By Gregory Mannarino, TradersChoice.net
Yes, the current monumental disconnect between the world economy and global equity/stock markets is today-off the Richter Scale. But that is just the tip of the iceberg.
What we have at present is a global stock market hyper-bubble on a truly EPIC scale. Furthermore, in my opinion, we may be near a breaking point. A breaking point not just in world stock markets, but the entire system.
Let’s start off with this.
The current distortions which exist across the entire spectrum of asset classes, including both commercial and residential real estate, are unlike anything which has ever been seen before. Make no mistake about it, the current multi-bubble financial system environment has been, and continues to be, driven directly by central banks who do in fact run the entire financial system.
Let’s delve a little more deeply into how the entire world financial system works.
What 99 percent of people have not even the slightest idea about is this: the world financial system operates in a vacuum, that is, it exists in a perpetual state of deficit. The system is, by design, insolvent. The insolvency of the entire system stems from the fact that the system itself is debt based. This perpetual debt/deficit state can be understood, possibly, by looking at the current debt ceiling situation.
The debt MUST expand exponentially every single day, which allows the system to operate. Today the national debt is over 31 trillion dollars and increasing every second of the day, 24 hours a day, 365 days of the year. Without this mechanism in place, the entire system would immediately cease to function, and a “credit freeze” would occur. (A credit freeze is a situation where every single transaction STOPS).
How many people even understand that they work, day after day, hopefully with weekends and holidays off, just to earn the right to BORROW their earnings from the Fed? That’s right. The money you “earn” via your hard labor, only gives you the right to borrow those bills from the issuing central bank. You don’t own that cash! It is owned by the issuing central bank and owed back to the issuing central bank plus interest.
But even that gets worse.
From the moment you get to borrow your wages, after working X number of hours to earn the right to borrow your wages, and it makes its way into your accounts, they begin to lose purchasing power. In today’s inflationary environment a dollar you earn begins to lose value the second you get it! And even that gets worse! Today people are carrying their highest debt burdens EVER! Moreover, by their numbers the inflation rate here in the U.S. is near 5 percent, with the average rate on credit cards sitting at over 17 percent.
Markets, the consumer, and yes, the entire financial system is being dismantled brick by brick by central planners/central banks, who are fulfilling their end game…to own it all. But for their end game to be realized, the current system must—by design—be broken.