Today the former US Budget Director Under President Reagan, David Stockman, told King World News that the 1,000 Dow intraday swings is a warning that the fantasy of the last few decades is finally coming to an end.
Bringing Down The Entire System
March 7 (King World News) – David Stockman: “The jig is up. I’m referring to 30 years of financial and economic fantasy that I believe that is coming to a rude and sudden end because it was all based on false economics, unsound money, and rampant debt and speculation that is bringing down the entire system.
So I think the real disease we are facing at the moment is not COVID-19. That’s just the catalyst, the trigger for a massive awakening and reset. The real disease is runaway financialization driven by the central banks, led by the Fed, that’s been intensified in the last 10 years, but has really been going on since Greenspan started the whole thing in 1987.
Going Off The Deep End
What we have underneath and $85 trillion world GDP is exploding debt. The Debt/GDP ratios are off the charts along with money pumping from the central banks like we’ve never seen before. The balance sheets of the central banks are now about $25 trillion. Compare that to maybe $2 trillion at the turn of the century. I mean everything is just upside down and they’ve gone off the deep end in terms of injecting fiat credit and fiat liquidity into the financial system.
We have rampant speculation. You know Wall Street tells you these PE ratios are ‘okay.’ They say ‘They’re high, but that’s because bond yields are historically low.’ Well, that makes sense as a financial statement if you believe that a 61 basis point 10-Year US Treasury — the benchmark security for the entire $90 trillion global bond market — reflects anything that’s rational or economically based. I don’t think so. I think we are in the mother of all bond bubbles. This is a peak of manic speculation in treasury bonds and all fixed income, really, and it’s only a matter of time before this thing goes sky high.
The Twisted Fantasy Is Coming To An End
So I think what we are getting now in the last few days — these 1,000 point intraday swings — signals that the whole fantasy is finally coming to an end. I think we are now entering an era where some of the truth that a lot of us have been talking about for a long time will come home to roost and the world will wake up to this fantasy that was unsustainable. And I think some pretty rough times, some pretty traumatic adjustments are going to happen…To listen to one of the most important interviews of this year with David Stockman discussing the wild swings in stocks, bonds, and gold (Stockman is very bullish on gold), as well as what investors should be doing right now and more CLICK HERE OR ON THE IMAGE BELOW.
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