As we kick off what promises to be another wild trading week, today a 50-year market veteran spoke with King World News about everything from Paul Volcker and the tumultuous 1980s as well as the ultimate threat to the global Ponzi scheme.
John Embry: “This morning things remain in the metals markets remain in lockdown. The U.S. stock market is giving every indication of wanting to break down, and given its technical condition, lack of volume, overvaluation and deteriorating fundamentals it should break down. However, the Plunge Protection Team, which has been around since the 1987 Crash, has been working overtime virtually every day to prevent the market from coming unraveled….
Continue reading the John Embry interview below…
“The problem is that they can only deny reality for so long and when it finally intrudes on their fantasy the outcome is going to be extremely unpleasant. The whole state of the markets got me thinking over the weekend and I concluded that what most people now view as normalcy is in fact a long-running asset inflation, which is not sustainable.
Paul Volcker And The 1980s
I was involved in managing money institutionally in the U.S. stock market from the mid-1960s through the early 1980s. At that point in time you had bull and bear phases which culminated in Paul Volcker’s staggering administered rate rise at the beginning of the 1980s that was undertaken in order to squeeze a deeply imbedded inflation psychology out of the system.
When Volcker succeeded, the money printing started up again but instead of going into real things it began pouring into financial assets starting with the bond market bottom in 1981 and the historic stock market bottom in the summer of 1982. People that prior to that the Dow couldn’t clear the 1,000 level for 16 years. I remember that period like it was yesterday.
Money Printing & Asset Bubbles Have Ruled For 34 Years But Reality Is Coming
However, once the stock market was in motion it exploded upwards and any sharp corrections were subsequently met with an official response. It became ingrained in the system that the stock market had to go higher, and as a result a series of financial bubbles it became the order of the day. But whenever one popped, more money was simply injected into the system leading to even more damaging bubbles.
Now we have reached the point where a grotesquely overvalued stock market is seen as normalcy because the vast majority of the players haven’t seen anything but an ongoing financial asset inflation, which has now stretched for 34 years. But as I mentioned earlier, reality looms right around the corner now and the ultimate outcome is going to be a return to the pre-financial asset inflation days. The impact of this is going to be beyond ugly.
The Ultimate Threat To The Global Ponzi Scheme
Now on the other side of the coin, gold, silver and their equities continue to be abused by the usual suspects. Late last week was a joke. After the sector justifiably came to life in the wake of the Chinese yuan devaluation, it was taken to the cleaners after the London market closed. Now in a free market the Chinese devaluation would have seen gold up at least $100 an ounce overnight and silver several dollars higher.
But that can’t be allowed because it would threaten to unravel the most elaborate and egregious Ponzi scheme in history. This would also threaten to destroy the paper gold market that now has at least 100 paper claims for every available ounce of available gold in the Western world.
However, the physical gold market is now really heating up, and despite the best efforts of the powers that be, the paper gold and silver scams will be toppled like all Ponzi schemes are. At that point one better have physical gold and silver outside of the banking system because if it’s still in the banking system it can be hypothecated and rehypothecated and you will never see your metal again. And when the inflection point comes, the shares will present one of the greatest buying opportunities in any sector in history.” ***KWN has now released the extraordinary audio interview with Michael Pento, where he discusses why the fantasy is now coming unraveled, what this will mean for the gold and silver markets and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***KWN has also now released the incredible audio interview with 50-year veteran Art Cashin, where he discusses why the worldwide liquidation scramble could morph into a full-blown 2008-style collapse, the chaos in China, global stock markets, commodity markets, whether the U.S. stock market has finally put in a major top and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Why The Fantasy Is Now Coming Unraveled And What This Will Mean For Gold CLICK HERE.
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The audio interviews with Michael Pento, Art Cashin, Rick Rule, Gerald Celente, Bill Fleckenstein, Dr. Paul Craig Roberts, Robert Arnott, Eric Sprott, John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Andrew Maguire, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.