Bubbles are Brutal
The comments below are an edited and abridged synopsis of an article by Chris Martenson
The trade deal is just an excuse for why the markets are going higher. The real reason has nothing to do with trade at all. It’s all about central bank money printing.
The Fed is now in full emergency mode. Its December money printing looks like an act of desperation. Hundreds of billions have been poured into the system to prevent a crisis (chart provided).
But the Fed isn’t admitting there’s a problem to be concerned about. Its actions belie its desperation, however, and whatever’s going on behind the scenes is none of the ridiculous explanations it has offered so far.
It’s ludicrous to suggest, as Fed Chairman Powell did, that the banking system is suffering from a shortage of excess reserves.
At $1,388 billion, excess bank reserves are $1,358 billion more than they were before the Great Financial Crisis hit. Thirty billion dollars was enough a decade ago, but now 46x more than that is supposed to be insufficient? So, that isn’t it.
Instead, when banks won’t lend to each other overnight it’s because they don’t trust each other.
This means that the Fed knows something we don’t, and it means that Chairman Powell is lying for suggesting otherwise.
So the whole thing could go 2008 nuclear at any time, and the system won’t be able to control the meltdown, which is why the Fed is fighting like crazy to prevent that sort of thing from ever getting started.
So here we find ourselves, at the twilight of the Everything Bubble, with asset prices at all-time highs and the mainstream narrative crooning that the future’s so bright we need darker sunglasses.
Yet a little math shows that the entire financial, economic and monetary system is teetering on the brink. In the Fed’s latest half-trillion-dollar liquidity dump, we see how extreme measures are needed to keep things from falling apart.
Bottom line: This is going to blow up at some point. It will be a before-and-after story for the generations that follow in the same way the Great Depression was. You’ll either be emotionally, physically and financially ready for it, or you’ll become collateral damage along with the rest of the herd.