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How The Federal Reserve Is Setting Up Trump For A Recession, A Housing Crisis And A Stock Market Crash

FEDERAL, RATES, TRUMP, RECESSION, MELTDOWN, ECONOMIC, TEND, FINANCIAL, MARKET, PRICES, QUARTER, BLAME, DONALD, RESERVE, U.S., COLLIDE, BANK, HOMEOWNER, PERCENT, ASSETS, HOMES, HOUSING, INVESTORS, CRASHES, STOCKS, ECONOMY, BUSINESS, STOCK, RATE, FED, CRISIS, DOW, CRASH,

March 17, 2017

Most Americans do not understand this, but the truth is that the Federal Reserve has far more power over the U.S. economy than anyone else does, and that includes Donald Trump.  Politicians tend to get the credit or the blame for how the economy is performing, but in reality it is an unelected, unaccountable panel of central bankers that is running the show, and until something is done about the Fed our long-term economic problems will never be fixed.  For an extended analysis of this point, please see this article.  In this piece, I am going to explain why the Federal Reserve is currently setting the stage for a recession, a new housing crisis and a stock market crash, and if those things happen unfortunately it will be Donald Trump that will primarily get the blame.

On Wednesday, the Federal Reserve is expected to hike interest rates, and there is even the possibility that they will call for an acceleration of future rate hikes…

Economists generally believe the central bank's median estimate will continue to call for three quarter-point rate increases both this year and in 2018. But there's some risk that gets pushed to four as inflation nears the Fed's annual 2% target and business confidence keeps juicing markets in anticipation of President Trump's plan to cut taxes and regulations.

During the Obama years, the Federal Reserve pushed interest rates all the way to the floor, and this artificially boosted the economy.  In a recent article, Gail Tverberg explained how this works…

With falling interest rates, monthly payments can be lower, even if prices of homes and cars rise. Thus, more people can afford homes and cars, and factories are less expensive to build. The whole economy is boosted by increased "demand" (really increased affordability) for high-priced goods, thanks to the lower monthly payments.

Asset prices, such as home prices and farm prices, can rise because the reduced interest rate for debt makes them more affordable to more buyers. Assets that people already own tend to inflate, making them feel richer. In fact, owners of assets such as homes can borrow part of the increased equity, giving them more spendable income for other things. This is part of what happened leading up to the financial crash of 2008.

But the opposite is also true.

When interest rates rise, borrowing money becomes more expensive and economic activity slows down.

For the Federal Reserve to raise interest rates right now is absolutely insane.  According to the Federal Reserve Bank of Atlanta's most recent projection, GDP growth for the first quarter of 2017 is supposed to be an anemic 1.2 percent.  Personally, it wouldn't surprise me at all if we actually ended up with a negative number for the first quarter.

As Donald Trump has explained in detail, the U.S. economy is a complete mess right now, and we are teetering on the brink of a new recession.

So why in the world would the Fed raise rates unless they wanted to hurt Donald Trump?

Raising rates also threatens to bring on a new housing crisis.  Interest rates were raised prior to the subprime mortgage meltdown in 2007 and 2008, and now we could see history repeat itself.  When rates go higher, it becomes significantly more difficult for families to afford mortgage payments…

The rate on a 30-year fixed mortgage reached its all-time low in November 2012, at just 3.31%. As of this week, it was 4.21%, and by the end of 2018, it could go as high as 5.5%, forecasts Matthew Pointon, a property economist for Capital Economics.

He points out that for a homeowner with a $250,000 mortgage fixed at 3.8%, annual payments are $14,000. If that homeowner moved to a similarly-priced home but had a 5.5% rate, their annual payments would rise by $3,000 a year, to $17,000.

Of course stock investors do not like rising rates at all either.  Stocks tend to rise in low rate environments such as we have had for the past several years, and they tend to fall in high rate environments.

And according to CNBC, a "coming stock market correction" could be just around the corner…

Investors are in for a rude awakening about a coming stock market correction - most just don't know it yet. No one knows when the crash will come or what will cause it - and no one can. But what's worse for most investors is they have no clue how much they stand to lose when it inevitably happens.

"If you look at the market historically, we have had, on average, a crash about every eight to 10 years, and essentially the average loss is about 42 percent," said Kendrick Wakeman, CEO of financial technology and investment analytics firm FinMason.

If stocks start to fall, how low could they ultimately go?

