It would be easy to scoff at these proposals as completely insane if the Fed hadn’t published a paper back in 1999 suggesting the implementation of a “carry tax” or taxing actual physical cash using an expiration date if depositors aren’t willing to spend the money.
Fraud is endemic in the financial system today. We know that the currency, stock, bond, and even commodity markets have ALL been manipulated by Investment Banks or Central Banks.
The fact is that much of the globe, particularly the developed west, is up to its eyeballs in debt. Mind, you, this is based solely on official public debt numbers. If you include unfunded liabilities, then the US, most of Europe, Japan, and even China are sporting Debt to GDP ratios well over 300%.
Traders have been trying repeatedly to force an upwards breakout in the S&P 500. Thus far they have failed. And now the market is coming up on support.
Put another way, the amount of high quality collateral backstopping this mess has shrunken dramatically. On top of this, traders have been piling into sovereign bonds in anticipation of various QE programs, forcing yields to multi-decade if not multi-century lows.
The next time something breaks in the financial system… it won’t be just individual banks going belly up. It will be entire countries. What’s happened in Cyprus and Greece is coming to your neighborhood… wherever you are.
For over 30 years, sovereign nations, particularly in the West have been buying votes by offering social payments in the form of welfare, Medicare, social security, and the like.
The bigger issue concerns the fact that bond yields are rising across the board. The UK’s Gilts, US Treasuries, and German Bunds have all dropped sharply in the last month, pushing their yields higher.
This was the “Rubicon” moment: the instant at which Central Banks gave up pretending that their actions or policies were aimed at anything resembling public good or stability
Numerous data points are showing the economy is approaching if not already in recession. And yet stocks are pricing in economic perfection. By the time they catch on… we’ll see a serious market correction.
So… we have stocks bubbling right as they enter a seasonably weak period as the economy is rolling over. None of these things bodes well for the market. We believe stocks are actually putting in a TOP right now, to be followed by a 20%+ correction in the coming weeks.
Take note, Gold is officially money for the most powerful entities in the world. They are not only accepting Gold as collateral but are openly trying to insure that they have their own Gold in safe custody.
Central Bankers bet the financial system that their academic theories would work, despite the countless real-world examples showing that printing money does not generate growth.
