Using GAAP (Generally Accepted Accounting Principles) The 2016 Fiscal Deficit Is NORTH OF 5 TRILLION DOLLARS !

il·lu·sion

iˈlo͞oZHən
noun
  1. a thing that is or is likely to be wrongly perceived or interpreted by the senses.
    “the illusion makes parallel lines seem to diverge by placing them on a zigzag-striped background”
    synonyms: mirage, hallucination, apparition, figment of the imagination, trick of the light, trompe l’oeil; More

    1. a deceptive appearance or impression.
      “the illusion of family togetherness”
      synonyms: appearance, impression, semblance; More

    2. a false idea or belief.
      “he had no illusions about the trouble she was in”
      synonyms: delusion, misapprehension, misconception, false impression

      Example below – do you see two faces looking at each other or a white vase?

https://upload.wikimedia.org/wikipedia/commons/4/4b/Two_silhouette_profile_or_a_white_vase.jpg

Guest Post by Leo Woods…

I really hate to sound like a broken record, but it is absolutely critical for everyone to understand that we are living in, and attempting to make intelligent life decisions in, a world of contrived illusions.

 

These ILLUSIONS are everywhere!!!

 

For starters, the marketplace is packed full of “knockoffs” of brand name usually higher quality items.  These “knockoffs” can fool us into thinking we’re getting great deals, or if we know they’re cheaper quality, “knockoffs” help us fool others into thinking we own “real cool” stuff that’s really not all that “cool”.  The list is practically endless here, but clothing is a perfect example of this type of illusion.

 

Furthermore, in the food marketplace, manufacturers like to use illusions to fool us when they want to raise prices.  They like to keep containers (like cereal boxes) the same size but put less ounces in them, or they make containers look exactly the same but they make them slightly smaller while they leave the price the same as before (like the old 1/2 gallon ice cream containers that are now only 1 3/4 quarts).  I could cite dozens of such examples here, but I’m sure you get my point.

 

In the health world illusions are everywhere.  Patients are prescribed drugs for health problems, the symptoms of which may go away, giving us the illusion that the problem is solved, only to have “side effect” symptoms show up causing us to need additional medical attention.  Or another illusion regarding our health is we are being marketed food items that are heavily processed or genetically modified, but just by looking at the item it appears perfectly normal and good for our bodies.

 

I think is fairly safe to say ILLUSIONS ARE EVERYWHERE.

 

This brings me to the point of my “email subject title”.  I think most of you realize that the Federal Government is real big into this illusion stuff.  They’ve figured out all kinds of ways to fool the citizenry into thinking we’re living in a better world than we actually are. 

 

They’ve figured out how to “jimmy” the monthly employment numbers using “seasonal adjustments”, the birth/death model, and by using pathetic requirements by which someone can be considered “employed”.  They’ve become masters at playing with the CPI (Consumer Price Index) so that people don’t realize their cost of living is far out pacing their incomes.  The “numbers games” that are played with government statistics have evolved into a virtual “art form”.  Other areas such as our “Constitutional Rights” and the “Rule of Law” are still there in title, giving us the illusion of what once was, but are fading away under “big government’s” manipulative hands.  Also the illusion is still propagated that our society has the opportunity to participate in a free market system while in reality it has become quite clear our markets (equity, bond, currency, commodity, and precious metals) are all manipulated for the benefit of the government, while the citizenry is unconsciously fleeced.

 

This process of government illusion may have reached it’s zenith when it comes to our government “acknowledging” it’s TRUE COST OF DOING BUSINESS. By that I mean that each year our government is forced to publish that it’s expenditures have surpassed it’s revenues…….but…….BUT……BUT……by using fraudulent, contrived accounting standards that ONLY THEY are allowed to  use.

 

Take Fiscal Year 2016 as an example.  Using the government’s own personal accounting rules (these are the one’s that if a business owner used them it’d be jail time…….but if the government uses them, IT’S PARTY TIME), they present a deficit of about 800 billion dollars.  Now using GAAP (Generally Accepted Accounting Principles), yes these would be the ones that all of us that want to stay out of jail would use, the ACTUAL 2016 Fiscal deficit would be OVER 5 TRILLION DOLLARS!

See the Mike Savage article further down in this letter.

 

All other illusions, both private and public, pale in comparison to this complete farce of government fiscal accountability.

 

The United States of America is suffering from an EPIDEMIC FAILURE of honesty and accountability in government!!! 