One technical analyst that has a stunning record of predicting short-term stock market declines in recent years is saying that the Dow could potentially drop "by more than 6,000 points to 14,800?…

But if the technical stars collide, as one chartist predicts, the blue-chip gauge could soon plunge by more than 6,000 points to 14,800. That's nearly 30% lower, based on Friday's close.

Sandy Jadeja, chief market strategist at Master Trading Strategies, claims several predicted stock market crashes to his name - all of them called days, or even weeks, in advance. (He told CNBC viewers, for example, that the August 2015 "Flash Crash" was coming 18 days before it hit.) He's also made prescient calls on gold and crude oil.

And he's extremely concerned about what this year could bring for investors. "The timeline is rapidly approaching" for the next potential Dow meltdown, said Jadeja, who shares his techniques via workshops and seminars.

Most big stock market crashes tend to happen in the fall, and that is what I portray in my novel, but the truth is that they can literally happen at any time.  If you have not seen my recent rant about how ridiculously overvalued stocks are at this moment in history, you can find it right here.  Whether you want to call it a "crash", a "correction", or something else, the truth is that a major downturn is coming for stocks and the only question is when it will strike.

And when things start to get bad, most of the blame will be dumped on Trump, but it won't primarily be his fault.

It was the Federal Reserve that created this massive financial bubble, and they will also be responsible for popping it.  Hopefully we can get the American people to understand how these things really work so that accountability for what is coming can be placed where it belongs.

How The Federal Reserve Is Setting Up Trump For A Recession, A Housing Crisis And A Stock Market Crash | pf-icon | Economy & Business Federal Reserve Bank Trump Print Friendly

http://www.thesleuthjournal.com/federal-reserve-trump-housing-stock-market-crash/

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A 'tsunami' is about to overwhelm the debt market

DEBT, PAY, MATURITY, RESEARCH, YIELD, RATES, DATA, CASH, MONEY, DEFAULTS, RATE, LOAN, PROJECTING, COMPANIES, MISH, FIRMS, LENDING, ESTIMATES, MARKET, PROFITS, EXPENSIVE, BONDS, COMMODITY, YEAR, DEFAULT, LOANS, CREDIT, LONG-TERM, ROGUE, BANKS, RETAIL,


JUN 3, 2016

A tidal wave may be coming to the bond market, and it's not going to be pretty.

At least that's the view of Matthew Mish, credit strategist at UBS. To Mish, the elevated rates of default in the commodity sector and high risk bonds are a harbinger of things to come for the broader debt market.

"First, our quantitative framework is signalling a broader deterioration in the default outlook, with our model projecting default rates of 4.3% over the next 12 months (versus 2.6% one year prior)," wrote Mish in a note to clients on Thursday.

Mish's research asks whether the recent uptick in default rates is simply a "rogue wave" that will dissipate or the "start of a tidal wave" that will bring the rate of defaults much higher over the long-term.

Mish is in the latter camp. He cites three short-term reasons for a coming increase in the number of firms unable to pay back their debt. They are:

Decreasing profits: Mish notes that corporate profits fell 7.6% in the first quarter against the same time period a year ago. In order to pay back loans, companies need to continue to make more, and thus with less cash coming in, there will be less to allocate to debt.

Screen Shot 2016 06 02 at 12.24.17 PM

UBS

Lending standards are getting tighter: Firms also have the ability to pay down debt that is coming to maturity by issuing new debt, effectively kicking the can down the road. Lending conditions for new debt, however, are getting tighter as banks focus on higher quality borrowers. In turn, this makes it tougher for companies to pay for debt with more debt.

Debt is getting more expensive: Loan spreads, or the difference between what banks have to pay to borrow money and what they charge companies in interest on loans they then give out, are starting to widen. In other words, new debt is getting more expensive.

Add these factors up and you've got a problem for companies with debt outstanding, and the $1 trillion market for low-grade, risky bonds.

This trouble is not just limited to the commodity space. Mish estimates that the default rate for non-energy firms will creep up to 3.5% in 2016 up from just 1.5% currently.

"Higher frequency data suggest default stress is rising specifically in the media/ entertainment, consumer/service, retail and aerospace/ industrial sectors (as well as the non-bank financials)," wrote Mish.

As these defaults start to pile up, said Mish, long-term shifts in the credit markets could snowball and make the situation even worse.

