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Rob Arnott continues:

“With the Fed monetizing the debt they run a risk of debasing the currency, but meanwhile that money has to go somewhere.  People don’t want to put the money to work in start-ups and developing new enterprises.  So what we have is the effort to prop things up is really just propping up the stock market, not the macro economy.

It’s wonderful when you see this kind of thing happening to just say, ‘Well, I’m going to be along for the ride and then I will get out of harms way before things unravel.’  But how do you do that?....

Continue reading the Rob Arnott interview below...


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“I prefer to step aside during liquidity-fueled rallies, and take advantage of them as an opportunity to take some risk off of the table.  Thank you very much for these gains, now let me move to a more cautious posture.  I would much rather be out of harms way than to pick up the last nickel in front of a steamroller.”

Arnott also added: “You don’t have growth take place in an anti-capitalist environment.  That’s been tested many times before in history.  For some reason we want to test it again.  Even evidence of prosperity like soaring corporate profitability, and all-time peak in earnings last year, are illusory.

If you engage in fiscal stimulus, deficit spending, that money makes its way into the macro economy through the private sector.  The private sector is reluctant to spend the money, and if they are reluctant to spend the money and invest for the future then it shows up in the form of heightened profitability.  It’s illusion.

Monetary stimulus makes its way in through the banking sector.  If the banking sector is leery about lending and is seeking aggressively to recapitalize, that shows up as increased earnings.  So the earnings themselves, as odd as it sounds, are indicative of the problem.

You need earnings to soar on a foundation of an economy that’s soaring.  When you have a divergence, earnings hitting all-time peaks as a share of GDP even as wages are at all-time lows as a share of GDP, that’s a formula for hostility.  The dangerous element there is the risks that occupy Wall Street could suddenly become mainstream.  It’s a very dangerous environment.”

Rob is one of the most brilliant and original thinkers in the financial world today.  This is why he oversees more than $130 billion.  He is warning KWN listeners what to expect going forward and also about stocks, markets and more chaos.  The KWN interview with Rob Arnott is available now and you can listen to it by CLICKING HERE. 

© 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with Rob Arnott, James Turk, Jim Sinclair, John Embry, Gerald Celente, Dr. Stephen Leeb, Rick Rule, Ben Davies, Andrew Maguire and Marc Faber are available now.  Also, be sure to listen to the other recent KWN interviews which included Egon von Greyerz, Felix Zulauf, Eric Sprott and Art Cashin by CLICKING HERE.

Eric King

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