 

It is an easily predictable outcome, that due to the sheer, out of control, TOTAL TONNAGE OF DEBT, this system will collapse under it’s own weight.  Debt accumulation compounding upon itself is simply NOT SUSTAINABLE !!!!!

 

DON’T BE FOOLED BY THE GOVERNMENT’S ILLUSIONS !   PLEASE PREPARE.  Own unencumbered hard assets and provisions.

 

Following are a few quotes from the Jim Willie Hat Trick Letter, and then all the other normal goodies.

 

Take care and have a wonderful Easter!

 

                                                                                                               Leo

 

“The first to awaken are often disgraced long before they are embraced. Being awakened from a slumber is not always welcomed by those clinging to the final moments of sleep.” ~ Jeannine Anderson

 

“The whole election cycle is a carnival act, full of sound and fury, signifying nothing. It caters to the most venal instincts of the public. It is an example of the deep cynicism among elites who, like all other con artists, privately mock us for our gullibility and naivete. We are treated like malleable children. None of those elected to the White House, the Congress, or statehouses have the power (and they know it) to challenge the corporate disemboweling of the country. The popular rage and frustration that have been rising against the established power elites during this election campaign will mount further as Americans, especially with a new president in the White House, realize that their voice and their vote are meaningless. They are about to discover that we do have a class of Super-Predators. These people inhabit the exclusive corporate enclaves of the privileged and the powerful.

[Hedges goes on to make a conclusion.] Corporations control the three branches of government. Corporations write the laws. Corporations determine the media narrative and public debate. Corporations are turning public education into a system of indoctrination. Corporations profit from permanent war, mass incarceration, suppressed wages, and poor health care. Corporations have organized a tax boycott. Corporations demand austerity. Corporate power is unassailable, and it rolls forward like a stream of lava. The seeds of destruction of corporate power, however, are embedded within its own structure. The elites have no internal or external constraints. They will exploit, manipulate, lie, and oppress until the economic and social fabric completely collapses and issues in a frightening police state.” ~ Chris Hedges (fine description of the culmination to the Fascist Business Model taking control of government and the election process, which the Jackass calls the Brown Shirt color revolution in America by the Banker Bourgeois)

 

“Someone asked me the other day if I believe in conspiracies. Well sure, here is one. It is called the political system. It is nothing if not a giant conspiracy to rob, trick, and subjugate the population.” ~ Jeffrey Tucker (chief liberty officer and editor of Laissez Faire Books and author of “Beautiful Anarchy” as well as thousands of articles on free enterprise)

 

I’m sorry but I had to include the following quote, not just because I dislike Hilary (which is an understatement) but because it is such a great example of a politician saying a lot of words when they really have nothing to say.  Leo.

“My accomplishments as Secretary of State? Well, I am glad you asked. My proudest accomplishment in which I take the most pride, mostly because of the opposition it faced early on, you know, the remnants of prior situations and mind-sets that were too narrowly focused in a manner whereby they may have overlooked the bigger picture. And we did not do that, and I am proud of that. Very proud. I would say that is a major accomplishment.” ~ Hillary Clinton (11 March 2014)   aaaaa…….WHAT ???

 

 

https://www.youtube.com/watch?v=qFttRczXpao  Great interview of Egon von Greyerz by Greg Hunter of USA Watchdog.

 

 

https://www.youtube.com/watch?v=KNR3FreTJfQ  VERY interesting interview of Rob Kirby (Rob Kirby Analytics) on USA Watchdog.com.

 

http://kingworldnews.com/peter-boockvar-3-20-16/  Worthwhile king World News interview with Peter Boockvar (Chief Market  Analyst of the Lindsey Group).

 

 

http://www.zerohedge.com/news/2016-03-16/world%E2%80%99s-second-largest-reinsurer-buys-gold-hoards-cash-counter-negative-interest-rat  This is a WOW article.  You don’t have to have an 8th grade education to figure out what happens in the gold market with a little FOLLOW THE LEADER !

 

http://www.activistpost.com/2016/03/proof-it-is-rigged-fed-moved-93-of-entire-stock-market-since-2008.html  This explains the main reason why so many stock investors looked so smart from 2009-15.

Posted March 16th, 2016 at 4:34 PM (CST) by Bill Holter & filed under Bill Holter.

As a rule I try not to comment all that much on politics because it is such a polarizing topic. No matter what I could say one way or the other, “politics” will turn some normally placid folks into rabid trolls. That said, what we are witnessing now has never happened before in our lifetimes and is not even about the candidates …it is about the survival of our Republic!

