BALTIMORE – Barron’s, in a lather, says the market is facing the ‘Two Horsemen of the Apocalypse.’ Huh?
Supposedly, the so-called Brexit – the vote in Britain this Thursday on whether to leave or remain in the European Union (EU) – and uncertainty over where the Fed will take U. S. interest rates are cutting down stocks faster than a Z-turn mower.
But Brexit is a side show. As our contacts in London explained in last week’s issue of Bonner & Partners Inner Circle, Britain will do just fine outside of the EU. It will even thrive.
As for the Fed’s fumbling, it is a consequence, not a cause, of falling stock prices. The real threat to this market is more basic, more dangerous… and completely unavoidable. It is a ‘doomsday device’ – hidden in plain view – in the feds’ fiat money system.
It took us a long time to understand how this works. For many years, we referred to the Fed’s EZ money policies as ‘printing money.’ Finally, we realized that this metaphoric description of the Fed’s role probably hides more than it reveals.
The Fed is not printing money. If it were printing money, we’d have more money around and higher consumer prices. Instead, when the feds went to a ‘paper’ money system in 1971, they did it very cleverly.
Yes, their new system is totally fraudulent and absolutely ruinous – just like an old fashioned money-printing scheme. But the fraud takes much longer to uncover, and the ruin is only obvious at the end. It is a ‘bezzle’… where you only become aware that you’ve been had when it blows up.
This post was published at Acting-Man on June 21, 2016.