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Why This Market Needs to Crash (And Likely Will)

June 08, 2017
 Outside Source

Contributor

Editor's Note: The following is a guest post by Chris Martenson with PeakProsperity.com.

Like an old vinyl record with a well-worn groove, the needle skipping merrily back to the same track over and over again, we repeat: Today's markets are dangerously overpriced.

Being market fundamentalists who don’t believe it’s possible to simply print prosperity out of thin air, we’ve been deeply skeptical of the financial markets ever since the central banks began their highly interventionist policies. Since 2009, they have unleashed over $12 Trillion in new money into the world, concentrating wealth into the hands of an elite few, while blowing asset price bubbles everywhere in the process (see our recent report The Mother Of All Financial Bubbles).

Our consistent view is that price bubbles always burst. Which is why we predict the world’s financial markets will implode spectacularly from today's heights -- destroying jobs, dreams, hopes, economies and political careers alike.

When this happens, it will frighten the central bankers enough (or merely embarrass them enough, being the egotists that they are) that they will respond with even more aggressive money printing -- and that will then cause the entire money system to blow up.  Ka-Poom!  First inwards in a compressed ball of deflation, then exploding outwards in a final hyperinflationary fireball (see our recent report When This All Blows Up...).

It really cannot end any other way.  Money is not wealth; it is merely a claim on wealth.  Debt is a claim on future money.  The only way to have faith in our current monetary policies is if one believes that we can always grow our debts at roughly twice the rate of GDP -- forever.   That is, compound the claims at twice the rate of income year after year from here on out.

This would be like having your credit card balance rolled over every month as the balance grows at 10% each year, while your income advances at only 5% per year.  Eventually you simply have a math problem: your income becomes swamped by your debt service payment.  First you are insolvent, then bankruptcy eventually follows.

At the national level, the US is already insolvent, meaning liabilities exceed assets.  The US has been spending far above our means for decades and decades, amassing a tremendous amount of public and private debt (as well as entitlement promises) along the way. And, yes, even nations can go bankrupt.

But bankruptcy is a legal process, and it’s not possible for an entire economy to enter a legal process, so what do we mean when by talking of a looming bankruptcy? Simply put, all those the claims represented by all the debt and excess printed currency have to be destroyed, or reduced, to bring things back into balance. 

The Austrian economist Ludwig von Mises said it best: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

Sadly, there’s been absolutely no demonstrated willingness on behalf of our national leadership for  “voluntary abandonment of further credit expansion”. In fact, it’s been the exact opposite.  With the Federal Reserve leading the way, the ‘plan’ has been the voluntary, increasingly desperate, attempt to expand credit even more aggressively than before.

To understand just how dangerous this has become, we need look no further than this chart:

Our current debts and other national liabilities now total more than 1,000%(!) of the nation's annual income, a.k.a GDP.

US economic growth began slowing due to its accelerating ‘too much debt’ problem back around 2000. Instead of allowing natural market forces to clear out the excessive debts, the Federal Reserve chose to go into overdrive to ‘remedy’ the problem. It's remedy? Drive interest rates to 0% to reduce the service burden of those debts, and print trillions of fresh dollars that in turn can fund new borrowing.

Of course, no true ‘solution’ for having too much debt involves piling up even more of it.  That's like treating cancer with more cancer.  Or alcoholism with more alcohol. But such has been the twisted logic of our central bankers.

The only path that history has shown works involves fiscal austerity and reducing debt.  Or, as von Mises put it, "a voluntary abandonment of the credit expansion".  But, that requires real political courage and a willingness from society to endure actual ‘pain’ in the form of living below its means to make up for the prior periods of living too lavishly. Don't expect that to happen anytime soon? Nether do we... 

Returning to the chart above, it’s sufficient to know that no country, ever, in all of history, has ever dug out from such a mountain of excess claims.  Never.  Not once.