Immediately after turning on the business news this morning, I heard an interview of a Republican National Committee member talking about “rules”. I did not catch who it was but the essence of the interview was it did not matter who had the most votes or delegates …the Republican committee would choose “their candidate” if no one had the majority leading into the convention. He was questioned with “so the will of the people doesn’t matter”? To which he answered and I will paraphrase in my own words as I understood, “it doesn’t matter who the people vote for and we will even overturn a majority if we see fit, the Republican party will choose their candidate for the good of the Republican party”. As an aside, John (buddy can you spare a Kleenex) Boehner “endorsed” Paul Ryan for presidential nominee. (Not sure I would have voted for him but I don’t recall his name on the ballot)? Upon further searching, the interview can be found here Voters don’t pick nominee, we do: GOP official. All I can say is “in your face, we make the rules, you don’t even matter”!

Please understand this fully, the tricks, sleight of hand and outright lying as to our country’s condition are not working anymore. The primary voting on both sides show an electorate where a large percentage of the country has woken up in anger. It doesn’t matter if the average guy does not know exactly “what” is wrong, he/she knows it is something! Reality is so bad the “machine” can no longer hide it and the boiling point is being reached. The election looks to me as if it is going to be a referendum of the average guy versus the establishment. The danger of course is if enough “average guys” have their votes ignored they will rail against the machine. The way I see it, the upcoming election will be about the establishment retaining the control and ability to continue bilking the system or the populous rising up and taking power back.

You might ask “what does this have to do with finance or economics”? In no particular order, it has EVERYTHING to do with economics and finance! Whatever happens will certainly affect the dollar (the currency of any nation is the equivalent of its common stock). Future policy will affect the dollar as well as how foreigners view what happens. Interest rates, stocks, real estate, everything imaginable will be affected. It does need to be said that no matter who wins or loses, the system is already toast and only “timing” may be altered. Most importantly I believe the only difference between who wins and who loses will dictate how quickly or severe the elimination of our civil rights and liberties will be.

In my opinion we are actually watching a circus that no fiction writer could have dreamed up. On one side we have a socialist/communist running against an apparent felon. On the other side we have a populist who says whatever he cares to as long as it’s something the people are thinking, running against a hardened conservative that no one in establishment Washington likes. The odds favor a Clinton/Trump matchup. I would ask a couple of questions. What will the response be if Hillary Clinton is indicted? A really far out question would be what if she is somehow pardoned and allowed to run? On the other side, what will happen if the nomination is taken away from Mr. Trump? Or better yet, what if it is taken away from both Trump and Cruz and instead given to a “preferred” candidate? The most comical thing I can think of right now is future debates between Hillary and The Donald!

Before finishing it needs to be said the old adage “it doesn’t matter who you vote for, it only matters who counts the votes” is probably quite true now more than ever before. Because of the financial backdrop I wonder whether or not we will even have an election? If the financial system were to come down prior to the election (which I believe is likely), would we have an election under martial law conditions? Financially our fate is carved in stone in my opinion, how we navigate, survive or perish with or without civil liberties is in question.

As I said at the beginning, I hesitate to write on this topic because my e-mail inbox explodes with hatred. As an admission, my candidate of choice was Ben Carson. Was he most qualified? No. Was he establishment or even a politician? No. Did he have ANY experience in government? No. In my opinion, Ben Carson is an American with his country’s best interest ahead of his own or anyone else’s. He believes in God and in Christian values, whether real or not, the world would be a pretty cool place if everyone got along and acted as Christ did according to the Bible. Mr. Carson was my choice because as I see it, our “inalienable” (or God given) rights have been frittered away and we are on the cusp of losing them altogether. Maybe I am mistaken but I view him as a man of respect for everyone and their individual rights, not someone who wants control through handouts I can only pray that we as a nation can find our way back in time when neighbor helped neighbor, and self reliance and accountability for one’s actions not only meant something but was expected. No matter the outcome, this next election will be historical!

Standing watch,

Bill Holter
Holter-Sinclair collaboration
“Lucid” comments welcome!
bholter@hotmail.com

 

Mike Savage

 

I am starting this article just prior to the Fed meeting’s end and Janet Yellen’s comments at 2PM. It is a true shame that we have to pay so much attention to the central planners and watch how the market reacts when their next scheme is announced.

