MARC FABER Gives His Predictions on Stock Market Collapse, China, Gold, U.S. Dollar
MARC FABER Gives His Predictions on Stock Market Collapse, China, Gold, U.S. Dollar
It
is widely expected that the Federal Reserve is going to announce the
end of quantitative easing this week. Will this represent a major
turning point for the stock market? As you will see below, since 2008
stocks have risen dramatically throughout every stage of quantitative
easing. But when the various phases of quantitative easing have ended,
stocks have always responded by declining substantially. The only thing
that caused stocks to eventually start rising again was a new round of
quantitative easing. So what will happen this time? That is a very
good question. What we do know is that the the performance of the stock
market has become completely divorced from economic reality, and in
recent weeks there have been signs of market turmoil that we have not
seen in years. Could the end of quantitative easing be the thing that
finally pushes the financial markets over the edge?
After all
this time, many Americans still don’t understand what quantitative
easing actually is. Since the end of 2008, the Federal Reserve has
injected approximately 3.5 trillion dollars into the financial system.
Of course the Federal Reserve didn’t actually have 3.5 trillion dollars.
The Fed created all of this money out of thin air and used it to buy
government bonds and mortgage-backed securities. Americans are
seeing near-zero interest rates on their savings accounts while median
incomes are falling, and millions of people are facing higher gas
prices, food prices, electricity prices, health insurance prices. Enough
is enough, the Federal Reserve needs to open its books — Americans
deserve a sound and stable dollar. It looks like a growing number of
professional investors are preparing for a stock market crash, as hedge
fund filings for the second quarter show a spike in defensive positions.
In particular, legendary billionaire
George Soros made a huge bet against the market. He increased his short
position on the Standard & Poor’s 500 by a startling 605%. A gold
backed currency? What a crazy concept. My bet is the market will love
it. The banks will hate it, but overall the Swiss people will benefit.
So will the non-Swiss who are paying attention now. The evidence of gold
price manipulation is clear.
The evidence of gold price manipulation is clear.
The
deregulation of the financial system during the Clinton and George W.
Bush regimes had the predictable result: financial concentration and
reckless behavior. A handful of banks grew so large that financial
authorities declared them “too big to fail.” Removed from market
discipline, the banks became wards of the government requiring massive
creation of new money by the Federal Reserve in order to support through
the policy of Quantitative Easing the prices of financial instruments
on the banks’ balance sheets and in order to finance at low interest
rates trillion dollar federal budget deficits associated with the long
recession caused by the financial crisis.
Of the last 150 years
of developed market monetary policy, we suspect nothing will prepare
market participants or Fed members for the twisted terms and
double-speak the FOMC will try to unleash today as they attempt to ‘end’
the most extreme policy measures ever. Goldman Sachs’ ‘base-case’ for
today’s FOMC is a “steady as she goes” message with few substantive
changes in language and asset purchases ending on schedule… but Goldman
warns, recent macro and market action might bias the Fed dovish. For
many Americans the country of Mexico conjures up images of a third world
nation. The poverty, lack of basic services, and extreme violence has
left the populace so desperate that thousands of people on a daily basis
head to the United States for a better life.
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