The only possible way we're avoiding crisis is if the economy suddenly returns to extremely rapid economic growth for an extremely long time.  And that’s if AND ONLY IF during such a period of rapid growth, we use that windfall to pay down the debts and other associated IOU’s -- rather than as an excuse to once again look the other way because, hey, everything's awesome now!

At any rate, what we can divine from all of this is that there’s been zero effort towards ‘voluntary abandonment’ of the credit cycle. And there's been every effort made towards extending it farther. We're simply climbing ever higher up an extension ladder from which we will someday fall.  We passed the ‘moderately painful’ height a long time ago; now we're up at the ‘quite possibly lethal’ altitude.

But make no mistake, pushing us further up this credit ladder is exactly what 0% interest rates were meant to do.  The openly-stated intent of the central banks in treading into the never-before-tried ZIRP and NIRP waters was to spark more borrowing (and spending). 

The fact that savers and pension plans have been utterly decimated by these low (even negative rates in some parts of the world) is not even a passing concern to the Federal Reserve.  Their only goal has been to get credit expanding again as fast as possible.  Ditto for the European Central Bank, The Bank of England, and the Bank of Japan, as well as The People’s Bank of China.

All of them have the same plan: Expand!

But this ‘plan’ does not pencil out.  It fails basic math both here in the short term, as evidenced by more than a decade of sub-par GDP growth, but especially later over the long term. Why?  Because there’s no such thing as perpetual exponential expansion of anything. Even the universe itself is expected to one day stop expanding and eventually implode in a "big crunch".

Regrettably, though, that’s the ‘plan’ of every major central bank around the world right now.

Because it's mathematically guaranteed to fail, our only job as private individuals is to understand the situation accurately and to then take actions that are in alignment with the reality of living within such a broken system.  If we can’t stop the lunatics, at least we can foresee the consequences of their actions and begin to unhitch ourselves as best as possible from their nutty trajectory.

Just how reality-detached are these bankers?

As Adam Taggart recently wrote:

Janet Yellen just poured more gasoline on the anti-bank fire smoldering in my heart...

Speaking today at the 10th Biennial Federal Reserve System Community Development Research Conference in Washington, D.C, she delivered a short speech titled "Strong Foundations: The Economic Futures of Kids and Communities". In it, she focuses on the difficulties of growing up poor and is clearly trying to present herself as an advocate for raising families out of poverty.

Really, Janet? Really???

What about the record-low interest rates you've presided over?

The ones that have destroyed all incentive to save?

The ones that have starved American households of savings income, especially for those on a fixed income?

The ones that have created asset bubbles everywhere, making it nearly impossible for young families to buy a house and sending the cost of rent and other living expenses skyrocketing?

The ones that have made it tremendously cheap for companies to borrow and invest in automation, gutting future demand for unskilled/low-skilled workers?

The ones that have led to the greatest wealth disparity in our country's history?

This is a classic example of the shameless pathological hypocrisy/evil of those running our monetary and financial systems. It's akin to a bloody-handed serial killer lecturing to his dying victims "You know, someone should really do something about the murder rate in this town")

Janet has a strong tradition of “blaming the victim” which she did a few years ago by lecturing poor and working class Americans that their own lack of advancement had nothing to do with Federal Reserve policies that literally hand money to big banks and wealthy insiders. Instead, she saw the root causes as shoddy early childhood education, a lack of entrepreneurship, and not having had wealthy parents who passed down a reasonable inheritance.  I kid you not, she really said all that back in 2014. 

Maddening?  You bet.  But only if you're of the mind that Janet Yellen cares about connecting the consequences of her actions to real people and their increasingly poor outcomes.  Once you understand that Janet, et al., are psychologically unable to cross the chasm between their personal views of themselves and the consequences of their actions, it’s much less surprising. And much more sad and pathetic.

