Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy - 11th Sep 19
Precious Metals, US Dollar: How It All Relates – Part I - 11th Sep 19
Bank of England’s Carney Delivers Dollar Shocker at Jackson Hole meeting - 11th Sep 19
Gold and Silver Wounded Animals, Indeed - 11th Sep 19
Boris Johnson a Crippled Prime Minister - 11th Sep 19
Gold Significant Correction Has Started - 11th Sep 19
Reasons To Follow Experienced Traders In Automated Trading - 11th Sep 19
Silver's Sharp Reaction Back - 11th Sep 19
2020 Will Be the Most Volatile Market Year in History - 11th Sep 19
Westminister BrExit Extreme Chaos Puts Britain into a Pre-Civil War State - 10th Sep 19
Gold to Correct as Stocks Rally - 10th Sep 19
Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - 10th Sep 19
Stock Market Sector Rotation Giving Mixed Signals About The Future - 10th Sep 19
The Online Gaming Industry is Going Up - 10th Sep 19

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

The Stock Market Cycle’s Slippery Slope

Stock-Markets / Stock Markets 2014 Oct 10, 2014 - 03:43 PM GMT

By: Harry_Dent

Stock-Markets

Will this bubble burst anytime soon? Will we have inflation or deflation? There are lots of questions being asked.

The inability for economists and financial analysts to understand the most basic principle of cycles is just beyond comprehension… especially since we’ve been in this bubble era since 1995. How could so many be arguing that we’re not in a bubble when we have seen one bubble after the next rise and then burst as they always do?


The Japanese stock bubble burst in 1990 and then Japanese real estate tanked in 1991. It’s been 19 years since their stocks dropped a whopping 80% and after 23 years real estate is still down 60%.

The tech bubble that peaked in 2000 crashed by 78% and it’ll likely crash again after approaching its highs. And when stocks proved fallible, investors rushed into real estate — the one thing that couldn’t go down. They couldn’t have made a greater mistake — it fell by 34% between 2006 and 2011 — with the worst sectors down by 55%. That really hurts when you are highly leveraged with a mortgage.

My promise here… even though it had a weak bounce: It will drop again (and don’t even get me going on China).

The chart below shows some of the more prominent bubbles.

The emerging markets bubble was as strong as the tech bubble that peaked in late 2007/mid-2008 and then dipped by 68%. It crashed 70% in China. China is still hovering around its 2008 lows today. Commodities peaked in mid-2008 and they still haven’t gotten back to those highs and will probably go much lower, according to our 30-year commodity cycle and it’s been reliable for nearly 200 years.

Then the last bastion was held by gold and silver. They were supposed to be the ideal investment strategy that would protect you in a downturn… according to the gold bugs, not us. That quickly turned into a not ideal strategy. We saw gold drop by 38% from its peak back in September 2011 and silver slid down by an unbelievable 63% since April of 2011 when we gave the major sell signal for the precious metals. There will be more to come in that scenario.

I don’t see how economists and analysts are blind to the Fed’s constant fueling of the bubble we’re in and that it will, not maybe but will burst. It couldn’t be more obvious. The denial factor grows stronger when bubbles are moving into the final stages and it’s a rampant symptom right now in a lot of people.

I’ve had to debate Ron Insana on CNBC many times. He categorizes the Fed’s policy in creating endless amounts of money out of thin air to solve all of our financial crises and problems as “enlightened policies.” How is that for delusion and denial?

It’s just mind-boggling.

I’m going to play devil’s advocate here for a second. If we’re going to print money… and it has no serious consequences… and it really is the new enlightened approach to economics, then why are we ***** footing around? Why don’t we print $17 trillion and pay off the national debt? Why don’t we print $10 trillion and pay off every household’s mortgage?

Or as Roseanne Barr recently joked in all of her typical political correctness: “Why don’t we give every broke person $10,000 a week? Then the rest of us can invest in liquor stores, casinos and porn websites.”

Ron Insana is actually one of the most intelligent people I debate on this topic but his view is still simply insane to me. Paul Krugman is the leading liberal economist and he thinks we should have printed much more money than we did.

If I’m not debating the “enlightened” ones, I’m hashing it out with the gold enthusiasts. They see hyperinflation, gold going to $5,000 plus and the dollar crashing to near zero. Did this happen in the last financial crisis? No, it didn’t. The dollar went up and gold and silver crashed.

Inflation is not the consequence. The consequence is preventing our economy from rebalancing unprecedented debt, financial leverage and speculation. The inevitable consequence is creating an even bigger bubble that will have to burst and it will do that soon.

Deflation is the trend and we saw the money supply in the U.S. actually contract 6% for a few months before the Fed stepped in with their unprecedented stimulus. They are inflating to fight deflation.

Even the central banks can’t keep this bubble going forever, and in fact, it seems to have expanded to about as far as it can go to me and stock gains have been minimal since the beginning of this year.

You need to prepare for another across-the-board bubble burst and the deepest downturn since the Great Depression with deflation… not inflation. It will fall deeper and it will last longer than it did in 2008.

This isn’t the time to listen to those leading politicians, economists and pundits who say we’re not in a bubble and we’re finally seeing a sustainable recovery.

Harry

http://economyandmarkets.com

Follow me on Twitter @HarryDentjr

Harry studied economics in college in the ’70s, but found it vague and inconclusive. He became so disillusioned by the state of the profession that he turned his back on it. Instead, he threw himself into the burgeoning New Science of Finance, which married economic research and market research and encompassed identifying and studying demographic trends, business cycles, consumers’ purchasing power and many, many other trends that empowered him to forecast economic and market changes.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules