Market manipulation and coming problems? Really? There are two major themes that many experts are now repeating. These themes are in regard to market manipulation and how precious metals are where you can store your wealth. In fact, Macroeconomic analyst Rob Kirby says that “We really do not have markets anymore. We have interventions, and we have massive fraud committed on a daily basis in what we call our capital markets. Our capital markets have become nothing more than a crime scene.” So maybe market manipulation isn’t the right phrase. Perhaps we should be talking about market elimination. Either way, this is a scary proposition because it means that when the inevitable finally occurs, it is going to smack everyone in the mouth. Few will really be ready for it. It’s reminiscent of the great stock market crash of 1929 because nobody wanted to see that coming either, even though there was evidence of market manipulation on that one too.
Market manipulation is real and actually fairly common. Unfortunately, what this could also mean, is that the stock market’s numbers are irrelevant in regard to my models. 19,000, 19,500, or even 20,000; it may not matter. If someone can manipulate the markets to this extent, then that really only provides us two different scenarios. 1) The market will not crash until the new economy is in place and your wealth will be systematically destroyed by inflation until the point that the old markets eat themselves, or 2) an inevitable crash will occur in the near future and they are just waiting for the best time to let it happen. And it WILL happen. As Rob Berger said recently in a piece in Forbes, “The stock market will crash in dramatic fashion.“
My models have shown many different things over the last two decades, merely beginning with rampant market manipulation. While not perfect, many of the conclusions have proved to be highly accurate. We were right about the rising threat of Russia and China and their expanding global power, and we were right about the international deals opposing the PetroDollar and more. But my models have also shown that a crash or correction should begin to show its face when the Dow hits between 19,000 and 19,500. As I write this, the Dow just closed at 19,549 and some are suggesting it could go much higher. More market manipulation?
Of course, this is alarming to me, but if there is market manipulation on a large scale, then there wouldn’t be much validity in their numbers anyway. I hold that my model is right, but that those behind the wheel are cheating. It’s hard to explain but some have asked why my model would show me such a number in the first place? It’s a good question, so let me simply state that it’s based on the number “100”. Let me explain.
Let’s say you have “100”. It could be anything really, but let’s say it’s dollars. That’s what you get every month. All your bills started out at 25 (trash, cable, water, etc). This left you with 75. But then you had to get groceries, clothes, transportation, etc. This sets you back another 25. This leaves you with 50. But then there were taxes, tags, healthcare, insurance, fees, tickets, and so on. This was another 25. Now you only have 25. Some of it is spent on fun and some of it you save. Let’s say you’re somewhat responsible and save 10 and blow the 15.
Then both taxes and inflation increased. Each category then increases by (we’ll say) 2.5 as a result. This means that your extra 25 is now just 17.5. The next year, another 2.5 are added to the bottom line. Now you only have 10. And let’s say that over the course of time, this trend continues. The following year, the same thing happens again. Now you only have 2.5 extra. So now what?
You have a little in savings, but really not much because you were only saving 10 at a time. So what do you do when the following year puts you in the red? What happens when your dollar decreases in value by 33%? You have to trim the fat. Cut out cable, maybe move to a cheaper place or get a better job. Some of you might roll the dice and take out student loans and go back to school to make yourselves more competitive in the job market. But no matter what you do, each year that 2.5 increase occurs and eats away at your bottom line. Eventually, it’s going to catch up with you no matter what you do. When that happens, it’s over. You lose and the house takes the table. Again, this is simplified but it is similar to what I am seeing on a larger scale.
So let’s think about this. The U-3 Unemployment was recently at 4.9%. Suddenly, it dropped dramatically to 4.3% having added a net total of 178,000 new jobs. Now, understand that there are 318 million people living in the United States. Does that math add up to you? It shouldn’t. The reason for the skew was because labor force participation continues to decline (now at 62.7%). It’s simple; Americans that are no longer looking for work (because they can’t find it or because they are too old for it) do not get counted as unemployed. When Americans leave the labor force, this decreases the unemployment rate—even if hiring does not improve – as we have just seen. So the numbers look good on paper, but the reality is much different. One need look no further than the help wanted ads to see how bad things have become.
I have talked about the Student Loan Debt Crisis, the credit card debt crisis, the auto sub-prime crisis and so on. I have talked about market manipulation on my podcasts for years. This is old news at this point. But this all helps to paint the bigger picture. I have talked about how 7 in 10 Americans have less than $1000 in savings or how more than half have no savings at all. That is simply alarming. I have even talked about the decline in retail sales – even holiday retail sales and how while more people are buying, they are buying for themselves and spending less. Sure, we are seeing stories about how great retail sales are, but I have even discussed the types of retail establishments doing well – deep discount stores – and how high-end retail is in a massive decline. Now think about that picture and then consider that according to the Commerce Department, exports are weakening while imports are surging. That means Americans are desperate for cheaper goods all the way around and our economy is hemorrhaging money to places outside of the economy that needs it most. Why? People are trimming the fat and running out of options. It really is that simple.
