Admittedly, we are surprised that Hope and The Fed have sustained the rise in stock market prices so long. Except for oil-shale fracking and tech firms it is hard to find an industry in America on the rise, and the latter employs most of its labor outside the U.S. Most of the “wealth” being traded on Wall Street today was printed on paper and passed around as “equity” in financial firms. But equity in what?
For a decade before the housing bust Americans passed around paper representing equity in the supposedly safest investment known to man, real estate, certified by Fannie Mae and Freddie Mac. But behind every stock certificate, there must eventually be real value in things and services. When the “thing” is just paper printed by the Federal Reserve, eventually the house of cards falls down.
ZeroHedge economist and hedge fund manager Jim Rogers agrees:
“It is only a matter of time before the US stock market runs into devastating problems due to the Fed QE program”, Jim Rogers warned during an interview on CNBC Singapore, adding that the prevalence of similar stimulative programs around the world merely exacerbates the probability and size of a fall. His simple message to US investors – “Be Careful.”
On US Equities:
“We may well have had a big, big rally in the U.S. stock market, but it’s not based on reality. I would encourage investors to know you’re in a fool’s paradise, be careful, and when people start singing praises, say, ‘I’ve been to this party before, and I know know it’s time to leave.'”
On A US Recession:
“First of all, throughout American history, we’ve always had slowdowns every four to six years. That means that sometime in the next couple of years – three years, maximum – we are going to have problems again, caused by whatever reason,”
On The Increasing Size Of The Problems:
“For instance, there was 2001 and 2002, and then 2007 and 2009 was much worse.
Well, the next time it’s going to be worse still, because the level of debt is so, so, so much higher. Every country is increasing its debt at the same time.”
On The Limits Of Central Banks:
“This is the first time in recorded history that we have every major central bank in the world printing money, so the world is floating on an artificial sea of liquidity.
Equities have declined for three straight days:
The United States only looks safe because no other nation that looks better on its books is large enough to be the anchor of a strong world economy. And the longer the United States keeps kicking its gargantuan government spending can down the road like it did yesterday with the passage of the Ryan-Murray budget; coupled with the anti-business policies of Democrats that have been in place since 2007 and getting more draconian with Obamacare, the sooner Wall Street’s party at taxpayers’ expense will end and they join us in the Slough of Despond that is most of the U.S. economy in the Age of Obama.
And if they keep printing money like confetti for News Years Eve, it will eventually only be fit for use as toilet paper, and the cheap kind at that. Inflation is already hurting the poor with record energy and chicken prices before even before the Winter Solstice has arrived.
Mike DeVine
“One man with courage makes a majority.” – Andrew Jackson
