Despite last week’s rally in stocks, the highs of mid-November remain the market’s high point. As I have been noting, my long-term, trend-following indicators remain negative.
The stock market highs of November have not yet been taken out and my long-term trend-following indicators continue to become more bearish. At this point, a “Santa” rally looks less likely especially given the Fed’s recent statements about accelerating the taper or slowing the rate of currency creation.
Historically speaking, this pattern of inflation followed by deflation repeats over and over again. If you’ve not already done so, take steps to protect yourself.
The Federal Reserve, the nation’s central bank controlled by private bankers, is now the buyer of last resort of US Government debt, and as such, the Fed has no choice but to continue to create currency further fueling the inflation.
No matter your political persuasion or leanings, we can all agree there is virtually no evidence that spending cuts are being seriously contemplated – quite the opposite is actually happening which is quite remarkable given the numbers.
Over the past dozen years or so, the Fed has created currency literally from thin air, a process known as quantitative easing, and has kept interest rates at artificially low levels.
The economic news continues to concern. Technically speaking, inflation is an expansion of the money supply while deflation is a contraction of the money supply. Since all currency presently is debt, when debt levels reach unsustainable levels, the money supply contracts.
The Federal Reserve announced a $15 billion per month taper and markets rallied. All markets rallied as noted in the databox above; stocks, bonds, and precious metals all moved higher.
Despite the rhetoric from the Washington politicians that the nation’s fiscal woes can be corrected by taxing the billionaires, simple, basic math proves this doesn’t come close to solving the problem.