Increased regulation, the holding of high yield debt by "less stable" investors such as mutual funds which are likely to unload the bonds quickly in the event of a drop, and the increased size of the low-quality leveraged loan market could all make the tidal wave even worse than in the past.


http://www.businessinsider.com.au/tsunami-about-to-hit-bond-market-2016-6


 

 

19.4 trillion dollars in debt - we have added 1.1 trillion dollars a year to the national debt under Obama

DEBT, FEDERAL, SPEND, AVERAGE, TOTAL, CREDIT, ECONOMIC, FUTURE, CHILDREN, PAY, YEARS, FED, LIABILITIES, ECONOMY, BUY, HOUSE, UNFUNDED, AMERICANS, DEFICIT, GOVERNMENT, DOLLAR, TRILLION, NATIONAL, FINANCIAL, WORLD, AMOUNT, INTEREST, LONG-TERM, SPENDING, U.S., YEAR, DOLLARS, MONEY, TRADE, SHORT-TERM, GRANDCHILDREN,


07.25.2016


Our economic infrastructure has been gutted at a pace that is staggering


In 2006, U.S. Senator Barack Obama's voice thundered across the Senate floor as he boldly declared that "increasing America's debt weakens us domestically and internationally. Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren."  That was one of the truest things that he ever said, but just a couple of years later he won the 2008 election and he turned his back on those principles.  As I write this article, the U.S. national debt is sitting at a grand total of $19,402,361,890,929.46.  But when Barack Obama first entered the White House, our federal government was only 10.6 trillion dollars in debt.  That means that we have added an average of 1.1 trillion dollars a year to the national debt under Obama, and we still have about six more months to go.

Even though Barack Obama is on track to be the first president in all of U.S. historyto not have a single year when the U.S. economy grew by 3 percent or better, many have still been mystified by the fact that the economy has been relatively stable in recent years.

But the explanation is rather simple, actually.  Anyone can live like a millionaire if the credit card companies will lend them enough money.  You could even do it yourself.  Just go out and apply for as many credit cards as possible and then spend money like there is no tomorrow.  In no time at all, you will be living the high life.

Of course many of you would immediately object that a day of reckoning would come eventually, and you would be right.  Just like for those that abuse credit cards, a financial day of reckoning is coming for America too.

In the United States today, our standard of living is being massively inflated by taking trillions of dollars of future consumption and moving it into the present.  The politicians love to do this because it makes them look good and they can take credit for an "economic recovery", but what we are doing to our children and our grandchildren is beyond criminal.

On average, we are stealing more than 100 million dollars from future generations of Americans every single hour of every single day.  We are complete and utter pigs, and yet most Americans don't see anything wrong with what we are doing.

At this point, our national debt is more than 30 times larger than it was just 40 years ago, and many (including myself) have argued that it is now mathematically impossible for the U.S. government to ever pay off all of this debt.

The only thing that we can do now is to keep the party going for as long as possible until the day of reckoning inevitably comes.

Under Obama, our national debt will come close to doubling.  What that means is that during Obama's eight years we will accumulate almost as much debt as we did under all of the other presidents in U.S. history combined.

Right now, the U.S. government is responsible for about a third of all the government debt in the entire world.  Fortunately the financial world continues to lend us gigantic mountains of money at ridiculously low interest rates, but if that were to ever change we would be in an enormous amount of trouble very rapidly.

For instance, if the average rate of interest on U.S. government debt simply returns to the long-term average, we would very quickly find ourselves spending more than a trillion dollars a year just in interest on the national debt.

And as the Baby Boomers age, our "unfunded liabilities" threaten to absolutely swamp us.  By the year 2025, it is being projected that "mandatory" federal spending on "unfunded liabilities" such as Social Security, Medicaid and Medicare plus interest on the national debt will exceed total federal revenue.  What that means is that we will spend every penny we bring in before a single dollar is spent on the military, homeland security, paying federal workers, building roads and bridges, etc.

In recent years the Federal Reserve has also had a "buy now, pay later" mentality.

While Obama has been in the White House, the size of the Fed balance sheet has grown by about two and a half trillion dollars.  The goal has been to artificially pump up the economy, but when the Federal Reserve creates money out of thin air it is actually a tax on all of us.  The purchasing power of every dollar that we will spend in the future has been diminished thanks to the Fed, but most Americans don't understand this.

