US Stock Markets Big Picture Overview As They Reach Insane Oversold Extremes...

Today, after another devastating day in the markets we are going to stand back and take a “big picture” view of what is going on.

This is not some ordinary run-of-the-mill bear market that is starting here – it is the beginning of a devastating collapse that is necessary to clear the system of all the accumulated dross that has built over many years. A “reset” is an apt word to describe it.

The rot can really be traced back to when Nixon got rid of the gold standard in 1971, or in other words, got rid of sound money. This gave governments and politicians carte blanche to print more and more money and to go ever deeper into debt, since the greater the debt, the more money they could print to service it. The situation was exacerbated in the United States because, being in possession of the global reserve currency, it could ramp the debt ever higher without collapsing the currency, because so many dollars and government debt are held by foreigners spreading the load of the real devaluation of the currency, hence the unending farce of the debt ceiling, which is always being raised. The last chance to clean up this mess presented itself in 2008, when the system went into a state of cardiac arrest, but instead, as a result of a combination of cowardice, greed and expediency by powerful vested interests, they elected to “paper over the cracks” employing more of the same measures that created the mess in the first place, i.e. growth in the money supply and expansion of debt and the labyrinthine spreading of risk via derivatives, and to ramp them up at a much greater rate by means of Quantitative Easing, and thus push the day of reckoning off into the future as far as possible – now they have arrived at the point where they can postpone it no longer, although that won’t stop them trying.

Debt continued to grow exponentially in recent years at all levels, including corporate debt, federal debt, municipal debt and private debt with the result that the only way to keep the game going and stop things from coming apart at the seams was to artificially suppress interest rates, and the longer this went on the more complex was the financial engineering required to stop the house of cards from collapsing. The very low rates further afforded CEO’s the opportunity to “window dress” their earnings per share by borrowing to buy back their own stock, the better to justify fat bonuses for themselves, and the government, particularly under Trump, was happy to go along with it as it drove the stock market ever higher, regardless of the fact that the stock market’s performance ceased to be a measure of the state of the real economy. Meanwhile, the middle class came under ever more pressure as real inflation ran way ahead of the CPI, which is a fabrication.

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