 

As I have said many times before central planning has always failed. There appears to be no difference this time as the world economy is stalling out as the central planners have run out of answers except to do more of what hasn’t worked so far.

 

You may be wondering why I am so bearish at this time. The reasons are abundant:

 

Shipping rates are at all- time lows with shipping company CEOs lamenting that it is worse than 2008

 

Brazil is in a depression along with Argentina and Venezuela

 

China is in a depression also but are hiding behind tens of trillions of dollars of debt while pretending to be in control. There is major unrest in many provinces there (of course, not reported here) where state and state-owned company employees are facing massive layoffs and while they await their fate- many have not been paid in weeks or months. It has taken riot police to quell the rallies.

 

China is the poster-boy for mal- investments as there are many empty cities and massive overproduction of many goods. The exporting of deflation has just begun as they look to dump those overproduced goods onto the rest of the world.

 

Canada, similar to England when they sold their gold at a dead low, has sold all of their gold. They now hold their foreign reserves in fiat currency. Smart! Maybe they should watch what the major banks and sharper countries are doing and be loading up on gold instead of selling it at what will likely be a historically low price- and soon! Look out below for their currency- the Loonie which I had, prior to this, expected to rally. All bets are now off.

 

Even insurers are getting in on the act as Munich Re the world’s largest reinsurer has added tens of millions of euros in gold to their holdings. It only makes sense since it now costs to make deposits on a depreciating asset (Fiat Currency) while they can hold gold (likely an appreciating asset) and avoid the negative interest rates.

 

Banks, instead of making more loans in Europe and Japan, are now keeping cash in their vaults rather than depositing it with the central bank and paying for the privilege. Ordinary people are also getting the idea and buying safes and are holding large-denominated bills. The smarter ones are also diversifying into other currencies and metals. (likely why all the chatter is taking place about going “cashless” so you will have no way to protect yourself from the tariffs.

 

The negative interest rates are actually slowing the economies down rather than jump-starting them as the plan supposedly was. Either the central bankers are stupid (I doubt it) or this is all about paying the government’s bills and propping up banks that are obviously impaired. Deutsche Bank just had their CEO announce that he doesn’t believe the bank will report a profit in 2016. Not a shock as I look at the Weiss ratings for Deutsche Bank and see that they have negative net income, negative earnings per share, 1.84 TRILLION in liabilities. Hey, they are paying a 4% dividend- I am sure someone is thinking this is a screaming buy! I don’t think so. Their derivative book (some estimate it is leveraged 50-70 times) could bring down the entire world financial system. (Info from report of 10-29-15

 

Retailers are closing up shops from coast to coasts as inventories are piling up similar to the way they piled up prior to the 2008-2009 episode in our markets.

 

There is a full-blown recession in manufacturing as retailers are stuck with inventory that is moving stubbornly slow.

 

While there is a lot of happy talk around automobile sales the facts are that if you can fog a mirror you can get a car loan. Result? Delinquencies on subprime auto loans are at an all time high and rising! Ditto student loans.

 

With all of the happy talk on the financial game shows I would like to hear ONE piece of positive information that would allow me to believe that:

 

The job market is recovering. There are 3 million LESS full time jobs now than in the year 2000.

 

That the unemployment problems are fixed- nobody with half a brain can buy that- with over 93 million people who eat, breathe, drink and sleep somewhere every day that are conveniently left off of the “official” reports.

 

China- collapsing with exports down 25% year over year and imports down 18% year over year.

 

Japan- economic basket case that is truly a bug searching for a windshield as John Mauldin accurately reports.

 

Unless the numbers are massaged to convey the “correct” message that the authorities want to send all of the numbers are scary to say the least.

 

A quick trip to USDebtclock.org will end the myth being peddled by Washington that our deficits are the lowest in years. The spending bill was $4.1 trillion and tax receipts are generously expected to be $3.3 Trillion. Simple math says $800 billion is where we start. Using GAAP (Generally Accepted Accounting Principles) the yearly deficit is north of 5 TRILLION dollars. Just in fiscal 2016!

Anyone who has not bought gold or silver yet, in my opinion, should get some ASAP while it remains artificially repressed by the authorities. Yes, it is way up in 2016 but I believe this is just the start of a multi-year historic bull market.

 

Anyone who is still wondering if this stock market will rocket to new highs I suggest you get a look at the real numbers and sell while the selling is good.

 

Time is short!

 

Be Prepared!