But also very human.  All throughout history, oppressors and genocidal maniacs have always deployed elaborate psychological defenses to protect their fragile egos from the sort of crushing destruction that would result from a clear-eyed view of themselves and their actions.  It’s hard to transition from one's self-inflated view of being a virtuous superhero to admitting you're actually the source of untold misery and heartbreak.

At Peak Prosperity, we hold out hope, dim though it may be, that the bankers and their bought-and-paid-for-politicians will be held accountable for the lives they are ruining, as well as the immoral and criminal acts they've committed in the process.  Without accountability, nothing ever changes. You only get a repeat of the same bad behavior that got you into trouble in the first place.

That right there, in a nutshell, describes the systemic abuse by the banking elite that began under Greenspan when he bailed out Wall Street in 1998 (during the LTCM debacle). This was followed closely by the repeal of Glass-Steagall under Clinton in 1999.  Since then, it has been an orgy of exploitation. And after a brief pause during the Great Recession (during which the banks paid themselves record bonuses while receiving taxpayer bailouts), it got worse than ever.

Conclusion (To Part 1)

All of the efforts to extend today's sky-high asset prices are drawing to a close. And the ending will be ugly. As prices correct, dazed investors will lose $trillions of market value, likely quite swiftly. 

But how was it ever supposed to end any differently?  The entire premise of what the Federal Reserve has been attempting to do is completely preposterous.  They have ignored (or just as alarming, have been ignorant of) the risks of everything from moral hazard, to historical precedent, to the role of incentives on human behavior, to common sense.

And just as happened in 2008, the accumulating instabilities within the system will reach a tipping point where they can no longer be suppressed. The deflation monster will escape from the box the central banks have been desperate to confine him within, and he will very quickly set about making up for lost time. A lot of wealth will get destroyed very quickly.

Strange as it may sound, it's our opinion that the sooner this happens, the better. Crash now while there’s still chance of picking up the pieces afterwards and making something useful from them. The longer we push off the inevitable correction, the more destructive it will be and the more difficult it will be to recover from.

Why risk taking the overdrafts to such extreme levels that the future is ruined for generations? Or ends in the sort of global warfare that can result from economically-wounded nations lashing out instead of holding themselves to proper account? 

The boomer generation in charge has a lot to answer for in this story; from their inability to lead boldly, to their selfish pushing-off of the repercussions of their own poor decisions onto future generations

More simply put: We not only need a market crash, but deserve one.  

So, with that somber realization in mind, what to do? Well, for individuals like yourself, our strongest advice is to position yourself for crisis before crisis arrives.

In Part 2: Positioning Yourself For The Crash we detail out the steps a prudent individual should seriously consider taking now, while things are still relatively tranquil.

You want to make sure the bulk of your investment capital is positioned for safety, and you want to make your lifestyle as resilient as possible so that, no matter what jarring developments the future may bring, you and the ones you love are least impacted by them.

Click here to read the report (free executive summary, enrollment required for full access)

11 things you can do to help stop the Great Reset

Photo by Arthur Franklin on Unsplash

The foundation of the American way of life is freedom from tyranny, which can only exist in a nation that defends the rights, powers, and property of individuals and families. Over the past two centuries, the greatest threats to liberty have come from governments, both foreign and domestic. And from the beaches of Normandy to the civil rights movement of the 1960s, Americans have repeatedly conquered the challenges placed before them by those seeking to extinguish or limit individual rights.

However, over the past few years, a new, potentially catastrophic danger has emerged, but not primarily from the halls of Congress or state capitols. This threat to freedom has largely emanated from the board rooms of the world’s wealthiest, most powerful corporations, large financial institutions, central banks, and international organizations such as the United Nations and World Economic Forum.

In an attempt to secure vast amounts of wealth and influence over society, corporate CEOs, bankers, and investors, working closely with key government officials, have launched a unified effort to impose environmental, social, and governance (ESG) standards on most of the industrialized global economy. ESG standards are also referred to as “sustainable investment” or “stakeholder capitalism.” According to a report by KPMG, thousands of companies, located in more than 50 countries, already have ESG systems in place, including 82 percent of large companies in the United States.

