May 14, 2020
There’s a huge gap between asset valuations and the economy. Just look to the Fed. Many times we were assured there would never be debt monetization. Now, they’re not just buying corporate debt but also buying junk bonds as well. The Fed is actually making loans directly to businesses and passing out stimulus to anyone with a pulse. The Fed has truly gone rogue. And yet, inflation stays down. Q2 is going to see $3 trillion deficit and a $4 trillion deficit for the year. There’s no productivity associated with this stimulus. According to Michael Pinto this will result massive stagflation due to massive money printing. This is unique. In 2018 stocks took a hit, even though profits were up. Why? It was because the Fed was tightening. And then the reverse happened in 2019. Where do you to find a free market indicator? Michael and I have been warning about this for years. We’re heading for the most negative rates in history. With negative rates, we’re increasing current spending, which can only result in Stagflation. Is hyper-inflation a possibility? Not likely because it’s inconceivable that the US Dollar will collapse against it’s trading partners. But inflation will run into double digits, kicking off the greater depression. The implosion of the bond market is sure to happen. Insolvent debt on the corporate and sovereigh realms. It’s a surefire way for a debt collapse.