Showing posts with label speculation. Show all posts
Showing posts with label speculation. Show all posts

Thursday, December 7, 2017

The Federal Reserve's Monetary Policy Under Chairwoman Janet Yellen

Fig 1: Federal Reserve Monetary Base[MB], 2006-17, None- Seasonally Adjusted, Log. Scale


What follows is a short generalized examination of the Federal Reserves overall monetary policy during Chairwoman Janet Yellen's tenure, which is apparently due to end in February 2018. 

What I did was to visit the Federal Reserve online site and download  two graphs showing the monetary base [MB] figures for the periods 2006 -14,[when Yellen's predecessor Ben Bernanke, was chairman, and from 2014 through Oct. 2017 [the most recent figures], the period for which Janet Yellen has been Chairwoman .

                          
                                                Fed chair 2014-18 Janet Yellen

What Is the Monetary Base? 

The monetary base is the narrowest measure of the money supply which is manipulated by the Federal Reserve. It is therefor regarded as being the most liquid.

Here's what one financial site says :

"The monetary base is part of the overall money supply. The monetary base refers to that part of the money supply which is highly liquid (i.e. easy to use). The monetary base includes:

~ Notes and coins
 

~ Commercial bank deposits with the Central Bank

~  The monetary base is also referred to as ‘narrow money’ because it is a narrow  definition and doesn’t include more illiquid types of the money supply."  
                                                 Source

Why Bother With Federal Reserve Monetary Base Figures? 

When I first became interested in investing, speculation, and economic theory [over 30 years ago], a lot of the people I looked to for advice watched, amongst other things, the Federal Reserve's monetary base figures in order to try to predict what was going to happen next. 

This was especially true amongst the "hard money" and "gold-bug" types whom I mostly followed [ e.g. Doug Casey, Harry Schultz, Harry Browne, Terry Coxon, Richard Russell, John Pugsley, Howard Ruff etc.] . 

The notion amongst most of them and others was [and for some apparently still is], that monetary supply inflation inevitably led to the dreaded price inflation that nobody wanted and  that last came to pass in the late 1970's and early 1980's.  

Bernanke's "Reign"  Versus Yellen's "Reign"- A Dramatic Difference

I think you can see a dramatic difference in overall Fed policy between the two "reigns" of Bernanke and Yellen................

1]: Monetary Base Expansion Under Fed Chair Ben Bernanke [ 2006-14]

Lets first take a look at what happened to the monetary base under Mr Bernanke. The graph below shows monetary base figures for 2006-14, and the shaded area [ 2008 - 2009] represents  when the last severe recession "officially" started and  "officially" ended :-) :


Fig. 2: Federal Reserve Monetary Base, monthly, not seasonally adjusted, Log. Scale, period 2006 - 2014[Fed Chair B. Bernanke]

The Fed's "Quantative Easing" and Price Inflation- 2008- 14

As some of you might know, "Quantitive Easing" was the Federal Reserves new-fangled,  fancy term [first used in Japan, apparently] for the large scale "emergency" purchase by it of specified amounts of financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply, during "the great recession" [ or whatever you want to call it]         
                                                      

As can be seen from the above chart, the increase ["inflation"] of the monetary base via the Fed's"quantitive easing" was enormous, in fact, under Mr Bernanke, the monetary base had an approximate 250 -300 % increase over the 6 years  2008-14].  [See my related article: "Ben Bernanke the Great[est] Inflator?"].

Quantitive Easing To Cause Price Inflation?

At the time, many people [ including various famous "investment advisors" ] assumed that this massive, unprecedented inflation of the monetary base  supply [let alone the broader measures of M1, M2, M3 and MZM], was bound to cause massive  price inflation in the market place, sooner, rather than later. 

No  Price Inflation [2008 -18]?

However, obviously, at this time of writing it appears to have not have been the case. Either the assumed inflation is late getting here [historically  it is assumed to  show up within 3-5 years after the money supply has been initially "over- inflated"], or there was/is something else going on.

Here's what one site says:  

"Quantitative easing led to a big increase in the monetary base.The Federal Reserve created money to buy bonds from commercial banks. Banks saw a rise in their reserves.

However, commercial banks didn’t really lend this money out. Therefore the growth of the broader money supply didn’t change much.

What happened is that commercial banks merely oversaw a rise in their reserves.

The US inflation rate was largely unaffected by this increase in the monetary base. Stripping out volatile cost push factors (food and fuel), core inflation remained below 2% inflation target.

