Scared? You should be – the greatest financial crisis in history is approaching COMMENTARY | Express commentary | Comment
Now, 13 years later, the central bank’s coordinated “temporary emergency measures” are more important and have continued. Modern central bank money printing (aka modern monetary theory) has destroyed the price discovery mechanisms in the markets. Despite this, the head of the US Senate Finance Committee, Bernie Sanders, adopted these senseless policies. Central bankers here, led by government policymakers, bailed out billionaires, not High Street.
Look at your own main street – small businesses and mommy and daddy’s shops are gone. Once again, after printing hundreds of trillions of pounds and dollars, these same central bankers assure us that “inflation is transitory.”
Is it similar to one-off, temporary emergency measures?
On many UK radio stations we are frequently told how ‘new wealth’ can be created by investing in new financial products. All advertisements end with this warning phrase: “Your capital is at risk.
When the equity, real estate, fixed income and credit markets reach a point of exhaustion, they “bubble” to extreme valuations.
Today, we are at this breaking point: living on borrowed time in a fantastic world, detached from reality with ridiculous valuations.
During the irrational exuberance of bubbles, retail investors are always the last to dive into markets as they peak as institutions and executives ditch stocks.
Scared? You should be.
Here’s why: In times of extreme economic uncertainty, most people turn to mind-boggling stories or the “shiny object” hanging in front of their noses. Everyone gets richer by investing in the markets – we miss it, buy fast, buy, buy! The acronym for this market mania is FOMO (fear of running out), and it signals an extreme market.
But it’s different this time. Why? Because of inflation.
Global prices for food and raw materials are exploding. Shipping rates have skyrocketed almost 1,400% since 2016, as shown by the Baltic Dry Index. Since last November, oil prices have increased by 100%. And of course the gas goes through the roof.
Over the decades, governments have outsourced most manufacturing activities to China, making China the world’s largest manufacturer for the 11th consecutive year.
In March 2020, I warned that COVID-19 would decimate supply chains and that the West’s over-reliance on China for critical infrastructure and medical supplies would lead to massive shortages.
Today, global supply chains are broken.
Chilling inflation has arrived and the value of fiat currencies will collapse further as governments print more to “inflate their debt.”
Bond defaults on some of the more than $ 11 trillion in corporate debt and bankruptcies will trigger a liquidity crisis with a “domino effect” causing the most severe economic depression in history.
Millions of employees of leveraged zombie companies backed by these NIRPs (negative interest rate policies) will find themselves out of work.
At the same time, senior executives will have made billions cannibalizing future profits with Ponzified share buyback programs.
We all have to suffer from Stockholm Syndrome to fall for the same leadership lies over and over again. Chinese Evergrande is just the tip of the iceberg; a major crash is coming, creating huge opportunity for a few, disaster for most, and higher taxes for everyone.
Mitchell Feierstein is CEO of Glacier Environmental Fund and author of “Planet Ponzi: How the World Got into This Mess, What Happens Next, and How to Protect Yourself”.