I’m sure that this varies across the country, but you don’t have to be an economics wiz to know that energy prices are increasing. Some of you have noticed that your mortgage or other loan payments are increasing too. At the same time, your wages may have increased a little bit, but somehow it doesn’t seem to cover the increase in your bills at home. If this picture doesn’t look bad enough, now we have to consider your essentials like food, clothing and so on. Inflation has been punching everyone in the face while the media sells it as a good thing. So what does that mean for you, the consumer?
Well, let me provide you the following example (as a consumer): A twelve-pack of Chunky Soup three months ago cost me $17.95 and it cost me $24.72 two days ago. That’s an increase of 37.72%; far above the 2.5 example, I was talking about earlier. Much of this has to do with the “trickle-down” effect of economics. If a supplier has an increase in cost, they pass it along to the next company who will do the same until it reaches you. Sometimes a company will add a little padding for the sake of being safe, which only adds to the end cost. We end up paying for it either way. Awesome.
But now imagine an entire basket of food with similar increases. Even if the average basket increased an average of only 10% when you factor in the additions of increased costs talked about already, any potential increase in wages was eaten up before I even got started. So what can I do? Put it on the credit card, dip into savings, or take out a loan. But these options will only further erode what little room I had to begin with, by either depleting my reserves (if available) or adding to the monthly obligation. Tick tock… tick tock. So now imagine this all on a bigger scale.
Am I right about the 19,000 to 19,500 crash? Maybe not, but probably only because everything is being manipulated at this point. And don’t get me wrong; it’s not that I’m not enjoying this brief boom. But the way I see it is that December 14th is a week away and the Fed will make their decisions about interest rates; we’ll get a better idea then. Furthermore, and as far as I’m concerned, markets have a way of correcting rallies like this. As CNN Money points out, “Even Herbert Hoover had a 13% market surge following his election in 1928 before the country plunged into the Great Depression.“
Some could also say that the trouble has already peaked out and that my number was right. Unfortunately, it presents itself different every time and we’ve never been in this boat before so it’s hard to say what it is going to look like. Regardless, what has happened as of late makes little sense and I can’t see it getting too much higher than what it is because as I have said before in regard to markets – what goes up does not stay up very long and any time there is a record high, a big correction is sure to follow. Former Assistant Secretary of Housing and Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration, Catherine Austin Fitts says “We are so overdue for a 25% correction.” I think she’s right but also I think that’s a modest percentage. I also agree with Economist John Williams who believes that the manipulators are running out of options. So as far as I’m concerned, it’s not a matter of “if” at this point; it’s a matter of when and how.
I am not alone in this thought.
“We’re forecasting the economy is not going to rebound with the economic proposals that are in place now. . . . The global situation has created an environment for financial panic. The financial panic conditions have been in place for quite a while.” Top trends researcher Gerald Celente
“The markets are all rigged. So, when you try to look at the markets in traditional ways such as price/earnings ratios, earnings growth, or sales growth or any kinds of things like this, they don’t know anything because the Federal Reserve has probably the largest trading desk in the world.” – Economic expert and journalist Dr. Paul Craig Roberts
“Capitalism is finished. I can’t tell you what the next system will be, but capitalism is over because the heart of capitalism is markets. Without markets, you cannot have a capitalistic system—it’s over.” – Market expert Jim Sinclair
“Unless the long term solvency of the U.S. Treasury bonds can be addressed, there’s no hope of avoiding a hyper-inflation and the complete demise of the dollar.” – Economist John Williams
“The country is 53% under-financed. So, the country is actually bankrupt right this minute. It’s not $206 trillion in the future that we owe, it’s $206 trillion today. It’s our credit card bill, and we’re broke.” – Boston University Economics Professor Laurence Kotlikoff
So what can you do? Either ignore the warning and hope everyone is wrong or prepare yourself. If you decide to prepare, you need to prepare accordingly. I often tell people to get an extra can of food each time you go to the store or get an extra piece of silver or gold if you can get your hands on it. Sure, it’s wise to get things to defend yourself and your family, but consider what you need each day and just pick up a little extra when you can. Each time you do, that provides you an extra day of security. Consider what Jim Sinclair says; “When it’s all said and done, there will be a catastrophic big bang, and then the only thing that will be left is your savings account.” But that savings account is not at your bank. Sinclair says “your savings account is going to be gold. It’s going to happen because all currencies, even the roaring dollar, are falling in terms of being a storehouse of value.”
Let me provide you something else to consider…
UPDATE… Market Watch (12/08/2016) – The stock market’s oldest indicator just flashed red – Wall Street’s jump this week has taken the S&P 500 to an eye-watering 27.9 times the corporate earnings of the past 10 years. That’s according to data compiled by Yale finance professor Robert Shiller and some simple math. This is about the same level that the market hit just before the crash of 1929 and is far higher than was seen in 2007, for example, or during the ill-fated boom of the late 1960s. The last time we saw the stock market this expensive on this measure was early in 2002 — just before stocks plummeted.