ESG standards are designed to create a “great reset of capitalism” and to “revamp all aspects of our societies and economies, from education to social contracts and working conditions.” ESG supporters plan to enact these radical changes by using ESG schemes to alter how businesses and investments are evaluated, so that instead of focusing on the quality of goods and services, profits, and other traditional economic metrics, companies — including financial institutions — are evaluated largely on their commitment to social justice and environmental causes and then assigned scores so that companies can be compared, rewarded, or potentially punished.

Supporters of the movement for a Great Reset also plan on using technology to limit free speech and privacy rights, and they support creating vast new government programs that are designed to transform the Western economy via the Green New Deal, European Green Deal, a federal jobs guarantee, and basic income programs.

Together, the proposals that make up the Great Reset represent the most serious threat to freedom in the West since the fall of the Soviet Union and perhaps since World War II. But there is hope. We can stop the Great Reset, but only if we act quickly and with great conviction.

Below are 11 steps you can take to push back against the Great Reset. These steps represent a powerful bottom-up, grassroots approach to the Great Reset’s top-down plan to remake the world. Although many of these steps won’t be easy for everyone to take, they are essential for ensuring that our children and grandchildren will grow up in a world that protects the rights of individuals and empowers families, rather than wealthy special interests, financial institutions, and large corporations.

1. Live Not by Lies: The time for remaining quiet is over. When you hear or see something that you know to be false, speak up. Be kind, generous, and compassionate, but do not, under any circumstances, allow lies to infect your life. Further, do not support organizations, publications, politicians, schools, or any other institutions that regularly promote false claims.

2. Buy Local: The reason the Great Reset is so powerful is because so many of us have become totally dependent on large multinational corporations. They can be easily manipulated in a way that small, local businesses cannot. Learn to buy local, whenever possible, even if it means spending more money on your purchases. Yes, big corporations offer conveniences and low prices that many small businesses can’t compete with, but those benefits come with a great cost: your freedom.

3. Bank Local: Big financial institutions and banks are driving much of the Great Reset movement. They have started to use their incredible wealth and power to alter society by financing only those businesses who agree to the terms of the Great Reset. This problem is going to get worse, so it’s important to find local banks and credit unions you can trust and who refuse to utilize ESG scores and other discriminatory schemes.

4. Support Local Farms: If you live in an area that has local farms and farmer’s markets, consider buying as many of your groceries as possible from farmers. In the future, food production and distribution are going to change dramatically. It’s important that you support local farmers and build relationships with individuals who can provide you with the goods you need in a time of crisis. One of our main goals must be to make local communities as self-sufficient as possible, and that cannot happen unless we support local farms.

5. Be Vocal: After starting to shop and bank locally, be sure to tell big financial institutions and corporations why they have lost your business. They need to know that their decisions have serious consequences.

6. Run for Local Government: Local and state governments will soon be our most important defense against the Great Reset. Consider running for your local school board, zoning board, or even for a state legislative office. If you don’t feel qualified for these positions, find someone who shares your values and help them run for office. If we don’t have control of our local governments, we won’t be able to halt the Great Reset.

7. Demand That Your State Pass Laws Against ESG Scores: In America, states have a tremendous amount of power to slow the Great Reset and protect their citizens from abuses by large corporations, banks, and international institutions. They can do this by passing laws that make the use of ESG metrics and other, similar systems by financial institutions illegal, when used as a precondition for banking services, financing, investment, etc. ESG scores are, by definition, discriminatory and should be made illegal by state lawmakers who care about protecting their citizens’ rights.

8. Make Responsible Spending a Key Issue for Politicians: In recent years, politicians on the ideological left and right have totally abandoned responsible fiscal policy in favor of vast money printing and loose monetary policies. The many trillions of dollars that have been “printed” in recent years put our economy at risk and are being used to fuel the Great Reset. Without these trillions of dollars of printed money, it would be exceptionally difficult for governments and financial institutions to buy off corporations.

