Rob here with Patriot Privacy and the Self-Reliance Institute.
I suspect many of you are already suspicious of the stock market.
After all, many would argue that the stock market has benefited from the U.S. Federal Reserve’s (and other central banks around the world) manipulation of the money supply.
The question is, will there be a downside to all of that manipulation?
David Stockman certainly thinks so.
Do you remember Stockman?
David Stockman was the Director of the Office of Management and Budget under President Ronald Reagan. And while he is controversial, most everyone believes he is worth listening to when it comes to the state of the economy.
This week, in “Today’s “Dip” Is A Warning—-Get Out Of The Casino!” Stockman had much to say about the stock market. And while I encourage you to check the article out for yourself, here are a few snippets I want to highlight.
“The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.”
“Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.
“What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry tradespeculation that can’t get out of its own way because central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero. …
“[F]inancial markets are no longer honest, rational, stable or independent; they are merely gambling hall subsidiaries of the central banks where most of the punters still believe that the latter will not permit risk asset prices to fall for more than a day or two or funding costs to rise unexpectedly.
“The reason that the casino has become so stupendously dangerous, therefore, is that the whole financial house of cards—including vastly over-valued asset prices of every kind and insanely extended leverage like the CHF currency speculations—all depend on maintenance of confidence in central bank competence and omnipotence. …
“One thing leads to another and ultimately to a daisy chain of wreckage when honest “price discovery” is destroyed by the central banks. Even now several Austrian, Italian and other European banks, which plunged into the CHF lending business, are on the rocks.
“It is only a matter of time before one “surprise” after another turns up owing to the speculative mania of the last six years. And it is virtually certain that the central bankers who have presided over this fiasco will be caught as flat-footed as they were during the sub-prime fiasco. …
“[T]he casino gamblers have been playing with free money for 73 months running.
“Accordingly, the joint is an accident waiting to happen. Forget the dip. Get out of dodge.”
In short, what Stockman is saying is that the Stock Market – what he rightly calls the Casino – has run out of tricks and it’s only a matter of time before inevitable happens.
And, I suspect, when it does, it will be very, very ugly.
Bottom line: Stockman is warning his readers to get out of the Stock Market.
OK. Check out Stockman’s piece and let me know what you think by emailing me at [email protected] and please check out my PS below.
Do you think the Stock Market has become a Casino supported by the money the Fed has been manufacturing?
Do you think the Stock Market is too risky for average investors?
Should we all be looking for Alternative Investments?
Let me know.
Be safe, secure and free!
Rob Douglas – Former Washington DC Private Detective
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