Sailing Through a Global Storm Without Enough Hot Air

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Global Panic Has Just Started

By Egon von Greyerz – Re-Blogged From Gold Eagle

Greg Hunter interview with Egon von Greyerz on USAWatchdog:

In this Interview with Greg Hunter, Egon von Greyerz says the signs abound that we are nearing the end of this global fiat money experiment.

Asked about the health of the global financial system EvG replied: “The central banks are panicking. They don’t know what to do anymore. Europe is starting QE again with $20 billion a month, but that’s nothing compared to what is coming… This is simply a ‘practice round’”.

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Why are Bonds Going for Broke?

One argument for last week’s extraordinary plunge in bond prices, which I explored as something that might happen this time of year in one of my earlier Premium Posts, was that bond prices could get crushed by the supersized US treasury auctions planned for September and October as the government makes up for its inability to issue new debt during the debt-ceiling standoff.

While pointing out the concern to patrons, I decided in the end for my own investment purposes that the Fed’s termination of quantitative tightening and its return to reducing interest rates would likely offset the impact of the government’s sudden debt expansion. Evidence is solid so far that the ballooning treasury auctions have not been the cause of the sudden collapse in bond prices (rise in yields).

(I also got out before the carnage of last week.)

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The Big Cons

By Gary Christenson. – Re-Blogged From Deviant Investor

WHAT BIG CON? There are so many in the worlds of central banking, economics, government, and money that we list only a few.

  1. We Need A Central Bank: Mainstream Media (MSM), politicians, and bankers promote this lie. It’s not true.
  2. Debt can increase forever without material consequences. This is a dangerous con. Debt matters and will cause major pain in the next five years. Don’t believe the MSM regarding harmless debt.
  3. Deficits don’t matter. Deficits matter little to politicians. If deficits were important, congress would not raise the “debt ceiling” every year or two. Deficits and massive debt transfer wealth to the political and financial elite. Continue reading

The Central Banks’ Time Machine Is Broken

Last week we wrote about how global central banks have created an economic time machine by forcing $17 trillion worth of bond yields below zero percent, which is now 30% of the entire developed world’s supply. Now it’s time to explain how the time machine they have built has broken down.

In parts of the developed world, individuals are now being incentivized to consume their savings today rather than being rewarded for deferring consumption tomorrow. In effect, time has been flipped upside down. These same central bankers then broke that time machine by guaranteeing investors they will never cease printing money until inflation has been firmly and permanently inculcated into the economy.

They have printed $22 trillion worth of new credit in search of this goal since 2008. This figure is still growing by the day. But by doing so, they have destroyed Capitalism. Freedom is dying; not by some Red Army but by central banks.

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An Inflection Point In The Markets?

By Mark J Lundeen – Re-Blogged From Gold Eagle

The Dow Jones closed the week down 3.20% from its last all-time high.  On a week where the FOMC cut its Fed Funds Rate by twenty-five basis points (0.25%), the Dow Jones deflated 2.59% BEV points from last week’s close, or down 707.44 dollars.

Back in the late 1990s, even a rumor that Alan Greenspan was even thinking he may cut the Fed Funds Rate by twenty-five basis points caused the bulls on the floor of the NYSE to begin dancing, beating their copper kettles with wooded spoons for joy.  Twenty years later we live in a different world.

Certainly in the past eighteen months things have changed.  Look at all those BEV Zeros (new all-time highs) in the Dow’s BEV chart below from 2013 to the end of 2017.  But since the beginning in January 2018 the Dow Jones has seen only four BEV Zeros last autumn, another four this summer, and sandwiched in between these paucities of new all-time highs is the deepest post March 2009 market correction; an 18% decline late last December.

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Reading the Next Recession

Here is a journey in photos and facts to compare the present Great Recession with the past Great Depression to gain perspective on where we might be headed.

Just as we had two great world wars, we might have two great depressions, the last of which we started out calling “The Great Recession” because, at the time, we didn’t know where it would end up or how long it would continue. Remember that World War I did not start off being called WWI. It was originally called “The Great War.”