9. Organize Anti-Great Reset Groups: No matter where you live, there are Americans in your community who do not support the Great Reset — Republicans, Democrats, and independents alike. Find like-minded neighbors and organize a local, peaceful resistance. Find people you can trust and agree to support one another when times get tough. Now, more than ever, we need to develop dependable communities.

10. Buy Property and Diversify: Property ownership is going to become increasingly more difficult in the months and years to come. It’s important that you work with a qualified financial adviser to help you figure out the best way to buy property and diversify your investments. Buying hard assets, including real estate and precious metals, could be a good way for you to protect against the Great Reset and a possible financial collapse. If you already own property, resist selling it to large corporations and financial institutions, whenever possible. (This is not financial advice, and I’m not a financial adviser. Talk to an expert you trust before taking action!)

11. Make the Great Reset a Litmus Test for Politicians: Before supporting politicians, find out if they know what the Great Reset is and what they plan to do to stop it. If they aren’t familiar with the Great Reset or don’t have a plan to halt it, then demand that they learn about the Great Reset and develop a proposal to prevent it. Political leaders who refuse to take the Great Reset seriously do not deserve your support. This is the key issue of our generation.

'Scheduled for EXECUTION': Unvaxxed COVID patient flown to Texas after being denied life-saving care in Minnesota

Image source: Video screenshot

Scott Quiner was transferred over the weekend to a hospital in Texas after doctors in Minnesota threated to terminate life support measures as he battled severe complications from COVID-19. Scott's wife, Anne Quiner, appealed to the courts for a restraining order to prevent the hospital from pulling the plug as she sought a new facility to provide medical care for her husband. Scott was unvaccinated when he tested positive for COVID-19 in late October, 2021.

Anne and her attorney Marjorie Holsten joined "The Glenn Beck Program" Thursday to describe their frantic efforts to halt the hospital's decision to turn off Scott's life support — allegedly because he was unvaccinated — and just how difficult it was to get him the medical treatment he needed.

"It was absolutely stunning," Holsten told Glenn. "[Anne] came in and she has this order, I saw the screenshot from the [online medical] chart that said [Scott] is basically scheduled for execution at noon the following day."

According to Holsten, the Minnesota hospital responded to her appeal for a restraining order by claiming that the "position" to keep Scott alive "is not supported by medical science or Minnesota law. As a result, Mercy will ask the court to issue an order that Mercy has the authority to discontinue Mr. Quiner's ventilator and proceed with his medical care plan."

"The 'medical care plan' was the plan to discontinue the ventilator at noon, which leads to death very shortly. So that was at 10 o'clock, but then at 11 o'clock, before the 12 o'clock execution, the judge did, in fact, sign an order saying the hospital is restrained from pulling the plug," she added.

Anne told Glenn that doctors in Texas were shocked by Scott's condition after he arrived from the Minnesota hospital. Not only had he been given dangerous drugs, he was also found to be “severely malnourished."

"The doctor [in Texas] spent two hours with Scott and when he came back out, he said, 'I don't know how he even made it, how he even survived that other hospital ... but I will do everything I can to try to save his life,'" Anne explained.

"And the doctor [in Texas] said Scott was the most undernourished patient he has ever seen," Holsten added.

"Glenn, we are first bringing this battle to the court of public opinion," Holsten continued. "What we are showing the world is that Scott was near death because of the protocols used in that [Minnesota] hospital, but now he is recovering. He is getting better.... Now, we're not planning a funeral, we're planning for his release."

Watch the video clip below for more details.

If you'd like to help support the Quiner family, please consider making a donation to GiveSendGo.com/Anne.


Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

WATCH: The Great Reset: Joe Biden and the Rise of 21st-Century Fascism

The Great Reset is not just an elitist idea — it’s not even a socialist utopian concept. It’s a real-world fascist threat to every American from Wall Street to Main Street. It’s happening now in policies and cultural shifts big and small, obvious and subtle, from environmental promises to corporations going woke. But the mainstream media, global elites, and politicians brushed off the Great Reset as “nothing to see here.” Another myth they push: “The World Economic Forum is just a conference for elites who have no REAL power.”

Glenn Beck first exposed the Great Reset almost two years ago, and the globalist cries of "conspiracy theorist" soon followed. They said he believed the WEF was a “master cabal calling the shots from some evil underground lair.” But Glenn Beck never said that. Instead, he uncovered the true intentions of global leaders in finance and politics by simply highlighting their own words.

This week, the same global elites are doubling down on their agenda at the World Economic Forum’s Davos Agenda virtual event. But still, the global elites — like Twitter’s Jack Dorsey — are trying to downplay the WEF’s influence to stop people like us from interfering with their plans. The oligarchy will prosper in the new world order they’ve designed. You will not.

So Glenn unveils a master chalkboard based on his best-selling new book to outline the threats from globalists and why we must stop their agenda if we hope to keep the precious freedoms we still have.

Watch the full episode of "GlennTV' Below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

'This isn't such a crazy conspiracy theory after all': Journalist concedes 'loony' Glenn Beck is RIGHT about the Great Reset

Kim Iversen, journalist, YouTuber, and host of "The Kim Iversen Show," reacted to Glenn Beck's appearance last week on "Tucker Carlson Tonight" by conceding that, while the subject of Beck's new book, "The Great Reset: Joe Biden and the Rise of Twenty-First-Century Fascism" might at first sound "a little bit loony," closer analysis confirms "this isn't such a crazy conspiracy theory after all."

"Glenn Beck was on Tucker Carlson's show last week touting what has been called a right-wing conspiracy theory and discussing his new book, 'The Great Reset: Joe Biden and the Rise of Twenty-First-Century Fascism'," began Iverson on The Hill's "Rising."

"Well, maybe that all sounds a little bit loony — and believe me, I do think Glenn Beck tends to be a loon," she quipped. "But, maybe this isn't such a crazy conspiracy theory after all. And after seeing everything we've seen with the governments enacting all sorts of authoritarian controls and many other conspiracy theories coming true, maybe there's something to be concerned about. So, what is the Great Reset? The name even sounds conspiratorial, but believe it or not, it's a real thing."

Iverson went on to explain exactly who is behind the Great Reset, what their agenda entails, how they are using the COVID-19 pandemic to "to rebuild society in a way the global elites see best fit."

"You'll own nothing and you will be happy: That's what they're saying," Iverson explained. "And with inflation sky high and no signs of it slowing down, they might be right. We are on our way to becoming a nation of renters, but don't worry it's nothing to fear ... don't worry, everything is being done under the premise that this is all ... being done for our own good, the benefit of a collective society, and we will be happy," she added sarcastically.

Iverson concluded by asking, "Who thinks it's a good idea that a bunch of corporate millionaire and billionaires and world leaders are getting together and coming up with what's best for we the little people? I mean, who thinks that that's a really good idea? And who thinks that they are going to be doing it for our benefit? But, of course they're going to frame it like 'Oh, this is good for you. You're going to rent. You'll own nothing and you'll be happy. Don't worry about it' ... When you look at the actual list of partners with the World Economic Forum, they control everything. They control media. They control health. They control business. They control everything, and so then it does become, how do we people fight against that?"

Watch the video clip below to hear Kim Iverson break it down and don' t miss Wednesday night's special episode of "GlennTV" on BlazeTV’s YouTube channel.

Iversen joined Glenn Beck on the radio program to discuss what The Great Reset is and how YOU can help stop it. Watch the video clip from "The Glenn Beck Program" below:

Want more from Glenn Beck?

To enjoy more of Glenn’s masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution, and live the American dream.