will have the upper hand.

And so in the winter of the coming discontent that the 2017 pivotal moment looks like unfurling on the oligarchy world, those who have moved to the new paradigm as nation states will survive better than their neighbours. 

China and the USA seem to have those skills. Russia not so much although it is a prime mover of this pivot.

Europe? Big question mark. Is it a joint effort or every nation for itself? Now we will find out! 

JailBanksters's picture

Cheap Money as in ...

The Wall St Banks can loan Money into existance from the Feral Reserve, then Park that same money back at the Federal Reserve and the Feral Reserve will pay you more Interest than the Interest they charged you when you loaned it into existance.

That's not cheap money, that's the Feral Reserve paying you to take their money.

And even with this level of Insanity, they still can't make a Buck.



moorewasthebestbond's picture

Another crap article prematurely pushing the good stuff off the front page of this once-great 'hedge.


FU SHTFplan!

JB Say's picture

So sell everything now and go live off acorns and squirrel meat in the backwoods. Let us know how that all works out.

Overdrawn's picture

 If Trump seized all the assets of Soros, the other multi-billionaires, the Clinton Foundation & anyone else who have been looting the world (Haiti, Iraq, Libya, Syria & Ukraine etc.).  American taxpayer may have funded these operations, but the profits went to the criminals. These people need to be put on trial and locked up for a very long time. That would free up trillions of $ which Trump could use to help the economy.

gdpetti's picture

Yes, but they are the system... they are the real 'useful idiots' used to create chaos worldwide... same as always. They are totally expendable to the real PTB, but as they are the tools for the job, when they go, it all goes. Our economy isn't designed to be 'fixed', that's just more 'wishful thinking'. It is designed for their manipulation and eventual collapse in order to reset the game... just another reflection of the larger game Mother Nature is bringing to the table.... 'as above, so below'.

richsob's picture

I can't think of a better way to lose your ass than follow financial advice from Mac Slavo.  He'll be right some day.  Maybe 10-20 years from now but he'll be right.  And a person will be broke from following his advice long before then.  

gdpetti's picture

True... but anyone awake and aware of the situation can't keep playing along with this puppet show. Sooner or later the smart gambler collects his winnings and walks away... while he still can... stay just a wee too long and they won't let you.... either you've taken too much of their money, or you learned too much about them and their game.

The collapse is hardwired into the game... same with the cycles of nature... but the game is based in keeping the sheeple's eyes off the prize...keep them drowning in visions of sugar plum sexbombs dancing in their heads... or little kids to rape and snuff out... or countries to destroy.... or massive profits to squeeze from the sheeple... to each their own.... the game has always been rigged here in Purgatory, and learning that is the main requirement towards finding the exit, which very few do, as most are kept in the game until it collapses... Slavo knows the game will collapse, we all do, but like the arrival of the main event sequence for Mother Nature's cleanup show, the question is exactly 'when'... all the 'signs' keep going parabolic... such as the infamous 'global warming' con game... the 'Russians did it' game... etc.

angry_dad's picture
angry_dad (not verified) Jan 6, 2017 9:52 AM

The usa economy would turn into a paradise if interest rates were increased to 6% overnight.

richsob's picture

How so?  What do you think would happen?