Anytime there is a reason for the market to go down it goes up instead. That is not an accident and it is not a natural phenomenon. It is an income and asset transfer. Government is a business and its clients are those with enormous political power. There will be another huge rally next week when the Federal Reserve announces an interest rate increase.
Quantitative Easing, Federal Reserve policy and central planning in general have no other purpose than to pay corporate insiders as much as possible in the shortest period of time. How is this accomplished? Corporations borrow newly created money (virtually interest free) and buy their own stock. Earnings per share increase when the number of shares outstanding declines. Corporations also borrow to pay dividends.
Why is this bad for you? It isn’t if you own stock and sell before the whole system unravels. The only way corporations can borrow so cheaply is if savers are paid interest that is many times lower than what they would be entitled to in a free market. Savers are suckers, not for saving, but because they are not aware of how and how much they are being fleeced by government policy. As the suffering gets worse the motivation to understand its cause will become stronger. That is the most likely scenario.
In a certain amount of time, it will become impossible for corporations to show any earnings growth at all. As the general population becomes poorer the market for all goods and services will disappear.
Donald Trump has probably signaled that the stock market won’t be cut off. I expect the stock market to be strong for the rest of the year. The public is buying like a bunch of mad men now. There are not enough small investors to absorb all of the equities the elite need to sell but they will unload as much as possible into these naive weak hands.
How long can public opinion be managed? It is becoming more difficult to manage right now. Big time selling will begin as economic stress climbs the income ladder. We are at the point now where folks like medical doctors are starting to wonder why their lifestyles are getting harder to maintain. The misery needs to climb just a little higher to reach insiders of lower rung corporations. The breadth of the stock market is already weak. My advice to people is to sell every stock you own and hold cash. That is what I am doing.
James Quillian
The World’s Best Economist