Year to date, the U.S. dollar has lost over 8 percent of its value versus other major world currencies. And this is just the beginning. By design, I expect the dollar to continue its death spiral.
This past Friday, the U.S. stock market hit a trifecta of records: the Dow, the S&P 500, and the NASDAQ each hit all-time record new highs.
The fact that the stock market continues to go higher, hitting record high after record high, despite the grim reality that the U.S. economy is in literal collapse, should come as no surprise if you’ve been following my articles in the Trends Journal. I predicted this, and it’s happening.
I also forecasted the dollar meltdown right here in the Trends Journal. The “by design” phenomenon of the falling dollar is having a profound effect on the stock market. Understanding that it takes more weaker dollars, which are losing purchasing power, to buy anything should allow you to understand the illusion being created: the stock market is now priced in more deflated dollars.
The effect of deflated dollars in the market has created an inflated stock market priced in deflated dollars. Deflated dollars are also helping to cause another effect: the selling of treasuries. The U.S. 10-year note yield has gone up dramatically as of late, hitting 0.97 percent just this past Friday, and here, again, the effect on the stock market is simple: When capital leaves the debt market, it looks for places to go. The current “risk-on” environment drives capital that is leaving the debt market into the stock market, further inflating it.
The stock market is expecting, and will get, a massive influx of deflating dollars moving forward, and, again, the effect of this is simple: more record highs for the market as the economy melts down.
It is expected the Federal Reserve will continue to increase its asset purchases. The Fed makes these purchases with cash miraculously created out of thin air. Creating cash out of thin air and buying assets with it is precisely how the Fed’s balance sheet went from $4.1 trillion from this past March to $7.3 trillion today. During this period, the stock market has virtually gone straight up.
The Federal Reserve has one objective: to inflate its balance sheet and become the lender and buyer of last resort. The Fed’s objective allows it to fulfill its end game to BUY IT ALL with the dollar existing now in its current form.
The Federal Reserve has every intention of “phasing out” the dollar in its current form; to “inflate out of it.” Inflating out of the dollar in its current form is by design, making its way into a new dollar, which will be 100 percent digital and backed by nothing. Moreover, a new, yet further deflated digital dollar.
How do you like them apples?
by Gregory Mannarino, TradersChoice.net
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