If the economy had been booming, and banks were confident to lend, then this increase in the monetary base may have caused an increase in the broader money and inflation..."      Source

So, little overall inflation  to date apparently, as we head into 2018,  for various reasons. [Although some will argue that inflation has occurred in select areas, food for example]. 

2] The Monetary Base 2014-18 [ Fed Chair J. Yellen]:

Now lets take a look at the monetary base growth under Fed Chair Janet Yellen [2014-18] :



Fig.3: Federal Reserve Monetary Base [MB] 2014-  Oct. 2017,  [Fed. chair J. Yellen], none-seasonally adjusted,  log. scale


A Radical Difference Under Yellen?

As can  be seen from the above graph, since Ms. Yellen took office [2014],  overall, the Federal Reserve has embarked on a radically different policy from that implemented in mid 2008, and continuing through 2014. What might be called a "tightening" policy, if you will. 

In fact, as of October 2017 after steady decline to a low point reached in the last quarter of 2016, and a subsequent increase back to a point where , in Oct. 2017, monetary base figures now seem to be about where they were when Ms Yellen first took office as Fed chair in early 2014.

Summary: What Does It All Mean?  

Many will argue that the huge increases in the monetary base under B. Bernanke "must" still cause monetary inflation [ i.e. a decrease in  the per unit value of each $], sooner or later, despite the fact that this has still not occurred to date, [ for various reasons].

Others will claim that the "tightening" of the monetary base evident under the Yellen "regime" ensures a recession in the near future [2018 onwards]. 

I Claim: I will claim that either side might get it right, but that if they do, that it is not a sign of their own ability to predict the economic future, as many might believe, but only that the party concerned got lucky, nothing more. 

                                       Fig.4: Gold bullion prices, daily, 2008-17


Fig. 5: 30 year  U.S.Treasury Bond Interest Rates, Monthly, 1975- 2017[Nov.]


          Fig. 6: Aaa U.S. Corporate Bond  Yields, Monthly, 1920- 2017 [Nov.]

Human Action Versus Predicting The  Economic Future

For many fundamental reasons to do with human action that I will not get into here, the precise economic and financial future must remain unknown.  Which means that although inflation might be next, continued "disinflation", or even deflation has just as just much chance of occurring, as does a return to  economic "good times" . 

Bottom Line: Serious Risk For You and Your Precious Savings:

If your savings and investments in any way rely on your supposed ability, [or somebody else's  supposed "professional" ability],  to accurately predict  future economic and financial scenarios via charts like those above, or via "fundamental" or "technical analysis", or via tea-leave readings, astrology or whatever else [!], then unless you/they are extremely lucky individuals, your  entire savings portfolio is at serious risk of decimation. 

Regards, Financial Safety Services : onebornfreeatyahoodotcom

                                       Financial Safety Services disclaimer

Related posts: "Mr. Ben Bernanke: The Great[est] Inflator ?"

                       "How Long Can the Fed Keep the Boom Going?"

                       "Will The Yellen Fed Cause a Trump Recession?"




                              

                                                     image source

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Thursday, November 30, 2017

"Blowhard" Predicts $1 Million BTC By 2020!


https://www.youtube.com/watch?v=epObQ1AujyQ

"John McAfee, founder of McAfee Associates a well-known software company  has always been Bullish on Bitcoin, in fact, he has even been confrontational on the fact.

In July, with a lot of fear and uncertainty surrounding Bitcoin ahead of its Aug. 1 chain split, McAfee came forward and stated boldly that he was willing to stake his name and up to $10 mln on a bet that the Bitcoin price will move above $500,000 within three years or he would "eat my d**k on national television."

That prediction was seen as ludacris at the time, and many were left wondering how his on-screen promise would play out - however, now that Bitcoin has crossed $11,000, McAfee is not sitting back smugly, but rather raising the bar.

The outspoken tech mogul has now said:

“When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bitcoin at $1 mln by the end of 2020. I will still eat my dick if wrong.”


            [ obf sez: Too funny! Mr McAfee used some sort of supposedly "predictive" model of his to predict a future price, but he got it wrong, and so now, of course [:-) ], he has a new model to use! Whodathunkit? What could be simpler ? This "techno-narcissist" knows all! [because his latest model is infallible].

The underlying psychology of this person is no different from any other person using an economic model, be they an "investment advisor", an economist or something else. Just another know-it-all [great for entertainment value :-) ].