What most Americans want is for someone to "fix things" in the short-term, and not much consideration is ever given to the long-term damage that is being done.

I know that the phrase "trillion dollars" is thrown around a lot these days, and to a lot of people it doesn't have a whole lot of meaning anymore.  But the truth is that it is an absolutely enormous amount of money.  In fact, if you went out right this moment and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

A final example of our "buy now, pay later" mentality can be seen in our ridiculously bloated trade deficit.  We consume far more than we produce as a nation, and we buy far more from the rest of the world than they buy from us.  As a result, tens of thousands of businesses and millions of good paying jobs have gone overseas, and many of our formerly great manufacturing cities are now vast industrial wastelands.  Our economic infrastructure has been gutted at a pace that is staggering, and yet most Americans still don't understand what has been done to them.

If you visit your typical "big box" retail store today, where is most of the stuff made?  Instinctively, most of you would answer "China", and that is not too far from the truth.

We buy far, far more stuff from China then they buy from us.  This makes them steadily wealthier, and it makes us steadily poorer.  Unfortunately, our trade deficit with China has gotten much, much worse while Barack Obama has been in the White House.

At the end of Barack Obama's first year in office, our yearly trade deficit with China was 226 billion dollars.  Last year, it was more than 367 billion dollars.

Are you starting to see a trend?

Our long-term economic and financial problems have greatly accelerated under Barack Obama, but our leaders feverishly work to make things look okay in the short-term and so most Americans don't notice what is happening.

Unfortunately, this Ponzi scheme cannot go on forever and a day of reckoning is coming.  And when it arrives, the pain that it is going to cause for ordinary Americans is going to be far greater than most of us would dare to imagine.


https://www.intellihub.com/19-4-trillion-dollars-in-debt-we-have-added-1-1-trillion-dollars-a-year-to-the-national-debt-under-obama/


 

 

Treasury To Run Out Of Cash By June - Riots Expected

CASH, SHUTDOWN, SUMMER, TREASURY, VOTE, STIMULUS, ARMY, UNREST, TRUMP, RIOTS, PROBLEM, BILLION, SERVICE, BOEHNER, MAGNITUDE, BANK, GOVERNMENT, FISCAL, CEILING, PRESIDENT, CRISES, SHOCK, JUNE, STOCKMAN, DEBT, RECESSION, OBAMA, CONGRESS, SOCIETY, 


BY IWB · FEBRUARY 26, 2017

by Sean Adl-Tabatabai


US Treasury expected to run out of cash by June, sparking fears of civil unrest

A former White House Budget Director has warned that the U.S. Treasury could run out of money by June 2017, sparking riots and civil unrest across America. 

According to an interview with David Stockman, a controversial deal made between former Speaker of the House John Boehner and former President Barack Obama in 2015, will result in the "mother of all debt ceiling crises," by the summer of 2017 which will see a giant "fiscal bloodbath" for Americans.

"I think what people are missing is this date, March 15th 2017. That's the day that this debt ceiling holiday that Obama and Boehner put together right before the last election in October of 2015.

That holiday expires. The debt ceiling will freeze in at $20 trillion. It will then be law. It will be a hard stop.

The Treasury will have roughly $200 billion in cash. We are burning cash at a $75 billion a month rate. By summer, they will be out of cash. Then we will be in the mother of all debt ceiling crises. Everything will grind to a halt. I think we will have a government shutdown. There will not be Obama Care repeal and replace.

There will be no tax cut. There will be no infrastructure stimulus. There will be just one giant fiscal bloodbath over a debt ceiling that has to be increased and no one wants to vote for."

Superstation95.com reports:

With about $200 Billion in cash on-hand, and with the Treasury burning through about $75 Billion a month, this means the United States government will run out of cash sometime in June.  Stockman says:

In a typical month we have 250 to 300 billion in revenue coming in… that will easily cover the debt service for a month… that will readily cover social security and other critical payments… but when it comes to paying grants to state and local governments, contractors, or the Army Corp of Engineers, or the Pentagon, or a whole range of other activities, if you don't have the cash you put the bills in the drawer…

I think that is what's going to shock the system… and it will scare the living bejeezus out of Wall Street and financial marketsbecause then you won't have a sudden clarification or resolution to the problem.. and that could go on for days and weeks.

