The entire “Stock Market Gains” of the last 12 months have been wiped out over the weekend, while you were mowing your lawn and enjoying a last bit of summer recreation.
Take a look at the following charts [captured at roughly Midnight Sunday night]. They clearly show that “futures” for all three of the major US indices are plunging. And already, two of these three (DOW and S&P) have lost all gains for the year, just in last week’s trading, with the Nasdaq showing downward momentum to do the same within the coming week.
So between real losses in the market last week, and “futures” losses just this weekend, two entire years of “market gains” have been destroyed. If you ever wondered what it would take to trigger QE-4, I believe we have found the answer.
Couple these losses in the domestic market with the precipitous fall in Chinese and Japanese markets over the past 2 weeks, and add in the nearly apocolyptic losses across the remainder of the ‘Emerging markets’ over the same time frame, and it’s very difficult to deny that something big is happening.
The reality is that if these global trends play out according to the current market momentum, then several $Trillions of investement capital will have been destroyed in the month of August, alone.
Also of strategic risk to the US economy is the fact that since the first of this year, China and several other countries have made a major shift in policy, from being net-buyers of US Treasury Bonds to being net-sellers of US bonds. In a real market, this would cause the interest rate on such bonds to go up, as we have witnessed with Greek, Spanish, and Irish bonds in the last 5 years. However, the FED has committed to keeping interest rates at 0% (a.k.a. ZIRP), and thus their only alternative is for the FED to buy nearly all of the US Bonds issued, and monetize them. Monetizing simply means printing money to cover the purchase of the asset. So the FED will print money in the same amount as the US Treasury bonds it must buy to hold the interest rates at ZIRP.
The implications of monetizing massive bond purchases, even as global trade stagnates and major countries become net-sellers of US Treasuries, is that there will be quite a lot more dollars in domestic circulation.
More dollars in domestic circulation *SHOULD* mean severe inflation would be the result. But as it was in the lat 1970s under the Carter administration, there is an opposing effect caused by a lack of money and real credit in the comercial and consumer markets to pay wages and purchase commodities. This is commonly called “Stag-flation” when there should be inflation, but there is not sufficient money in the hands of commercial entities to be spent. In other words, there is too much money, but it is not moving through the economy. This movement of money through the economy is often referred to as “velocity”. Low velocity goes with low inflation, but it also goes with wage stagnation, and retards the growth of businesses and the economy overall.
But all that money *is* still out there, and less and less of it is tied up in foreign markets these days. If, for whatever reason, the velocity of all that money should actually begin to increase, then inflation would necessarily skyrocket.
I’m not a fortune teller, and I won’t try to pin some exact date on when I expect the implosion to become obvious to everyone. If you’re paying attention, they it is already obvious to you.
I sincerely hope you are stocked up and prepped for at least a year of outright insanity because, should things continue in their present direction, it will take at least a year for local economies to reconstitute themselves after the crunch happens, and international trade may well cease to exist for a protracted period of time, even if no global war erupts in the aftermath of the global economic implosion.
And should another World War erupt as the economies of the world implode then only God knows what, if anything, might remain afterwards.
Ours was supposed to be a nation that minded it’s own business. But for the last hundred years, the Federal Government has continuously sacrificed that virtue in exchange for the vice of empire – Control and Domination. Control of their “allies” and Domination of their “enemies”. And all to benefit the International Corporations, which never ought to have existed in the first place. Our nation has been bought by a colelction of entities without souls, and this is the result.
WE HAVE BEEN WARNED