by Gregory Mannarino, TradersChoice.net
On May 16, 2020, the Trends Journal published my article, “INFLATE OR DIE.”
In the article, I outlined a situation unfolding at the time, and I also made it known that the Federal Reserve has one primary goal: TO OWN IT ALL.
Since the article was published ten months ago, everything I forecast has come to be. Moreover, the mechanism of “inflate or die,” which is being utilized by central banks around the world, continues to expand exponentially.
Just this past week, the U.S. stock market again hit new, record highs. I foresaw this as well, as I noted numerous times in other articles I’ve written for the Trends Journal. Also, the forecast in my articles was that cryptocurrencies such as Bitcoin, which just broke over $60,000 this past weekend, would continue to gain in value.
Regarding the Federal Reserve’s balance sheet, since I wrote “INFLATE OR DIE” last May, it is now a massive 75 percent larger.
Also outlined in my articles for the Trends Journal is that as long as the Fed’s balance sheet continues to inflate, so will the stock market. The “inflate or die” mechanism being used by the Fed, which is dictating the ever-inflating stock market bubble, will continue.
Today, stock prices have zero bearing on reality; there is no real price discovery mechanism whatsoever. Ever-increasing and epic price distortions continue to manifest themselves as a direct result of “inflate or die” across the entire spectrum of asset prices. These distortions are soon to get much worse.
In the United States, debts and deficits are hyper-ballooning. Where is all of this cash coming from to fill the gap? It is being funded directly by the Federal Reserve, which has, in the literal sense, become the lender and buyer of last resort.
To understand the current situation of “inflate or die,” one must understand the end game. Since the establishment of the Federal Reserve System in 1913, allowing private banks to take over the monetary system, the single-minded, unrelenting goal of the Federal Reserve was to one day own it all – to be the lender and buyer of last resort.
In my 9 March article, “THE FED: INFLATE BY ALL MEANS NECESSARY,” I outlined the next step the Federal Reserve would use to bring about more influence over the markets, and that is Yield Curve Control.
For the Federal Reserve and the stock market, YCC is the logical next step. YCC will allow the Federal Reserve to manage the debt market to an extreme and inflate even more. As a result, the stock market will vault higher. The cost of YCC in real terms will be the accelerated loss of the purchasing power of the dollar, which will hit consumers hard. There is also another effect: a higher-priced-in-devalued-dollars stock market.
The simplest way to counter “inflate or die” is to take the opposite side of the equation and hold assets that are being deliberately manipulated to the downside. Assets that are “on sale” as a direct result of manipulation and the “risk on” cycle of the market.
A “risk on” cycle is when cash is making its way into the stock market being fostered by another mechanism. That “other mechanism” is a hyper-inflating debt market bubble. A “risk off” cycle is when cash leaves the stock market and seeks “safety.” A debt market meltdown will foster an epic risk-off cycle.
Today, the risk-on market cycle is being maintained via “inflate or die,” but the central bank end game is to at one point create a massive risk-off cycle, a deliberate crisis in the debt market.
More money is made when the markets fall faster than when they rise. As I have covered in past articles, markets are driven by two factors: Fear and Greed. Fear is stronger, and when everyone goes running for the door at the same time, stock prices will plummet. When this happens, the investment banks, hedge funds, and traders will simply short, or bet against asset prices, and all that accumulated cash flooding the stock market will be transferred from one person’s reality to another. The result: a total wipeout of the Middle Class.
It’s all by design… and it’s coming.