This is going to be a maelstrom like we've never seen before and the markets are not even remotely prepared for this… Fundamentals don't matter anymore… nothing is being discounted… it's all raging robo-machines and day traders thinking that somebody is going to come to their rescue no matter how  absurd the bubble gets or how extended the whole system becomes.

Stockman claims the fall out will be fast and unprecedented in its scale.  He goes on to say:

There is going to be a recession… and there is going to be no stimulus left to bail it out… and neither Trump or the Wall Street gamblers even remotely understand.

I see [President Trump] as the great disruptor… I don't see him as someone who is going to bring about a solution… We have to have the system blow up first for all practical purposes… I think he does not yet understand the magnitude of the problem… the incorrigibility of what he's inherited.

…He doesn't realize that this problem he is inheriting is a thousand times greater than anything he ever imagined… this is a monster.

Everything leaks and we're learning in the Trump administration they're as leak-prone as any I have seen… so it's all going to leak out… and the stock market…the casino… is going to begin to realize the fact that there is no plan…there is no big fiscal stimulus… the whole system is heading into some kind of crash landing and that's going to change the manic delusions that are underway today.

While no one in Congress wants to vote to increase the debt ceiling, there really is no choice.

But Congress may have another agenda - getting rid of Trump.  And they may just be willing to allow this catastrophe to happen so they can blame it on Trump!

But what Congress may not bank on, is that Trump sees what's coming and may just start issuing LAYOFF Notices to vast swaths of the federal government BEFORE the cash runs out.

At that point, Trump will have done what is necessary, and blaming him won't work.

Then, too, let's just examine for a moment, what it would mean if Food Stamps (SNAP), Welfare, Section 8, and the like, all end in June.  By July, the savages will be on the rampage nationwide because their EBT Cards are useless!

But perhaps that's the plan?  Perhaps it is long overdue for a complete meltdown of American society in its present form?  From June, forward - after the bloodbath - only the strong would survive.  Maybe that's what some are looking to do?

Stay tuned, folks, this could get ugly.


http://investmentwatchblog.com/treasury-to-run-out-of-cash-by-june-riots-expected/


https://www.youtube.com/watch?v=7xgNncFHAng


 

 

The National Debt Conspiracy

DEBT, FUND, DUE, RISING, RATES, TRILLION, INTEREST, DOLLARS, YEAR, SECURITY, AMOUNT, HOLDINGS, ACCOUNTABILITY, FIGURES, INCREASE, FINANCIAL, NATIONAL, RATIO, FIGURE, SURPLUS, FUTURE, REPORT, ANNUAL, U.S., CONGRESS, MONEY, PERCENT, INTERNATIONAL, DEFICITS, SOCIAL, FOREIGN, SECURITIES, RESERVE, STATES, AUDIT, ECONOMIC, PERCENTAGE, BUDGET, UNITED, GOVERNMENT, FISCAL, PUBLIC, YEARS, INTRAGOVERNMENTAL, ISRAEL, FEDERAL, TAX, BILLION, GDP, CEILING, TREASURY, ISRAELI, POLICY, TOTAL, SPENDING, WORLD,

Is there a conspiracy to bury the USA in debt?

The estimated population of the United States is 310,481,671 so each citizen’s share of this debt is $46,023.88.

If you think that the National Debt of the USA does not concern you, you could not be more wrong.

http://live-counter.com/us-national-debt-clock/

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?  YouTube video:

https://www.youtube.com/watch?v=J8oLMS11Ht4

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?  other YouTube titles:


END OF THE EMPIRE: AMERICA DESTROYED WITHIN / DEATH BY BANK-ISM 

CENTURY OF ENSLAVEMENT: THE HISTORY OF THE FEDERAL RESERVE

AMAZING DOCUMENTARY ON CONTROLING MONEY, POWER, GOVERNMENT, EMPIRE

SHADOW GOVERNMENT WHO RULES AMERICA? 

DETROIT BANKRUPTCY DOCUMENTARY ON CRIME: GANGS, DRUG DEALERS, DECLINE OF THE ECONOMY

DOCUMENTARY THE LAST DAYS OF LEHMAN BROTHERS MORAL HAZARD 2008

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Trump: Federal Reserve Must Stop Ripping Off Americans

February 3, 2017

President Trump has put the Federal Reserve on notice for violating the new administration's America First policy, claiming the central bank has been operating illegally and ripping off Americans.