Summary: "Houston , You Have a Problem"

And so, dear reader, if you really believe that Mr McAfee [or any other "techno-geek", let alone any regular "investment expert"] can successfully, consistently predict the financial/economic future, via the implementation of some secret [ no doubt algorithm- rich] formula, then I would suggest that you, like Mr McAfee himself, have a serious problem and should seek help.



                     
                                                       image source

                         
                                                     image source

                     
                                                      image source
  

                                                      image source


Regards, Financial Safety Services: onebornfreeatyahoodotcom












Tuesday, July 25, 2017

Do Not"Invest"In Bitcoin! [Or:How to Safely Profit With Bitcoin Etc.]

Financial Safety Services Disclaimer

                            
 Fig 1: Bitcoin's performance record - 2010- 17 Image Source
            [Click on image to enlarge].



Do Not"Invest"In Bitcoin![Or:How To Safely Profit With Bitcoin and Other Crypto-Currencies].


Introduction:

Bitcoin and other similar alternative, "internet currencies", or "crypto-currencies", have made remarkable gains since its/their appearance on the market a few years ago, which means that many people will now be tempted to "invest" in these relatively new market phenomena in the hopes of making large profits [nothing wrong with that :-) ]. Many "early bird" adopters have already  made large profits [mostly "on paper", I'm guessing], and  some of these persons now spend considerable time and effort in exhorting others to buy Bitcoin, " now, before its too late", so that they too can enjoy  similarly large profits.

What is Bitcoin? - here is a short , basic introduction for "newbies". 
 Also see this site, specially created for Bitcoin "newbies". [p.s. I count myself in the "newbie"category].



   Fig.2 : Gold bullion prices 2012-17, log. scale
          [Click on image to enlarge]


A Bitcoin Reality Check Fact For You : 

Fact: The Financial/Economic Future Always Remains Unknown and Unknowable!

.............which means that nobody, not you, me, your favorite investment advisor, fund manager, economist [of any "stripe"] or banker, or anyone else,  can definitively know where Bitcoin is headed from here. The same applies to  any other "investment", be it stocks, bonds, precious metals, real estate, or whatever. 

Therefor, in light of that stark reality, I would humbly suggest that if you seriously want to try to  profit from Bitcoin etc., that  instead of "investing" in it, that you only "speculate" in it, or in any of the other 100's [ if not 1000's] of new digital "crypto-currencies", assuming you realistically have the spare cash to risk[see below]. 

"Investing, Or Speculating"? - What's The Diff.?
What's the difference between "investing" in Bitcoin etc. and "speculating" in it? -you might well ask.

The difference is actually very important, and can mean the difference between losing most of everything you've managed to save for the future to date  [e.g. precious long term savings/retirement money] if everything goes wrong, and, on the other hand, only losing  a little "gambling", or betting/speculation money ["play" money if you like] if everything went wrong, while  your precious long term savings  remain safe and unaffected.  


                 Fig.3:Standard & Poors 500 Stock Index 2012-17,log. scale.
                                         [click on image to enlarge]
    


                  Fig.4: NASDAQ Composite Stock Index, 2012-17, log. scale
                                          [Click on image to enlarge]


How To Safely Speculate In Bitcoin and Other "Crypto Currencies":

Step [1]: Divide your savings into two distinct, separate categories:

i] Money/savings you cannot afford to lose under any circumstance [e.g. saving for retirement money]. This money should be kept in a balanced long term savings plan that you believe to be safe, maybe similar to this one. 

ii] Money you can realistically afford to lose [ play money, gambling/betting money]. 

N.B. If you have no money you can afford to lose then you have no money to speculate/gamble/bet with, which  means that you have no business making dangerous bets on Bitcoin, or on anything else [gold, or stocks, or bonds, or whatever] with any part of the money you cannot afford to lose .

Accumulating Money You Can Afford To Lose [If You Don't Have Any Right Now]

If you have no money you could afford to risk losing that you can  speculate with,  and if you still wish to speculate on Bitcoin or whatever at some time in the near future, you'll first have to accumulate/save  enough extra savings over and above your estimated long term savings needs; extra savings which you would not miss if your Bitcoin bet did not make a profit, as your gambling losses would still be safely insulated from all of your long term savings and would therefor not damage them in any way.

Do  You Already  Have Money You Could Afford To Lose on a Bitcoin Bet?

