The European Central Bank and the Bank of Japan have run out of “bullets” in their arsenal! They will continue to cut interest rates further ‘below zero’, but that is not taming the ‘Beast of ‘Deflation’. To the global community, it is evident that this is not continuing to prop up the stock markets any longer. How can they be expected to be trusted, anymore?
Take a look at the Bank of Japan which started QE in 2001. It’s still in deflation!
World Leaders Struggle For Control of the Financial Markets
As of today, I have no doubt that the ECB President Mario Draghi is back peddling on his statement regarding no further easing which will be contemplated. He is now stating “whatever it takes”.
The ‘monetary easing’ in Europe, Japan and China are placing us even further into a ‘black hole’. There are no more tools left in the tool box that may somehow magically appear. I am confident that the FED will not ‘materially’ raise their short-term interest rates over the next two or more years.
Alan Greenspan recently stated that the Fed cannot exit its era of ‘Quantitative Easing’ without any serious repercussions. Greenspan warns that there will be a “significant market event.”
The last crisis struck investors without any warning. So consider yourself forewarned by one who has over 35 years of experience in the financial market arena.
Wake up America! Warning signs are abundant, however, there is one sign that even the most complacent of all investors cannot ignore.
The banks of the world are now preparing for the biggest crisis in history. They call it the ‘BAIL-IN’. There was a paper prepared by the Federal Reserve Bank of New York in December of 2014. It was written by Joseph H. Sommer, a member of the Federal Reserve’s legal team. It specifically indicates that bank deposits are bank liabilities which are clearly affected by a bankruptcy. Your deposits are loans to the bank of which they can default on repayment, in the event of bankruptcy.
In July 2014, Germany gave its’ blessing to a ‘Bail-In Deposit Confiscation Plan’ and additionally, reports surfaced on Canada’s ‘Bail-In’ move. In December 2014, it was reported that the entire ‘G20’ were preparing for ‘Bail-Ins’ along with Australia, China, Italy, Japan and the United Kingdom, to name just a few countries. The plan has gone global and whether or not you believe it can happen, the banks of the world do believe it will happen. Why would the ‘G20’ make a plan to deal with a crisis that will never materialize?
In this ‘currency war’ that is still occurring, all over the world, the FED cannot allow for a stronger U.S. Dollar. China is further devaluating the Yuan while Japan continues to devalue their Yen. The European Central Bank is now implementing more QE, as well as other measures.
It is very clear that the NIRP has turned into a ‘disaster’ and as each of these monetary decisions in policy are announced, they are being ridiculed. The Bank of Japan is continuing to purchase shares in Exchanged Traded Funds and Real Estate Investors Trusts, (REIT). Each new round of these policies has a diminishing marginal rate of return. They are perpetrating a ‘global fraud’ on the global markets.
Deflation is rapidly spreading throughout Europe, China and Japan. The FED cannot stop it here, as there is nothing they can further implement other than to bail-in and use the hard working Americans bank savings to save the butts.
March 16th, 2016, the FED revamped their view of the economy and stated that they most likely not raise short-term interest rates as swiftly as they had previously anticipated. There are still lingering risks which are posed by both soft global growth and financial-market volatility.
The FED has removed the ‘rocket fuel’ that had propelled the markets to all new ‘artificial’ highs. Investors will continue to deal with even more volatility and then a stock market crash which will occur. The FED is behind 93% of the entire markets movement since 2008. (Source: “The Fed caused 93% of the entire stock market’s move since 2008: Analysis,”) (Yahoo Finance, March 11th, 2016). We have just experienced the third longest bull market, in history.
Good News! Opportunities Await Those Who Understand
In fact, I have several tremendous opportunities that I will reveal shortly. While the Risk On Assets Like Stocks Are Hot the music is about to stop for them. You do not have to remain helpless against these unstoppable forces. You do not have to suffer the ravages of too much debt that will destroy your wealth. Additionally, you can and will prosper in the process and rise above the masses who have fallen victim to complacency and have turned a blind eye to the facts if you know what to do and how to do it which I will share in the coming days.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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