And so, two days after Oaktree founder Howard Marks told Bloomberg TV that “now is not a good time to be investing”, Greg Jensen, the co-CIO of Bridgewater, warned that his fund was cautious on stocks, describing them as “frothy” as “most of the world is long equity markets in pretty extreme situations”, and predicted that gold would soar to $2000 and higher because the Fed and other central banks would let inflation run hot for a while and “there will no longer be an attempt by any of the developed world’s major central banks to normalize interest rates. That’s a big deal.” Read More …
Opinion: I come across financial posts like this one several times each week. Many I ignore, but this one got my attention.
It’s not the $2000 gold prediction that got me so much, as the dollar losing reserve status. I have been warning about that for several years. When nations print new money the value of existing money depreciates taking more dollars to buy goods and services. The Federal Reserve began a massive money printing scheme called quantitative easing (QE) in order to try to prevent a depression.
It didn’t work.
In 2010 and again in 2011 more money was printed and the whole world breathed a sigh of relief as the great recession began to turn around. The problem is the $4,000,000,000,000 debt created by the money scheme is still not paid back, and now the same Fed has started a new round of money printing and experts are saying that the debt may never be paid back.
We have met the enemy and we are his.
The US dollar is the engine of the world. When the nations buy commodities like oil, wheat and soybeans, they first purchase dollars in the form of Treasury Bonds and notes. China for example has over $1 trillion of our debt. If the dollar were to lose reserve status, nations would have to sell dollars and purchase the new reserve currency causing interest rates in the US to skyrocket, equities to plummet, and the US economy, to come to a stop.
I really don’t think there is a way to avoid it. We will just keep kicking the proverbial can down the road until …