Even though we are talking about money you can afford to lose, do you really want to lose all of it on a bad bet on Bitcoin [ or whatever]?  Of course not. On the other hand, if you don't really care if you lose it all, then by all means, "go ahead, make my day", as the saying goes :) , and just barrel on into Bitcoin, blind, right now. [I sincerely wish you good luck].


Bitcoin Reality Check [2]:

Assuming that you'd rather make money on your bet[s] than lose it all in "one fell swoop", then there are many factors that you will need to take into consideration before placing your bet, in order to maximize profits and at the same time protect yourself against undue losses.

"Off the top of my head", I know of at least a  dozen facts about speculating and speculations that you need to be fully aware of if you wish to be a successful speculator and do not just want to just rely on blind "lady luck" and "barrel on" in there.

Here are three [A,B & C]  that might be worth considering:

A]: Speculation Is Largely an Intuitive "Art"- Not a "Science": 

Successful speculation is intuitive, to a far greater degree than most successful speculators are even willing to admit.  

B]: Successful,Professional Speculators Actually Lose Bets More Often Than They Win Them: 

......however, their winning bets are large enough in the long run to more than offset their many losses by a considerable amount.  This is often accomplished via the use of strategies similar to the ones I hint at at the end of this post, plus others. 

C]:There Will Always Be Other Opportunities:

There will always be other opportunities to speculate coming up in the future - so do not feel pressured into "having to" speculate in Bitcoin and related. Don't listen to people who try to influence/pressure  you  via "once in a lifetime opportunity"  type arguments for Bitcoin, nor for anything else.

So, Do You Seriously Want To Safely Make Money In Bitcoin? 

Although there can be no absolute guarantees in speculating, in order to try to maximize your chances of safely making some serious moolah by speculations in Bitcoin  etc. instead of losing some/all of that moolah, you will probably need far more specific facts/information about the art of speculation than I have chosen to give away for free, here.[ Hint, hint]

 For example: how to establish reasonable risk/reward ratios; where/how to set "stop-losses" and "trailing stop-losses; establishing a risk/reward ratio,how to buy into a rising [or falling] trend; what to do if a better [non-Bitcoin] opportunity  presents itself in the future, etc. etc.

Because, after all, even works of art such as financial speculations need some clearly defined borders/parameters, in order to maximize the chances for significant profits, while at the same time minimizing the risks of losing significant sums that would hurt the speculator. 

Blind Luck Anyone?

Failing all that, I wish you [blind] good luck with all your blind speculations in Bitcoin, or whatever. [Maybe you naturally have "the feel":-) ] .

Regards, onebornfree. Financial Safety Services.

Related post:"Got Money You Can Afford To Lose?"

All questions/comments: onebornfreeatyahoodotcom

                          Financial Safety Services Disclaimer

                              Addendum: Additional Financial Graphs:



     Fig. 5: Federal Reserve Monetary Base totals, 2012-17. Log scale.
                               [Click on image to enlarge]



                      Fig. 6: Federal Reserve M1 totals, 2012-17. Log scale.
                                       [Click on image to enlarge]


             Fig. 7: Federal Reserve M2 totals, 2012-17. Log scale.
                              [Click on image to enlarge]


        Fig. 8: Federal Reserve MZM totals, 2012-17. Log scale.
                          [Click on image to enlarge]


     Fig. 9: Exchange rates, $ US vs. the Euro 2012-17. Log scale.
                         [Click on image to enlarge]


    Fig. 10: Interest rates: US 3 month T-Bill 2012-17.
                             [Click on image to enlarge]


    Fig. 11: Interest rates: US 30 year T-bond 2012-17.
                    [Click on image to enlarge]


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Thursday, July 11, 2013

The Financial Safety Services Disclaimer

Financial Safety Services is NOTan investment advisory or asset management service!


Goal: the primary goal of this service is to get the individual to the point where they fully understand that the financial and economic future cannot be reliably and consistently predicted by anyone, and that relying on the forecasts of "advisors", graph- interpreters, government officials, investment "gurus", fund managers, bankers, or any other proclaimed financial/investment "expert", for their "sure- fire predictions", can be very costly to the individual, even if that "expert" apparently has made successful predictions in the past. 


