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September 30, 2015

Stagflation Rears It's Ugly Head

Everything is ok? Everything is just dandy? Think again. The FED has shown its hand, they have shown the markets that they are incapable of raising interest rates, inadvertently admitting that the economy is not only in dire straights, but is in fact broken.
All the QE and all the phony fiat money printed to infinity cannot and will not solve this problem. The reason for this is simple; this has been the cause of our problems, not the solution.
At the beginning of this year, I along with many others in the precious metals space began forecasting that this would be an abysmal year, it would be the beginning of a renewed downturn in the global economy. Sadly, we were right.
Negative report after report continues to come pouring in. A recession is here, it is only a matter of time before even the FED and their puppets within the mainstream media must admit the facts. Ignorance will only last so long.
Adding further proof to this fact today, was Caterpillar, a bellwether of the global economy and a company many look to when judging economic growth.
Caterpillar's sales have outright plummeted, so much so that the company was finally forced to admit that they are in dire straights and will have to cut $1.5 billion in costs! Yes, you read that correctly, that's 1.5billion, not million.
The situation has gotten so critical, that Caterpillar has slashed their expectations by 5% going forward and have indicated that 2016 will mark the first time in their 90 year history that sales and revenue have fallen four years in a row.
Unfortunately, as we enter into this downward period, the one saving grace many have is that they are at least receiving a steady paycheck. Sadly for roughly 10,000 people, this is about to change. Caterpillar plans on doing a large portion of their cost cutting directly from their workforce, announcing that they will have to cut 10,000 jobs.
For these people, this only exasperates the crisis that we face and will turn this recession into a depression for those people that are out of work.
Even worse, is the fact that they will be getting a “double-whammy effect”, as inflation continues to tick higher in everyday staples.
The price of butter hit a new record high on Sept. 24 reaching $3.10 lb in Chicago trading. Just one more indication that inflation is indeed strong, despite what the FED claims.
Hopefully the economy will be able to weather this storm, as the one
that is approaching will be of epic proportions and could dwarf even that seen
in the 2008 crisis. Stagflation is here, and it's not a pretty sight.
Courtesy Nathan McDonald for Sprott Money News  

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