Has your stock portfolio just had a scary roller coaster dip? Feel like you might have a heart attack with last week's perpetual drops in the stock market?
Today, the S&P 500 was halted for the first time in history. The DOW saw the biggest intraday drop EVER. Stocks are falling all over the world. It's frightening stuff if you have a significant portion of your savings and investments in the stock market. Who is everyone blaming for this? China, of course. Especially mainstream media.
But China is not to blame. The Federal Reserve is to blame.
I have been talking for years about the Federal Reserve's policies of Quantitative Easing, "printing money and injecting it into our economy" for those who want an easier definition of Quantitative Easing.
I have explained how increasing prices on all products and services in the market stems from the Fed's printing of dollars over the decades.
I have explained how housing prices and other asset prices have increased, not because the value of those assets have increased, but because the Fed injects monopoly dollars printed out of thin air into the system and people put those new "dollars" into assets. That drives the cost of assets up.
It is an unsustainable system. It's a bubble because real dollars are not backing up the real value of these assets. Over-printed paper currency (like US dollars) are causing prices to increase. It's the principle of more dollars chasing the same amount of goods. In that scenario, manipulation of the markets is high, malinvestments are made, and the false values of assets (the bubble) will eventually burst because the economy cannot withstand all the inflation. Correction must occur. No one knows the exact timing that this will happen though.
The world should not be blaming China for this roller coaster ride in the stock market, they should be blaming the US Fed.
Peter Schiff, financial analyst, stockbroker, and author explains in this Zerohedge article how the DOW Jones is down about 11% year-to-date. The Chinese market is not even down 1% on the year. Sure, Chinese stocks are falling, but stocks are falling all over the world.
Schiff states, "Have no illusions, while most market observers are quick to blame the sell-off on China, this market was given life by the Fed, and the Fed is the only force that will keep it alive." After all, the Fed is who got the world hooked on 0% interest rates for years. Read this article to better understand how the Fed works and what they have been doing to cause this stock market decline.
Why listen to Peter Schiff? Over the last 15 years he has been right on all his predictions of how the markets and the economies are going to perform. He called the internet bubble crash. He called the 2008 housing bubble crash. He's written a book, The Real Crash, about a larger, more significant currency crash coming that hasn't arrived yet, but this could actually be the beginnings of it.
He's not clairvoyant. He understands the basic principles of economics that so many other economists choose to ignore. He doesn't know exact timing, but who on earth does?
If you read his writings and listen to his podcasts, he explains in great detail how he comes to his conclusions. And they make perfect sense. Plus Schiff offers great insightand advice on where to put your money to protect your wealth.
Fasten your seatbelt, this economic and money ride is going to get a lot scarier. Especially if your money is in the wrong assets.
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