 To that end, Financial Safety Services is an educational service that after that goal [above] has been reached with an individual,  then attempts to show that individual non-original [i.e. invented by others far more clever/intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual to self-managetheir savings [i.e. use no advisors or money managers ],  via relatively low risk speculations in various financial markets, using only money they can afford to lose, and also how to self-manage precious savings they cannot afford to risk losing [i.e. use no advisors or money managers ], and how to protect those savings from  unforeseen inflation, deflation, and other unforeseen future economic events/scenarios, as well as how to protect those savings from the likes of allegedly prescient professional investment and financial "advisors","gurus", investment "managers" etc. etc.


ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS.All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .


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More About Financial Safety Services:

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. mostly non-internet derived] clients how to speculate safelywith money that they canafford to lose.


 Money that the client cannot afford to lose should never be risked in these speculations!


For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.


No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.


Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], andneverfor the benefit of the general reading public and casual internet reader at large.


Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.


I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as I previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .


None- Client Questions?


Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.


Current Client Questions.


All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!

onebornfreeatyahoodotcom



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Wednesday, January 2, 2013

The Invisible Hand [Always] Strikes Back





[Financial Safety Services commentary:  a good article from Anthony Wile of  "The Daily Bell" follows below this commentary. Mr Wile is commenting on the idea, still being promoted by the establishment financial media, that the traditional "buy and hold" strategy for stocks is still reliable, and he zero's in on a recent Bloomberg article  that unabashedly promotes the traditional "buy and hold" concept that had seemed to work so well for both Wall Street and the proverbial " man on the street"  till around 2000 or so.  


Invisible hand vs. All-seeing eye






Of course, the truth of the matter is that "The Invisible Hand" , is always striking back and correcting capital misallocations. This effectively means that the economic future can never be reliably and consistently predicted. 

Meaning, if you take Mr Wile's "gloom and doom"/continuing bull markets for gold and other "hard" assets predictions seriously, bet on them all only using money you can safely afford to lose- in other words,  speculate in those markets you believe Mr Wile predictions will benefit, don't invest in them long term with money you cannot afford to lose.

 Likewise for any believed stock market boom  predictions by the likes of Bloomberg etc. - remember that these  future prosperity predictions have just as much chance of being right or wrong as do Mr Wile's {or any one else's} "gloom and doom" scenarios. 

On the other hand, should you be lucky enough to have money you can afford to lose should events move against you, then stock market index option   "calls" [if you believe the stock market is headed upwards from here], or index option "puts", or "shorts" [if you believe the market has peaked and will shortly collapse], or maybe other similar simple arrangements that might also bring you profit should your bet be correct, [ with suitable "buy in" points and automatic sell prices and other safety measures firmly in place] , might be the way the to go. Or, if you feel [i.e."know"] that Mr Wile is correct, then buy gold bullion. 


Saturday, December 29, 2012 – by Anthony Wile 

"Bloomberg has posted an article entitled "Americans Miss $200 Billion [by] Abandoning Stocks" that is presumably supposed to illustrate the folly of avoiding equities but in my view merely illustrates the difficulty of sustaining this meme.

And make no mistake, it IS a meme.

The idea that one can simply buy and hold equities like family heirlooms was always suspect and is more-so now. That's because people simply cannot internalize the reality of a failing economy and a booming stock market. The cognitive dissonance makes them wary.

Thanks to what we call the Internet Reformation, many people are much savvier about how the market works and the way the economy behaves. Such individuals are not apt to assume that the US recession is over just because the mainstream media proclaims it is so. They are nervous and not easily willing to dump large amounts of cash into the stock market.

Who can blame them?

This doesn't stop Bloomberg from launching articles like this one. The idea of course – the dominant social theme if you will – is that investing is frightening but those with a strong stomach can become wealthy if they just "stay the course." Here's more:

Americans have missed out on almost $200 billion of stock gains as they drained money from the market in the past four years, haunted by the financial crisis ...

Assets in equity mutual, exchange-traded and closed-end funds increased about 85 percent to $5.6 trillion since the bull market began in March 2009, trailing the Standard & Poor's 500 Index's 94 percent advance.

The retreat shows that even the biggest gain since 1998 failed to heal investor confidence after the financial collapse that wiped out $11 trillion in U.S. equity value was followed by record price swings in equities, a market breakdown that briefly erased $862 billion in share value and the slowest recovery from a recession since World War II. Individuals are withdrawing money as political leaders struggle to avert budget cuts that threaten to throw the economy into a new slump.

"Our biggest liability in the stock market has been the total destruction to confidence," James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $325 billion, said in a telephone interview. "There's just so much evidence of this recovery broadening." ...

