Interesting interview with Martin Armstrong on USAWatchdog
jmski52
Posts: 22,849 ✭✭✭✭✭
Here's your black swan:
The big risk, according to Armstrong, is global governments, including the U.S. Armstrong says, “You have to understand, at some point in time, capital begins to figure out who is the greatest risk, and the risk is government. At that stage in the game, when that point is reached, then you have shifts. The capital will move from public types of investments, such as government bonds and things of that nature, and then will move into the private sector. That’s equities, and that can be gold and real estate in different places. You try to go to tangible assets.”
So, what could go wrong with the Fed trapped in the repo market and cannot stop liquefying bad debt? Armstrong says, “What can go wrong is that they lose the game. They are doing this to try to prevent interest rates from rising. If they did not do this, the short term rate would be up dramatically.”
What could go wrong is the Fed can continue to fuel the repo market with cheap money and interest rates can rise anyway? Armstrong says, “Correct. They have already lost control, otherwise they wouldn’t be doing this. . . .They are trying to keep rates down. If the Fed loses, rates are going to go up, and you are going to see this in the Treasury auctions. Then it won’t matter what the Fed is trying to do in the repo market. You will see this stress in the Treasury auctions, and the government will have to start paying higher prices. This is what’s going to take place.”
In closing, Armstrong says, “The central banks are losing power.
He doesn't say what happens then - when governments have to start paying higher prices. Somebody's not gonna get paid, and they're gonna be really mad.
I knew it would happen.
Comments
Sometime, in the future.... there will be a financial reckoning....Not going to be pretty....Cheers, RickO
easily predictable. By definition, not a black swan. Black swans come out of nowhere, blindsiding even the experts.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
The “experts” are always blindsided...
I'd like to know how much of the GDP are attributed to city, county, state, & fed govt & pensions. My understanding is that from 2008-2016 the Federal govt grew from 19% GDP to 23% GDP.
When I look at transparentcalifornia.com that does not include the Federal govt.
Pensions have nothing to do with GDP. They do not produce a good or provide a service.
https://www.investopedia.com/terms/g/gdp.asp
Knowledge is the enemy of fear
Pensions have nothing to do with GDP. They do not produce a good or provide a service.
Pension payouts in places like NY, IL, and CA are one of the main reasons that those states are fiscal basket cases, and when taxes are hiked or benefits are cut in those states, I would expect a lot of gnashing of teeth and a chorus of calls to Congress for bailouts. The coal miners in WVa already got a federal bailout and it's a bad precedent, if you ask me. The upshot will be an accelerating debt load. Eventually, somebody's (A) not going to get "their" (our) money.
It's either that, or (B) create more of it. Much more of it.
Tell me which alternative you think will occur - "A" or "B".
The pension managers who assumed an 8% annual return - I wonder how much they all walked away with when they vacated the scene.
File under "Financial Industry Malfeasance"
I knew it would happen.