The global economy(s) has decidedly slowed down everywhere you look and at best is treading water. The GDP calculations of course are bolstered by trillions of dollars of new debt so without the “debt growth” we would be in full-fledged depression. Yet, stock markets nearly everywhere are ebullient and making either all time or multi year highs. A disconnect for sure, but is explained because of central bank easy money. Some have even looked at this phenomenon (myself included) and concluded that rising stock markets are a result of easy monetary policy… which hasn’t/won’t kick start the real economies. This is a classic sign that hyperinflation is in the cards. This conclusion is based not on opinion, but on history.
The current situation sees stock markets making new highs, interest rates historically and unjustifiably low, central bank and treasury balance sheets bloated and exponentially expanding… and yes of course “pressure” on paper precious metal prices. If you break this “combo” of pricing down into its parts, something (many/all things) doesn’t make sense. First, if “easy money” has not worked in the 5 years since 2008, why will it work now? If easy money (designed to create inflation and thus avoid deflation) is “good” for stocks because of the inflationary implications… then how do zero percent interest rates make sense if inflation will rise? Who in their right mind would tie up capital at very low fixed rates if they know that inflation will rise? And of course, how does easy money mean anything “bad” to real monies, gold and silver?
What we have here is a bubble. In fact we have a series of bubbles. The world is sitting on more bubbles, bigger bubbles than ever before. If you added together ALL of the bubbles (South Sea, Tulip, 1929, Japan 1980’s, Oil a couple of times, etc. …ALL of them prior) in the history of mankind, they would be a percentage, a VERY small percentage of the bubble(s) we have blown and are living with today. The central banks of course don’t see them (liars, liars pantalones on fire) because they ARE the bubble (or a big part if you don’t include the $1.4 quadrillion derivatives market)!
My point is this; every market is going in the wrong direction in preparation for what is coming. Yes I know, this is always how it works when bubble are being blown. Money is pouring into bonds in particular, stocks are being propped up and margin balances swollen, people are also being prodded into “selling” their gold (paper obligations). As I see it, we are headed directly into a brick wall where everything just stops. “Just stops” as in all markets are closed and you have what you have which will either be marked up… or down on the day that the music starts again.
You can argue many things, what you cannot argue is that the world, including and especially sovereign treasuries, are heavily indebted (more so now than ever in history) while at the same time their central banks increase the size of their balance sheets (print) unlike ever before. In what world does it make any sense at all to own the debt of a bankrupt debtor? In what world does it make sense to hold the currency issued from a central bank that openly admits to monetizing? In what world does it make any sense at all to participate in a Ponzi scheme AFTER the promoters have already spelled out exactly what it is? It doesn’t, but no one (very few) will see this until after the fact. After the markets are closed, after the “bail ins” occur, after currencies don’t and won’t spend.
Yes I know, some (probably many) will say that I’m nuts and none of this will ever happen. I would say that it has ALWAYS happened, ALWAYS. History is rife with examples. Examples of bank runs, examples of hyperinflations, examples of asset bubble and examples of governments that could not “pay their bill” because they borrowed too much. These examples were scattered throughout time and geographical location. Now it is everywhere and all at the same time… so why will “now” be any different from all of the previous historical examples? It won’t be, it will only be worse, affect many more and be concentrated into one hideous financial and societal event all at one time.
So, the crowd is pouring into bonds, stocks, real estate and counting their values in “chits” of colored paper. They are doing this with the “push” from sovereign administrations, central banks, financial institutions and the media. People are also looking toward an exit door with a sign over it that says “scary, SCARY… do not go here” placed there by the above collection. The “brick wall” is out there. You can say that it isn’t but history, math, logic and just plain 3rd grade common sense says that it is. Think this one through, it’s not hard but life after “the wall” will be!