Researched by Bart D. Blickenstaff. TOO ALL MY GREAT FACEBOOK FRIENDS. THIS MAY BE MY LAST FINANCIAL ARTICLE I WRITE IN A LONG TIME. WHY? HONESTLY BECAUSE I AM GETTING BORED AND THE HARD CORE TRUTH IS THERE ISNT MUCH TO SAY THAT I HAVENT ALREADY SAID PREVIOUSLY. ALSO FROM HERE ON OUT. THE USA HAS MORE DEBT THAN OUR GDP. THE BOND MARKET IS THE REAL MARKET. AND THE STOCK MARKET WILL SUFFER. OUR DEBT WILL SLOWLY SPIRAL BAD....AND THING WELL GET VERY TOUGH. I DONT CARE TO REPEAT THE SAME STUFF OVER AND OVER LIKE A DUMB POLITICIAN. BUT I THANK ALL OF YOU FOR LISTENING. GOD BLESS AND GOOD LUCK. Central-bank intervention has obviously played a huge role in the world economy over the past several years, and I believe that a lack of central-bank intervention will play an equally large role, and it’s something that investors need to prepare for. (YOU have been fairly warned so no crying....buck up and get things done please) It is always nice to just throw money at a problem because when economic troubles exist, more money often makes it better. (sometimes BUT not always) During the economic crisis, the United States set precedents for this by s(trying) to stimulate its way out of what would have otherwise been an economic depression. (we kicked the can down the road and saved big banks because of bad housing mortgages) Since then, it seems that nearly every other country has followed suit, (tryed to...many have done much much worse than us...like Argentina that is defaulting on ALL their countries debts a second time) and instead of reacting to economic problems by establishing measures to allow free markets to navigate their way out of the problem, central banks patch over the problems and hope that the underlying issues go away. ( always easier to hope and wish) However, in doing so, something very important also happens. When central banks flood economies with excess liquidity, like the United States and other countries have been doing, money eventually flows into asset classes like real estate and the stock market, and when that happens...bubbles are created. (this obviously has happened and is very bad because it is FALSE GROWTH. If it was real and worked we would RIGHT NOW be fine) Initially, the objective is to stabilize financial systems, and that is an excellent objective, but when the impact shifts from stabilization to something else, fostering economic growth...(like I just mentioned) for example, the problems could eventually become much worse than those problems the central banks were trying to prevent in the first place.( and they have but I AM NOT WASTING MY LIFE explaining all this...but I PROMISE you I understand it thoroughly.) That said, this will only be true if the underlying economy that was weak at the beginning, is still weak. ( this is exactly the USA and many other countries.) The objective of stimulating asset prices is to strengthen the underlying economy, but if the underlying economy is FALSELY STIMULATED...and does not stabilize on its own, we run the risk of a reversion when stimulus measures are reversed. (PLEASE PAY ATTENTION.....this is exactly what is happening and Yellen CAN NOT full the proverbial punch bowl...ONLY ONE OPTION....PRINT and CREATE more debt and FALSE GROWTH.) Furthermore, if the natural growth rate of our underlying economy is not only weak, but has gotten weaker during the stimulus phase (which ours has) not only would a reversion to the mean (the natural level of the economy) happen...but that natural level would also be lower than where it was at the beginning, meaning that without stimulus, it could get even worse than it was before. The FEDERAL RESERVEs rationale behind a weaker overall economy is that there are fewer new investors demographically in our current economy. If you think of it with baby boomers in mind, it can even become more influential. Although baby boomers are clearly invested, most of them do not have “new money” to invest into the economy. Instead, they are churning old money (this is a MAJOR point and economies do not grow naturally when old money is churned....PERIOD. The economy would be materially weaker had it not been for FOMC stimulus (false money), and it will be materially weaker according to my observations because net real stimulus (NRS) is ALREADY NEGATIVE! My macroeconomic VIEW IS the Investment Rate, tells us just how exaggerated the difference has been, and it is substantial. This differential sets the stage for a possible market crash. In MY OPINION.....that is exactly the condition the U.S. is facing today. According to The Investment Rate, the natural condition of the underlying economy has been deteriorating since 2007, and the lack of central bank stimulus will expose this. I know this sounds like a lot. I have taken over a YEAR too put these thought together. The next President will have ONLY one of 2 choices. print and add another 4 to 5 Trillion to our debt to cover our expenses....OR severely start cutting expenses which will be ugly and painful. We could NOT even begin to tax the rich or whoever to get our debt in control. I crunch REAL numbers a LOT. I have done genuine financial planning and activity- based accounting in the FORTUNE !00 to try and help corporations get a grip on their expenses to be profitable. THE USA is truly no different....our Congress and the Special Lobbying Groups would like to buffalo the general public. That just the hard core truth. Thanks for listening and God bless. As our debt gets worse....things in the USA and other countries will get worse. Period. That is just reality....and reality is where I live and breath. Not some dreamworld. Bart.
Posted on: Fri, 05 Sep 2014 20:22:07 +0000
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