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Are we right on the verge of one of the greatest financial collapses in American history? I have been repeatedly warning that our ridiculously over-inflated stock market bubble could burst at any time, but former Federal Reserve Chairman Alan Greenspan believes that the bond bubble actually presents an even greater danger. When you look at the long-term charts, you will see that an epic bond bubble has been growing since the early 1980s, and when it finally collapses the financial carnage is going to be unlike anything we have ever seen before.
Since the last financial crisis, global central banks have purchased trillions of dollars worth of bonds, and this has pushed interest rates to absurdly low levels. But of course this state of affairs cannot go on indefinitely, and Greenspan is extremely concerned about what will happen when interest rates start going in the other direction…
And he said many years ago:
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan
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This Jubilee Year is advancing just as I have predicted, with all the major elements of a worldwide catastrophe now in place.
On Monday, the markets continued to collapse, with every major European stock market down 2-3% and the Dow currently down 300 points following Black Friday which, we now know, was the worst sell-off in worldwide stock markets in history, losing a combined $2 trillion.
The previous largest sell-off in history occurred 7 years, 7 months, 7 weeks and 7 days prior, on the Shemitah end day of September 29, 2008, when $1.9 trillion was erased in one day.
Alan Greenspan issued a dire warning about the U.S. economy during an interview with Fox News on Thursday. Greenspan said that as Venezuela descends into martial law, the U.S. is heading in the same direction.
Greenspan warned that the U.S. has “a global problem of a shortage of productivity growth” which is leading it into an impending disaster.
Were you wondering what Alan Greenspan thinks about the outlook for monetary policy across the globe?
Neither were we, but Bloomberg was and Tom Keene and Mike McKee got the “privilege” of sitting down with the “maestro” on Monday afternoon to discuss a variety of topics including NIRP, which Greenspan says “warps investment behavior.”
While he isn’t willing to go so far as to condemn negative rates as “dangerous,” he does say the global race to the proverbial Keynesian bottom is “counterproductive.”
As far as the US economy is concerned, Greenspan isn’t optimistic. “We’re in trouble basically because productivity is dead in the water…Real capital investment is way below average. Why? Because business people are very uncertain about the future.”
– “Bernanke & Greenspan Have Destroyed America” Schiff & Maloney Warn “People Don’t Realize What Is Coming” (ZeroHedge, June 3, 2015):
Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn’t want you to seeas “people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time.” The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar – Bernanke “took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning.” The air is coming out of the bubble, they warn, “Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming…”
Full interview here:
Full transcript below:
– Alan Greenspan Warns Of Explosive Inflation: “Tinderbox Looking For A Spark” (SHFTplan, March 8, 2015):
Last month it was revealed that former federal reserve Chairman Alan Greenspan, the architect of U.S. monetary policy under four Presidents, is anticipating a significant market event as a result of the trillions of dollars that have been pumped into the system over the last several years. According to Greenspan, something big is coming.
His comments were shared by well known resource analyst Brien Lundin, who joined Greenspan for private discussions at last year’s New Orleans Investment Conference. In his latest interview Lundin further clarifies Greenspan’s private thoughts on current economic and monetary policy and sheds light on the former Fed Chairman’s suggestion that ‘something big is coming.‘
Greenspan made some good points to me… He was concerned about inflation… He was specifically concerned in relation to the outstanding, or excess, reserves which are close to three trillion dollars being held on the Fed balance sheet now… That money is just hanging over the U.S. economy like a big water balloon of liquidity and it’s just searching for a pin.
In fact, Greenspan referred to it as a tinderbox of explosive inflation looking for a spark.
Watch the full insider interview:
– 14 Signs That Most Americans Are Flat Broke And Totally Unprepared For The Coming Economic Crisis (Economic Collapse, Feb 23, 2015):
When the coming economic crisis strikes, more than half the country is going to be financially wiped out within weeks. At this point, more than 60 percent of all Americans are living paycheck to paycheck, and a whopping 24 percent of the country has more credit card debt than emergency savings. One of the primary principles that any of these “financial experts” that you see on television will teach you is to have a cushion to fall back on. At the very least, you never know when unexpected expenses like major car repairs or medical bills will come along.
