The Federal funds rate has been set at 0.25% for over the past 5 years. When the current bubble bursts, the interest rate can’t go down much further and still be positive. The ECB is currently at 0.05%. Hmmm, who will win the race? The Bank of Japan is already at 0.00%. I guess it is the winner. I foresee potential for negative interest rates. This is when you pay the bank interest to look after your money, which only exists in physical form at around 2% anyways. The rest is just data stored on a computer. They don’t need to rent warehouses or have massive vaults to store cash. It doesn’t exist in that form. It’s digital now. Perhaps some deposit haircuts are around the corner. Bail-ins are supposedly the next big thing. The banks close for a bank holiday, and open up with less of your money. Sound good? ZIRP and NIRP, they are acronyms of the hard working saving class, right?
Now lets look at the S&P 500. Has that reached nominal values higher than the last two previous bubbles? Oh good it has. The current bubble is quite ambitious. I guess now is really a great time to sell if you haven’t just entered the market.
Perhaps the Dow Jones Industrial Average hasn’t fallen victim to the interest rates. Nope, it appears it is just as ambitious as the S&P 500. How far will it go? It will continue to rise and make us all rich right? CEO’s must be loving their executive compensation. Stock buy backs are so in right now.
The NASDAQ took quite a beating when the Dotcom bubble burst. But don’t worry, it is trying hard to get back to where it once was. It’s all about market capitalization right?
China doesn’t really have a stock market. I think its citizens don’t trust it. Instead, they like real estate bubbles. Japan likes QE. Europe isn’t even bothering to replace its citizens anymore. Demographics have gotten ugly. The U.S prints money and lives off its exorbitant privilege to pay its bills. Nothing quite like having the worlds reserve currency. Thank you House of Saud! But the tide is turning. Gold is being sucked into a giant vortex in Asia. It stops off at Switzerland though to be processed before making its final stop in Asia. Yes, the world is about to experience another financial crisis. But when?
Look at the trend for 10 year treasury notes. They have been trending downward for sometime huh. No wonder the U.S government has been able to spend $100’s of billions on war every year. Force projection doesn’t come cheap. Still, better to destabilize the Middle East than to invest in your nations infrastructure. Actually, just print more food stamps. Go hard or go home!
Allow me to make some predictions. At least then I can gauge how accurate I was at the time of writing this blog. In a years time, so, by the 2nd of November, 2015, GMT, the next global financial crisis will have hit.
– U.S stock markets take a tumble. S&P500 at 700, DJIA 6000, NASDAQ 1400
– US Federal funds rate. Damn, umm, take it to NIRP. Bail ins. Gotta kill the savers right!
Gold, Silver, Bitcoin, Litecoin, Water