BALTIMORE – Today, we look at the biggest threat to Mr. Trump’s presidency.
So far, we have been delighted with the election of Mr. Trump. Not because we have any confidence in, or affection for, the man.
But he claims to be a disrupter. And this is an economy that badly needs disrupting. We want to see what happens.
So, let’s begin by looking halfway around the world, where a dear reader updates us on India’s recent attempt to curtail cash:
My daughter is in India for a wedding and has personally been impacted by the lack of cash. ATM lines for five to six hours to get out the equivalent of about $20. No taxis because no one has any money. Hotels don’t have money either. Things have ground to a complete halt.
Not interested in India?
But this story is a warning to us. There is not enough physical cash in the system. We rely on bank credit to fill the gap. And that means the credit system must not fail… credit must not contract… ATMs must work… credit cards must be honored…
…the whole system has to work… or it will collapse into an awful mess.
Ours is a system that runs – since 1971 – on credit, not cash. And credit is subject to the credit cycle. It expands. And it contracts.
But a credit contraction in a global economy with $63 trillion in debt is a big deal. That’s why the feds fight so hard to stop it. Economists, politicians, Deep Staters – everyone wants to avoid a correction in the credit market. At all costs.
The pattern began after the great stock market crash of 1987, when newly arrived Fed chief Alan Greenspan rushed to support stock prices with aggressive rate cuts.
It was the debut of the “Greenspan put” – the Fed policy of cutting rates to put a floor under prices if the stock market tried to correct.
After that, each time the market sneezed, the feds were there to wipe its nose.
The recession of the early 1990s (which George H.W. Bush blamed for his election loss to Bill Clinton)… the 1997 Asian financial crisis and the collapse of the hedge fund Long-Term Capital Management… the mini recession following the 9/11 attacks… and finally the 2008 crisis.
Each time, the Fed (aided and abetted by the same Wall Street insiders who are now joining the Trump team) made credit available on easier terms.
And now, by our estimate, we have about $35 trillion in excess debt. It’s a “debt bomb” that will probably blow up in Mr. Trump’s face.
But the Fed was not leading…
It was following the example set by the Bank of Japan, which has been fighting a credit contraction for more than a quarter-century.
It was the BoJ that was a pioneer of Zero Interest Rate Policy (ZIRP), Quantitative Easing (QE)… and Negative Interest Rate Policy (NIRP).
And now, the BoJ leads the way again. Reuters:
The Bank of Japan on Thursday fired a warning shot to markets by offering to buy unlimited bonds for the first time under a revamped policy framework, as domestic debt yields surged in the wake of Donald Trump’s upset U.S. election victory.
Yes, that’s what it says. The Japanese have finally gone “full retard” in their fight to stave off a correction.
They can win battles in this war against the markets, but they can’t win the war. Markets can be held off. They can be deceived. They can make mistakes. But they can never be stopped.
This week, we are preparing another open letter to Mr. Trump. (You can catch up on our first here.)
We will advise him to “disrupt sooner rather than later.” It will be painful. So, take the pain now… and make it hurt.
Oh, yes… and put the blame on the people who most deserve it: Clinton, Bush, and Obama… Greenspan, Bernanke, and Yellen.
Go on TV. Address the nation. Tell them that you have been left a $35 Trillion Debt Bomb. Disrupt the system. Let it explode… just like Reagan backed Paul Volcker at the Fed and let the inflation bomb explode.
Further Reading: Bill is so adamant about the disaster that’s coming that he’s put together a tell-all presentation to help you prepare for the consequences of decades of reckless Fed policies. You can watch it all here.
BY CHRIS LOWE, EDITOR AT LARGE
Are U.S. bonds entering a multi-decade bear market?
Today’s chart is of the Merrill Lynch 10-Year Treasury Total Return Index.
As you can see, it’s been in a steady uptrend for the past five years.
But as of last week, that uptrend has been broken.
And unless we get a dramatic reversal of the recent price falls, the start of a new downtrend is now very much in the cards.
You Don’t Have to Be a Victim of the Great Debt Default
We’re seeing unprecedented warning signs in credit markets all around the world… But this new strategy could be the single best way to make 10–20 times your money as the credit collapse unfolds.
40 Stocks Set to Rise Under a Trump Presidency
The S&P 500 is up 2% since Election Day. But this underestimates the big shifts in the stock market that will occur under President Trump. Here are 40 stocks set to benefit under his pro-growth policies.
Could We See 2008-Style Losses in the Bond Market?
When interest rates rise, bond prices get crushed. And some advisers are now warning that investors could lose 20%, 30%, or 40% of their bonds over the next several years. Those are 2008-like losses.
Bill isn’t the only one with a Donald Trump presidency on his mind…
Why do pundits only see both sides of old coins? Let’s say the Trumpster states that D.C. will have 20% of its funding dropped one of two ways: (a) each department/agency makes 20% cuts or (b) two departments get eliminated.
Let’s say he gives all corporations 60 days to declare if they will repatriate or lose the low tax rate and gain a tariff. Let’s say he orders a full external audit of the Fed and its members in search of mismanaged trillions of dollars. Let’s say he announces the swamp instigators and jails them for treason or aiding terrorism and, of course, confiscates all capital these people own. Let’s say he states that we’re on the brink of losing the constitutional government of the people, for the people, and by the people, and drastic measures are needed to end the “shadow government” that hates the deplorables and caused the decline of America’s way of life for their personal wealth.
The military oath is to defend the constitution from enemies, foreign and domestic. Perhaps some swamp lovers need their door kicked open and their ass exposed to the people.
– Jack K.
Why don’t you run for president next time? Trump has already shown that the citizenry is ready for an outsider and accepted him despite a tremendous number of warts.
Maybe someone who shows the ordinary citizen the way through the morass of cronyism and the outright theft? Since you have in past Diary posts offered yourself up to advise Obama and Yellen, why not offer yourself up as the savior of the nation?
I’m a Canadian, so not entitled to vote in U.S. elections. But if I were, I’d be much likelier to vote for you than any of the political vermin.
– Al R.
In Case You Missed It…
Currencies expert Jim Rickards released a new video, but it isn’t another warning about the dollar.
Jim says we’re about to see a complete rewrite of the global financial rules… and the ultimate end of the American Empire.