David Stockman, who has for years been predicting an economic collapse worse than 2008, described the U.S. Federal Reserve as “being lost” and needs to resign ahead of its two-day meeting.
“I think the Fed is completely lost in its Keynesian Puzzle Palace,” the former head of the Office of Management and Budget told Bloomberg television on Monday. “This is 86 months since they went to zero interest rates.”
“You can’t have seven years of zero-cost money without creating huge distortions in the financial market,” he added.
The three major U.S. stock indexes had their worst-ever start to a year on record this year.
The Fed’s meeting begins on Tuesday and is slated to conclude with a policy decision on Wednesday, followed by a news conference with Fed Chairwoman Janet Yellen.
Most observers expect the U.S. central bank to leave monetary policy unchanged. And many economists expect just one interest rate increase is coming this year, likely in June.
Word of the day: Prepare! And do it the old fashion way, like our fore-fathers did it and succeed long before us, because what lies ahead of us will require all the help we can get. Watch this video and learn the 3 skills that ensured our ancestors survival in hard times of famine and war.
“What they’ve essentially done is create another huge bubble and they’re about ready to be repudiated because the bubble’s gonna collapse at the very time that we’re heading into the next recession,” the renowned businessman and politician said. “They didn’t abolish the business cycle. We’re long in the tooth. We’re seven years into this recovery. The world economy is deflating and shrinking.”
Trending articles:
- ”EMP Attack Will Claim 9 of 10 American Lives” Says Peter Vincent Pry, Executive Director Of The EMP Task Force On National And Homeland Security
- 12 Tips to Survive The Next Economic Collapse and The Beginning of the Next Great Depression
In 2009, the Fed launched an once-in-a-lifetime bond-buying program called quantitative easing (QE) on the heels of the 2008 financial crisis. It then began tapering the program in 2013 and officially ended it in late 2014.
Late last year, the Fed raised interest rates and officials projected another four rate increases for this year.
Economic collapse is imminent, the 70-year-old former politician asserted.
“Look at all the numbers: business sales are down five percent from their peak; inventories relative to sales are at recession levels; and capex orders are down 10% from a year and a half ago,” he noted.
“Everywhere you look in the U.S. economy, there is weakness, except for the phony numbers put out by the BOS [Bureau of Statistics],” he added.
Stockman said he believes that the world economy is being driven by “a cabal” of central banks that are “wrecking the financial system and driving the whole world economy to a huge crisis.”
“Look at the market today. It’s crazy to be trading where it is, given the earnings collapse that’s underway,” he said.
He noted that as of year-end 2015, profits stood at just $86.46 per S&P 500 share, which is down 18% from their peak of $106.00 a share, recorded in September 2014.
Stockman said this means the market is trading at 22 times its current earning: “That is crazy,” he said.
Stockman contends stock buybacks will not help the economy in the long run and a massive default loss is still going to happen.
Over the past five years, the Dow Jones Industrial Average has rallied 43%, the S&P 500 is up 54%, and the NASDAQ Composite has surged 74%.
Stockman said that if the Fed talked about negative interest rates seriously or publicly, “they’re inviting a political firestorm in the United States.”
He said the millions of retirees, “who have been savaged by this, and savers, will take up arms and they have a champion; I wouldn’t be surprised to see Donald Trump take up that issue the minute the Fed even begins to utter negative interest rates.”
“Prepare for the unknown by studying how others in the past have coped with the unforeseeable and the unpredictable.”
By Mourad Haroutunian, Profit Confidential
There are a handful of intriguing points at some point in this posting but I don’t determine if I see these center to heart. There exists some validity but Let me take hold opinion until I take a look at it further. Excellent write-up , thanks and we want a lot more! Combined with FeedBurner too