Price Extremes, The Trapped Fed And Scapegoats

“You don’t have to be Garry Kasparov to figure out what happens next; stocks go down, long-term yields go up, and the Fed goes into overdrive to forestall what looks like a recession. It cuts short-term rates – a lot, possibly into negative territory – and the yield curve steepens dramatically.”

The inflation in paper assets will shift into commodities. Prices for food, energy, metals, cement etc. will rise far higher, as they did during the stagflation of the 1970s. Resulting consumer price inflation will traumatize our economic world.

  • Real consumer price inflation will jump higher.
  • Higher crude oil and gasoline prices will create a recession.
  • Paper profits will crash and burn. Gold and silver prices will spike upward.
  • $trillions of unpayable debts will default.
  • Central banks will “print” to save the wealth of the political and financial elite while proclaiming QE4ever is necessary to rescue the economy.
  • Economic nonsense and fake money will fall back to earth from current delusional heights.
  • The implosion and consolidation might not occur for several years. Perhaps it has already begun. The extreme ratios shown above, bubbles in stocks, bonds and real estate, political craziness, and long cycles suggest extreme risk.

Nonsense! Doom porn is counterproductive! Well, maybe. Let’s speculate.

Option One: The boom will continue for many more years. (We want to believe this comforting delusion.)

  1. Interest rates, “official” inflation and “official” unemployment remain low.
  2. President Trump shouts that everything is great.
  3. The Fed will inject QE as needed to keep interest rates low and the S&P high.
  4. New currency units must find a home and the stock market is the “best game in town.” Dow 30,000 and 40,000 are coming…
  5. It’s an election year! QE4ever will push the market higher.

Option Two: The boom will implode. Watch out below.

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Disclosure: None. 

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