Sisyphean Printing Will Kill Dollar & Bonds

Understanding four critical but simple puzzle pieces is all investors will need to take the flood that leads to fortune. 

Why then will the majority of investors still take the wrong current and lose their ventures?

Well because investors feel more comfortable staying with the trend than anticipating change.

Understanding these four puzzle pieces will not just avoid total wealth destruction but also create an opportunity of a lifetime.

The next 5-10 years will involve the biggest transfer of wealth in history. Since most investors will hang on to the bubble markets in stocks and bonds, their wealth will be decimated.

As Brutus said in Julius Caesar by Shakespeare:

“There is a tide in the affairs of men,
Which taken at the flood leads on to fortune.
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea we are now afloat.
And we must take the current when it serves.
Or lose our ventures.”

FOUR PUZZLE PIECES TO CLARITY

So what are the four puzzle pieces that will lead to either fortune or misery.

They are:

1. Stocks
2. Currencies
3. Interest rates
4. Commodities

Just put these 4 pieces together and the conundrum of the direction of markets and the future of the world economy will be very clear.

But sadly most investors will find it difficult to join up the 4 pieces.

ETERNAL PRINTING

Have governments and central banks conditioned investors to eternal happiness by their profligate policies?

Yes, they most probably have. But happiness in this case is ephemeral and will end in “miseries”.

Central banks are now caught in the Sisyphean task of printing money to eternity.

The more they print, the more they need to print. When Sisyphus came to Hades, his punishment was to roll a big rock up a hill. Once he got to the top, it rolled down and he had to roll it up again and again and again.

And this is also the punishment that the Fed has received. As I pointed out in my article about the Swiss 16th century doctor Paracelsus, everything is poison, it is only a question of the dose. The US has for decades received a toxic overdose of “free” money and once hooked the only remedy is to continue to inject the poisoned patient (the US economy) with more of the same.

On the one hand, the Fed can never voluntarily stop the printing as this would lead to instant collapse of stock markets, bond markets, and the financial system.

But on the other hand, the incessant printing also has consequences.

It will destroy the dollar and it will destroy the treasury market and eventually lead to inflation and hyperinflation.

Destroying the bond market means substantially higher interest rates which is something that neither the US nor the world can afford with $280 trillion of debt and rising fast.

So there we have it. The US and the world have both their hands tied and whatever they do will have dire consequences for the world.

So let’s come back to the 4 puzzle pieces which investors should have imprinted in their brain.

PUZZLE PIECE 1: COMMODITIES

Since Nixon closed the gold window 50 years ago, the world has experienced unprecedented credit growth and money printing.

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