Ron Paul Warns That When The “Biggest Bubble in The History of Mankind” Bursts it Could “Cut The Stock Market in Half”
The comments below are an edited and abridged synopsis of an article by Michael Snyder
From a low of 6,443 in March 2009, the Dow has nearly quadrupled since the last financial crisis. This stock market bubble was almost entirely fueled by easy money from the Fed, and that has been cut off. The insiders see the writing on the wall, and they are getting out of the market.
If the Dow falls to about 12,000 during the coming downturn we will be fortunate, because stock prices need to drop by at least that much to make sense once again.
Today, sales to stock price ratios are hovering near all-time highs. The same thing is true for earnings to stock price ratios and GDP to stock price ratios.
The only other times these ratios have been so elevated were just before major stock market crashes. In the end, these ratios always return to their long-term averages.
And it isn’t just the US that is drowning in debt. According to the Institute of International Finance, total global debt just hit a brand new record high of $247 trillion.
Global debt has been rising much faster than global GDP; today, there is three times as much debt in the world as there is money.
There is no way that debt can ever be paid off. The only way to continue is for debt to grow faster than global GDP, and that is simply not sustainable in the long-term.
So a monumental adjustment is coming; it’s just a matter of time.
We have fooled ourselves into thinking that the good times will roll on, and once again we will be in for a rude awakening when the inevitable crash arrives.