 

Mike Savage, ChFC Financial Advisor

2642 Route 940 Pocono Summit, Pa 18346

(570) 730-4880

Raymond James Financial Services, Inc. Member FINRA/SIPC

 

March 17, 2016

< ![if !vml]>Brian Maher< ![endif]>Dear Reader,

Baseball season is still weeks away. But 59% of fund managers believe the global economy is in its “final innings,” a survey by Bank of America Merrill Lynch informs us. That’s the highest figure since 2008, it adds.

Michael Darda, chief economist and market strategist at MKM Partners, for example, says, “Our working assumption continues to be that we are now in the late innings of both the market and economic cycle.” No wonder Janet Yellen didn’t raise rates yesterday. Talk about raising into weakness. This comes at a time when investors appear to be losing faith in the Fed and the rest of the central banks. As Jim Rickards recently noted, “For the first time since 2008, it looks like central banks are losing control of the global financial system.”

Case in point: Investors are selling stocks hand over fist, despite the recent market rally. Bank of America reports, for example, that “clients don’t believe the rally, continue to sell U.S. stocks.”

Bloomberg puts an even sharper point on it when it says, “Demand for U.S. shares among companies and individuals is diverging at a rate that may be without precedent.”

Corporate buybacks are fueling the rally — in other words, not private investors. Bloomberg continues:

Standard & Poor’s 500 index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever.

Investors are bailing on the market. It’s largely corporate buybacks keeping stocks afloat. The market’s being sustained by gimmickry. We should add that February was the fourth-strongest month on record for corporate buybacks. But using cheap debt to buy back your own stock can only drive up its price for so long. It must end. And what must end… does.

If you seek further evidence that the bull run in stocks has been largely smoke and mirrors, consider this gem: According to research by Brian Barnier, economist at ValueBridge Advisors and founder of FedDashboard.com, the Fed accounts for more than 93% of markets from QE’s beginning till the present.”

(That’s it?!)

Yahoo Finance sums up his analysis: “During the first half of 2013, the Fed caused the entire market’s growth… Since the Fed stopped buying bonds in late 2014, the S&P 500 has been batted around in a 16% range and is more or less where it was when the QE came to a close.”

In contrast, Barnier’s research shows that “from after World War II until the mid-1970s, future GDP outlook explained 90% of the stock market’s move.”

Maybe the market really is heading for the “final innings,” as all those fund managers think. How many innings do you think it has left?

Below, David Stockman shows you why he thinks it could be the bottom of the ninth inning and the market’s down to its last strike. Read on.

Regards,

Brian Maher
Managing Editor, The Daily Reckoning

P.S. Gold spiked over $30 within just a few hours of the Fed’s announcement yesterday. And the dollar’s getting slammed again on the international market.

 

Age of Bubble Finance Crackup Phase

By David Stockman

 

< ![if !vml]>David Stockman< ![endif]>Today, we have a rogue central bank. It’s destroyed honest price discovery in the money and capital markets.

I once said, “Invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”

You can say the same thing about Yellen today.

The Fed’s monetary injections, “puts” and safety nets under the price of risk assets now drive everything. Accordingly, investors ignore risk and mechanically “buy the dips.”

This irrationally inflates asset prices — that is, until the bubble becomes unsustainable and then splatters violently, as it has done twice already this century.

The vital core of capitalism is the capital markets. That’s where capital is supposed to be raised and allocated. It’s where future profits are rationally assessed and discounted. And it’s where entrepreneurs and business enterprises are honestly rewarded for their contributions to free market prosperity.

Now all of that has long disappeared. The Fed has turned the capital markets into casinos where speculators and gamblers are showered with ill-gotten gains. Financial operators strip-mine the Main Street economy.

I call this the “Age of Bubble Finance.”.

It is not merely that the financial markets have drastically changed — even from where they stood in the mid-1980s when I was working in the Reagan White House. Washington’s crony capitalist bailouts and the massive flow of cheap money and artificial credit from the Fed have wholly corrupted them.

In this crazy Fed-distorted market, the first thing you should focus on is capital preservation. Rule No. 1 is don’t lose money. This is more important than capital gains when government and central banks have gone rogue and have chronically violated every known rule of fiscal rectitude and sound money.

That means getting out of harm’s way in all the financial markets — debt, equity, commodities and derivatives — because when the big correction comes, they will all experience a thundering collapse.

The second thing you should be aware of is that short-term liquid investments and cash are not as bad as their microscopic yields imply.