And in the event of a major economic collapse, if you do not have any financial cushion at all you will be a sitting duck. Yes, I know that there are millions upon millions of families out there that are just trying to scrape by from month to month at this point. I hear from people that are deeply struggling in this economy all the time. So I don’t blame them for not being able to save lots of money. But if you are in a position to build up an emergency fund, you need to do so. We have been experiencing an extended period of relative economic stability, but it will not last. In fact, the time for getting prepared for the next great economic downturn is rapidly running out, and most Americans are not ready for it at all.
The following are 14 signs that most Americans are flat broke and totally unprepared for the coming economic crisis:
With the Federal Reserve printing trillions upon trillions of dollars to keep the economic system afloat, many investors and financial pundits have surmised that the fundamental economic problems facing the United States during the crash of 2008 have been resolved. Stocks are, after all, at historic highs.
But the insiders know different. And if there’s any single person out there who understands U.S. monetary policy and its long-term effects on domestic and global affairs it’s former Federal Reserve chairman Alan Greenspan. As the head of the world’s most powerful central bank for nearly two decades he’s privy to the insider conversations and government machinations that have brought us to where we are today.
Every two weeks or so on average, we ask ourselves: why do central bankers only tell the truth after they have quit their post (rhetorically, of course). The last time it was the BOE’s former head Mervyn King, who said that “more monetary stimulus will not help the world economy return to strong growth.” This took place long after the BOE, under his watch, unleashed its own QE back in the early days of the great financial crisis. Another example: back in November, the Fed’s own former head, the person who single-handedly unleashed the great moderation and led to the current terminal financial state where the global economy bounces from one bubble to another even bigger bubble or else everything implodes, Alan Greenspan said “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It.”
It was another statement by the maestro that has caught the world’s attention, this time opining on Greece, when he told BBC Radio’s the World This Weekend that “Greece will leave the Eurozone. I don’t see that it helps Greece to be in the Euro, and I certainly don’t see that it helps the rest of the Eurozone. It’s just a matter of time before everyone recognizes that parting is the best strategy.… At this stage I don’t see any people who are willing to put up the funds for Greece… All the cards are being held by the members of the Eurozone.” Naturally, this is just what anyone with a functioning frontal lobe (which immediatley excludes all tenured economists) would have said 5 years ago.
– The Council Of Foreign Relations Apologizes For The “Greenspan Glitch” (ZeroHedge, Nov 10, 2014):
Last week, we brought to the public’s attention a controversial ‘missing’ section from the official transcript of Alan Greenspan’s interview last with the Council of Foreign Relations where he dared utter his honest opinion that, “Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” Well, it turns out the reason for the practically heterical section’s omission was “a glitch in the live stream” and CFR has apologized and posted the full transcript. Interesting coincidence that this gold-loving, Bernanke-denying section was the only one to be hit by the ‘glitch’; we are confident it’s mere coincidence…
CFR has apologized…
As I’ve said many times … Physical gold and silver is the money of the TPTB.
– Greenspan’s Stunning Admission: “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It” (ZeroHedge, Nov 7, 2014):
For some reason, the Council of Foreign Relations, where ex-Fed-Chief Alan Greenspan spoke last week, decided the following discussion should be left out of the official transcript. We can perhaps understand why… as Gillian Tett concludes, “comments like that will be turning you into a rock star amongst the gold bug community.”
TETT: Do you think that gold is currently a good investment?
GREENSPAN: Yes… Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can macth it.
– Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, “Buy Gold” (ZeroHedge, Oct 29, 2014):
It appears it is time for some Hillary-Clinton-esque backtracking and Liesman-esque translation of just what the former Federal Reserve Chief really meant. As The Wall Street Journal reports, the Fed chief from 1987 to 2006 says the Fed’s bond-buying program fell short of its goals, and had a lot more to add.
Mr. Greenspan’s comments to the Council on Foreign Relations came as Fed officials were meeting in Washington, D.C., and expected to announce within hours an end to the bond purchases.
He said the bond-buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy.
“Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”
From the article:
“Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly…. Central banks, including the U.S. Federal Reserve, have taken aggressive action, consistently lowering interest rates such that today they hover near zero. They have also pumped trillions of dollars’ worth of new money into the financial system. Yet such policies have only fed a damaging cycle of booms and busts, warping incentives and distorting asset prices, and now economic growth is stagnating while inequality gets worse. It’s well past time, then, for U.S. policymakers — as well as their counterparts in other developed countries — to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy… The transfers wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them”…
– It Begins: Council On Foreign Relations Proposes That “Central Banks Should Hand Consumers Cash Directly” (ZeroHedge, Aug 26, 2014):
… A broad-based tax cut, for example, accommodated by a program of open-market purchases to alleviate any tendency for interest rates to increase, would almost certainly be an effective stimulant to consumption and hence to prices. Even if households decided not to increase consumption but instead re-balanced their portfolios by using their extra cash to acquire real and financial assets, the resulting increase in asset values would lower the cost of capital and improve the balance sheet positions of potential borrowers. A money-financed tax cut is essentially equivalent to Milton Friedman’s famous “helicopter drop” of money
– Ben Bernanke, Deflation: Making Sure “It” Doesn’t Happen Here, November 21, 2002
A year ago, when it became abundantly clear that all of the Fed’s attempts to boost the economy have failed, leading instead to a record divergence between the “1%” who were benefiting from the Fed’s aritficial inflation of financial assets, and everyone else (a topic that would become one of the most discussed issues of 2014) and with no help coming from a hopelessly broken Congress (who can forget the infamous plea by a desperate Wall Street lobby-funding recipient “Get to work Mr. Chariman”), we wrote that “Bernanke’s Helicopter Is Warming Up.”
– The Italian Job: How Borrowing And Printing Lead To An Economic Dead End (David Stockman’s Contra Corner, Aug 21, 2014):
Earlier this week Bloomberg published a devastating chart showing real hourly wage growth for the first 60 months of every cycle going back to 1949. The 11 cycle average gain was 9% and the largest was 19% a half century back.
Fast forward to the 60 months of ZIRP and QE since the Great Recession officially ended in June 2009, however, and you get a drastically different picture: Real hourly wages have risen by just 0.5%, and in the great scheme of things that’s a rounding error.
Surely the above chart is also flat-out proof that massive money printing doesn’t work. After all, reflating wages, jobs and incomes is what the monetary politburo claims it’s all about. Indeed, the Fed has insouciantly cast a blind eye to the massive bubbles building everywhere in the financial system, and has kept money market rates relentlessly at zero for six years running on the grounds that it is not yet done “stimulating” the labor market.
So why does this abysmally failed and dangerous experiment continue unabated—as Yellen will undoubtedly confirm at Jackson Hole? Self-evidently, it is irresistibly convenient to both Wall Street and Washington. The former gorges on a massive diet of carry trade gambling windfalls thanks to ZIRP and the Greenspan/Bernanke/Yellen “put”; and the latter gets a fiscal get-out-of-jail-free card owing to the Fed’s massive repression of interest rates. Indeed, with the public debt now topping $17.7 trillion, the implicit (and fraudulent) debt service relief from current ultra-low interest rates amounts to upwards of $500 billion per year.
“There is no other agency of government which can over-rule actions that we take.”
– Could the Fed Lose Control of the Frankenstein Economy It Has Created? (OfTwoMinds, Jan 1, 2014):
What if there are tail risks present in the Fed’s Frankenstein Economy of the same sort that Greenspan et al. failed to identify in 2008?
A longtime correspondent emailed me last week about the apparent contradiction between a Federal Reserve that has had the power for five years to counteract any decline and my call for a market decline in 2014: why would the Fed allow a market it has pushed higher for five years to ever fall?
It’s an excellent question, as it summarizes the key question: is there any limit on “don’t fight the Fed?” Can the Fed push assets higher essentially forever? And if so, why did it fail to do so in 2008?
– 100 years of economic turmoil: Is it time to ‘End the Fed’? (RT, Dec 23, 2013):
Since the magical moment of its inception on Dec. 23, 1913, the Federal Reserve System has been a source of controversy and even contempt for a growing number of Americans, many of whom are still feeling the sting of the latest financial crisis.
A large part of the discomfort with the Federal Reserve System can be traced back to a dusty document known as the US Constitution, a historic manuscript that predates “The Fed” by 125 years, in which it clearly states (Section 8, Article 5): “Congress shall have power to coin money, regulate the value thereof.”
Yet, despite its officious-sounding title, the Federal Reserve System is not an actual branch of the US government, nor does the US government have any control over its monetary monkeying, which involves the printing of money as well as setting interest rates.
These awesome powers were admitted by no less a respectable figure than Alan Greenspan, who served as Chairman of the Federal Reserve from 1987 to 2006.