Individuals have also seen evidence that computerized trading is making stock markets less reliable. An equity rout temporarily sent the Dow down almost 1,000 points on May 6, 2010, causing investors to question the stability of market mechanics and the effectiveness of regulators.

Botched IPOs for Facebook Inc. (FB) and Bats Global Markets Inc. earlier this year led to concern about trading and exchange technology, while Knight Capital Group Inc. nearly went out of business in August after it bombarded U.S. equity exchanges with erroneous orders in the wake of improperly installed software that malfunctioned.

"Whether it's the flash crash, the low-growth economy, unemployment, uncertainty about jobs -- those things just don't engender any desire to risk money," Walter "Bucky" Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama, said in a phone interview. "Investors say: The stock market? I don't have a clue as to how it works anymore."

Those who have organized modern equity markets have no one to blame but themselves. While certain stocks (especially small stocks) may offer legitimate promise, the larger marketplace is seen as unreliable. Too much has been passed off as legitimate that is not.

And many investors have internalized the disconnect between the economy and stock market performance. The Federal Reserve's tremendous money printing has boosted stock prices over the past four years, but this has only illustrated the control that the elites exercise over investment activities.
Facebook was the big story of 2012, but its wretched overpricing and downright weird business model had investors scratching their heads. The suspicion that US intelligence agencies had a hand in both the IPO and the company itself didn't help Facebook's cause.

The Flash Crash received a good bit of attention, making investors aware – as they had never been before – of how quickly stock valuations could change. But it's really quantitative easing that is the outstanding issue – the one that Bloomberg chooses to present without properly explaining the mechanism.

There is generally a great deal of talk about how stock markets and stocks themselves are value-oriented investments. But what is clear to many people is how close the market came to a meltdown in 2007-2008. The system proved a good deal more fragile than people have been led to expect.

Couple that with the Fed's ongoing money-printing that has literally doubled equity values and you get increasing resistance to the whole idea of stock investing. First people are frightened by the breakdown of the system itself and then they are exposed to ongoing – "industrial strength" – monetary manipulation.

What do those in the industry expect? What do elites that have built up the modern stock market believe people will do with their money? People "get it" ... and not in a good way. The Age of Promotion is waning in the setting of a waxing monetary expansion that was aided and abetted by mainstream media misdirection for decades. Too bad.

Once the Great Depression hit, people gradually stopped investing in stocks. Even after World War II, there was no appreciable action in US equities. NYSE officials ended up going on road shows in the 1950s to tout the benefits of stocks and stock-market investing.

At the time, the markets were ripe for US stocks. The US dominated the world, which had been mostly destroyed by the war. US industry was ascending and US power was at an all time high. People who invested in stocks were amply rewarded.

That's simply not the case today. US debt is in the tens, even hundreds, of trillions. The dollar itself is increasingly looked upon with suspicion around the world and its reserve status may be in jeopardy.
Perhaps most questionable from an investment standpoint is the money that has already been released by central banks in order to stimulate the economy. Much of this currency remains trapped in bank coffers, but it will circulate eventually.

The circulation of these trillions will cause tremendous price inflation – that will in turn result in significant interest rate hikes. As in the 1970s, these rate hikes will damp the recovery (to put it mildly), and stock prices as well.

I haven't even touched on the so-called fiscal cliff, which I believe will be resolved one way or another without the entirety of its tax-and-spend burden being implemented. But it, too, illustrates just how vulnerable equities are to outside political forces and their potential impact on the economy.
The past five years have shown investors clearly that stocks are NOT the proverbial "sure thing." There are good stocks, of course. There are good investments.

But this Bloomberg article is focusing on the wrong argument. The powers-that-be may wish to encourage stock investing, but reminding people of how far down the markets have traveled, and how extensively they have been manipulated by central bankers is not the way to do it.

The road to recovery for many kinds of equities will be a long and hard one. Even gold and silver stocks will struggle. The problem is that reality has caught up to the promotion. The market itself has struck back.

Of course one can argue, as we do, that the current US stock behavior – and modern downturns – have been in a sense planned by the powers-that-be for a variety of reasons, mostly having to do with impending global governance. But it is also obvious that Money Power seeks a continual "buy in" to the systems it has created and implemented.

This time, people aren't buying. Despite all their power, the elites are still at the mercy of the Invisible Hand and the natural laws that govern us all. It will be nice to watch the Internet Reformation swing the pendulum back in the direction of truth." 

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