The 20-year worldwide central bank credit boom has generated vast overinvestment in mining, manufacturing, transportation and distribution capacity worldwide. But now that the credit inflation is reaching its outer limits, and we are entering what I described as the “crackup” phase.

During this phase, the forces of global deflation will drive down the price of goods and many consumer services as well.

When the next crisis fully materializes, cash will be king. It will buy more everyday goods and services and will have command over drastically marked-down financial and real estate assets of every kind.

The third thing you should know is that the impending collapse of the global central bank credit bubble will generate unprecedented volatility and drastic movements in asset prices of all kinds. So I have two specific recommendations…

On the wealth-building side, you should consider deploying your discretionary capital — money you can afford to lose — by shorting vastly overvalued stocks such as Tesla and Amazon. This could reap huge rewards in the next crash.

On the wealth preservation side, you should buy the one asset that will be left standing tall when the central bank money printers finally fail: gold.

You’ll be glad you have it when the Fed-driven casino crumbles.

Regards,

David Stockman
for The Daily Reckoning

David Stockman was a two-term Congressman from Michigan. He was also the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street. He’s the author of two books, The Triumph of Politics and The Great Deformation. He also is founder of David Stockman’s Contra Corner and David Stockman’s Bubble Finance Trader.

 

If you haven’t seen the 2015 Best Picture nominee, The Big Short, I strongly recommend  

Company Logo

March 17, 2016

Santiago, Chile

 

If you haven’t seen the 2015 Best Picture nominee, The Big Short, I strongly recommend it.

The Big Short is based on Michael Lewis’ book which examines how such an extraordinary financial crisis gripped the world in 2008, and the handful of people who saw it coming.

The movie opens asking a very simple question about the global financial meltdown:

Wall Street missed it; the Federal Reserve missed it; the government missed it; every major financial institution missed it; the homebuilders missed it.

So how is it that a handful of people were able to see it coming? How could they see what nobody else saw?

Easy. They looked.

For anyone who actually looked, it was obvious that the banking and housing boom in the early 2000s was built on a house of cards. The data was all there.

Given the financial establishment’s astonishingly short-term memory and capacity to make even bigger mistakes than ever before, we now find ourselves in a very similar position today.

Once again, the financial system is in desperate condition. And the data is all there for anyone who cares to look.

Let’s look at a few of the numbers together.

Back in 2008, much of the calamity was caused by an implosion of “subprime loans” in the housing market.

These were frequently no-money down loans at teaser interest rates made to people with poor credit and limited income.

Banks made these toxic loans with your money.

The best example of this was probably Johnny Moon, a homeless man with no income or employment history who was able to borrow more than $600,000 to speculate in real estate.

The total value of these subprime loans was a whopping $1.3 trillion.

Not much has changed.

In 2016, instead of loaning money to subprime home buyers, the financial system is now loaning money to bankrupt governments.

They’ve even managed to go beyond “no-money down”, and are actually paying governments to borrow money at negative interest rates.

Japan is as great example.

Even though Japan’s national debt exceeds 200% of GDP, and it takes over 25% of tax revenue just to pay interest on the debt, the Japanese government is able to borrow money for ten years at negative interest.

This means that investors are GUARANTEED to lose money. It’s worse than no money down. And it’s total madness.

The bigger issue is that the size of this bubble is an astounding $7 trillion, far bigger than the subprime bubble in 2008. And it grows larger by the day.

To expect that this will turn out any differently is foolish.

Back in 2008, US government debt was “only” $9.5 trillion. The Federal Reserve’s balance sheet was $850 billion. Interest rates were over 4%.

So at least they had some capacity to slash interest rates and fight the crisis using traditional policy tools.

Today, US government debt exceeds $19 trillion, well in excess of 100% of GDP.

They have to borrow money just to pay interest, and they have entire pension funds that are on the brink of bankruptcy.

The Federal Reserve’s balance sheet has exploded to $4.5 trillion, and interest rates are barely above zero.

The government has no means to bail anyone out, including itself. And the Fed has no capacity to print more money and expand its balance sheet without causing a major currency crisis.

Simply put, the bubble is just as insane as in 2008, but much bigger. And the financial establishment has no ammunition to fight it.

If you want a more detailed comparison of the 9 most ominous similarities between 2008 and 2016 click here to watch today’s video podcast.

 

 

Until tomorrow,

Simon Black

Founder, SovereignMan.com

Virus-free. www.avast.com

 

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