A warning letter, written by top Republicans and obtained by the Financial Times, accuses the Federal Reserve of burdening American businesses and workers with bad financial deals made with global central banks "without transparency, accountability, or the authority to do so".

The Federal Reserve's involvement in secret international banking forums dealing with financial regulation must cease and desist immediately, according to the letter.

"This is unacceptable," the letter states. "Accordingly, the Federal Reserve must cease all attempts to negotiate binding standards burdening American businesses until President Trump has had an opportunity to nominate and appoint officials that prioritize America's best interests."

FT reports:

Ralph Hamers, chief executive of Dutch bank ING, told the Financial Times that he feared the US could pull back from a global agreement on banking regulation, which has been delayed because of divisions on the Basel Committee on Banking Supervision.

"We don't know the position of the Americans any more," Mr Hamers said. "That does mean further uncertainty and uncertainty is never good, it holds back investment and restricts economic growth."

Mr Hamers was speaking after the emergence of a letter to Janet Yellen, the Fed chair, from Patrick McHenry, one of the top five Republicans in the House of Representatives.

The letter, dated January 31, warned that the US's "continued participation" in international forums such as Basel, the Financial Stability Board and the International Association of Insurance Supervisors would depend on meeting the Trump administration's objectives.

Mr McHenry added that such a step would probably involve "a comprehensive review of past agreements that unfairly penalised the American financial system in areas as varied as bank capital, insurance, derivatives, systemic risk and asset management".

Republicans are also pushing legislation to restrict the Fed's freedom of manoeuvre. During the election, Donald Trump accused Ms Yellen of keeping rates low at the behest of former president Barack Obama.

"This is a multi-pronged attack on the Fed's independence," said Diane Swonk of DS Economics.

In a further marked shift of approach from the Obama administration, Mr Trump is also due on Friday take his first steps towards undoing parts of the Dodd-Frank reformsthat reshaped US banking in the aftermath of the financial crisis.

Mr McHenry wrote: "Despite the clear message delivered by President Donald Trump in prioritising America's interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands."

He said the Fed was doing so "without transparency, accountability, or the authority to do so". He added: "This is unacceptable."

Mr McHenry has clout because he is vice-chairman of the House financial services committee. But whether the White House agrees with him on the issue is yet to be seen.

Steven Mnuchin, Mr Trump's designated Treasury secretary, is still awaiting confirmation by the full Senate.

Wayne Abernathy, a senior official at the American Bankers Association, a lobby group, welcomed Mr McHenry's intervention. "This whole international process is far too opaque and needs more public scrutiny and visibility," he said.

As examples of problematic Basel regulations, Mr Abernathy cited rules that penalise banks for having heavy exposure to mortgage debt collection businesses, and liquidity rules that do not recognise that Americans tend to see banks as havens in times during crises.

Mr McHenry wrote: "The Federal Reserve must cease all attempts to negotiate binding standards burdening American business until President Trump has an opportunity to nominate and appoint officials that prioritise America's best interests."

Ms Yellen has said she plans to serve out the rest of her term, which expires in 2018. The Fed said the central bank had received the letter and planned to respond.


 

 

Is It Just A Coincidence That The Dow Has Hit 20,000 At The Same Time The National Debt Is Reaching $20 Trillion?


January 25th, 2017


The Dow Jones Industrial Average provides us with some pretty strong evidence that our "stock market boom" has been fueled by debt.  On Wednesday, the Dow crossed the 20,000 mark for the first time ever, and this comes at a time when the U.S. national debt is right on the verge of hitting 20 trillion dollars.  Is this just a coincidence?  As you will see, there has been a very close correlation between the national debt and the Dow Jones Industrial Average for a very long time.

For example, when Ronald Reagan took office in 1991, the U.S. national debt had just hit 994 billion dollars and the Dow was sitting at 951.  And as you can see from this chart by Matterhorn.gold via David Stockman, roughly that same ratio has held true throughout subsequent presidential administrations…

Dow Fueled By Debt

During the Clinton years the Dow raced out ahead of the national debt, but an "adjustment" during the Bush years brought things back into line.

The cold hard truth is that we have been living way above our means for decades.  Our "prosperity" has been fueled by the greatest debt binge in the history of the world, and we are greatly fooling ourselves if we think otherwise.

We would never have gotten to 20,000 on the Dow if Barack Obama and Congress had not gotten us into an extra 9.3 trillion dollars of debt over the past eight years.

