Sunday, April 3, 2016

The Illusion Continues, With Support By Central Bankers

As earnings continue to show weakness, central bankers continue their interventions to maintain the illusion of prosperity. Eventually, there will be another collapse. It will be historic!

And when will this happen? I don't know! My best guess is that it will occur during the next recession as the following happens:
1) Revenues to the US government collapse due to lay-offs and fewer people are working.
2) Demands for entitlement spending skyrocket, and more and more people require help with housing and food.

Of this I am certain:
1) The interest on US government debt is now about $1/2 trillion per year.
2) The US government will borrow an additional $1/2 trillion this fiscal year.
3) The Congressional Budget Office forecasts that by the end of the next president's first term of office, the US will be borrowing $1 trillion/year! That's about 1/4 of the budget!

This guarantees a debt crisis sometime in the next few years! It will collapse the bond market and the US Dollar. It will bring a depression that will dwarf the Great Depression of the 1930s. It will likely also bring horrible bloodshed as desperate people engage in desperate behavior to survive.