Unfortunately, most people do not understand this, and the mainstream media is treating "Dow 20,000? as if it is some sort of great historical achievement…

The average began tracking the most powerful corporate stocks in 1896, and has served as a broad measure of the market's health through 22 presidents, 22 recessions, a Great Depression, at least two crashes and innumerable rallies, corrections, bull and bear markets. The blue chip reading finally cracked the 20,000 benchmark for the first time early Wednesday.

During the current bull market, the second longest in history, the Dow has more than tripled since March 2009.

Since Donald Trump's surprise election victory, the Dow has now climbed by approximately 2150 points.

And it took just 64 calendar days for the Dow to go from 19,000 to 20,000.  That is an astounding pace, and financial markets around the rest of the planet are doing very well right now too.  In fact, global stocks rose to a 19 month high on Wednesday.

So where do we go from here?

Well, if Donald Trump wants to see Dow 30,000 during his presidency, then history tells us that he needs to take us to 30 trillion dollars in debt.

Of course that would be absolute insanity even if it was somehow possible.  Each additional dollar of debt destroys the future of our country just a little bit more, and at some point this colossal bubble is going to burst.

But you can't tell most of the "financial experts" these things.  Most of them simply believe that the "market always goes higher over time"…

The "market always goes higher over time," Todd Morgan, chairman of Bel Air Investment Advisors. "The lesson here is that through wars, recessions, elections, impeachments, financial crises, and on and on, investing for the long term in high-quality stocks is the key to building wealth. … We are telling our clients that you can't time the market. Think long term. Stay the course. We expect the market to see Dow 30,000 in my lifetime, and for my grandchildren to see Dow 50,000 in their lifetime."

My hope is that the market will continue to go up.  But nobody can deny that valuations are already at absurdly high levels, and the only way that this party can keep going is to continue to fuel it with more and more debt.

But for the moment, there is a tremendous amount of optimism out there, and most experts expect the Dow to continue to set new highs.  In fact, CNBC says that whenever the Dow crosses a new threshold like this it usually means good things for investors…

CNBC looked at market data from the past 30 years and zeroed in on the times when the Dow has crossed levels like 2,000, 3,000, 4,000 … all the way up to the 19,000 level it hit in November. At those times, investors can typically expect traders to push it up even higher, according to data from Kensho. Not only does the Dow go up, but it outperforms the S&P 500 index along the way.

But as USA Today has explained, not all Americans are benefiting from this stock market rally…

The breakthrough came just four trading days into Trump's presidency, a whirlwind in which the billionaire has reaffirmed his commitment to strengthen the U.S. economy and create more jobs and higher wages for workers. Still, nearly half of Americans have not benefited from the so-called "Trump Rally," which has generated more than $2.2 trillion in paper gains for the Wilshire 5000 Total Stock Index since Election Day. The reason: only 52% of Americans polled by Gallup last April said they "have money invested in stocks" - the lowest stock ownership rate in the 19 years Gallup has tracked the data and down sharply from 65% in 2007 before the financial crisis.

Hopefully the good times will continue to roll for as long as possible.

But there is no possible way that they can keep going indefinitely.

For decades, our debt has been growing much faster than our GDP has.  By definition, this is an unsustainable situation.  At some point we will have accumulated so much debt that our financial system will no longer be able to hold up under the strain.

Many were convinced that we would reach that point before the U.S. national debt hit 20 trillion dollars, and yet here we are.

So how much higher can we go before the bubble bursts?

That is a very good question, and I don't know if anyone has the right answer.

But for President Trump, this is going to present him with quite a dilemma.

Either he can keep the debt party going for as long as possible, or he can try to get us to take some tough financial medicine right now.

If an attempt is made to deal with our debt problems now, we will experience severe economic pain almost immediately.

But if the can keeps being kicked down the road, our long-term prognosis is just going to keep getting worse and worse.

And if we try to delay the inevitable indefinitely, at some point the laws of economics are going to make our hard choices for us.

So let us celebrate "Dow 20,000?, but let us also understand that it is far more likely that we will see "Dow 10,000? again before we ever see "Dow 30,000?.

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Yes.  I am 99% positive this will happen, if they can make it happen.   It is time for the next crash, and the bankers to strip the remaining wealth of the little people and buy all the assets cheap.

How do we protect ourselves?

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