By Julien Backhaus – Wealth Protection Today (Germany) –
You may have asked yourself frequently in the past few months why the financial markets react differently to important events than predicted by experts. For example, after the election of Donald Trump or the Italians’ “No” to change the constitution.In both cases, a dramatic stock market crash was expected.
And what happened after commercial opening? The courses shot up unexpectedly. I do not know how you’re doing it, but many people I know are rubbing their eyes, wondering what’s going on.The answer is relatively simple. Behind them lie the powerful central banks. Above all, the European Central Bank (ECB) and its monetary policy.
There was once a time, ladies and gentlemen, and many can still remember, there was economy still economy. By this I mean that developments and the subsequent reactions were still comprehensible. Everything followed relatively clear and logical laws. In the run-up to the US labor market data, which are published every last Friday of the month at 14:30 local time, one knew exactly that with the number X this and with the number Y, that happens. And that’s exactly how the reactions fell out. Prices were generated by clear offers and demands. Exchange rates were assessed using key ratios.
The central banks control the financial system
This is all over since the Lehman collapse and the big financial crisis. In 2008, the global financial system was pushing forward.
Since then, the system has been directed by the major central banks. Keeping alive and manipulating. For many years, central banks have been investing heavily in the financial markets. Pumping trillions into the money cycle.
They are implementing measures which would have been considered impossible. Buy bonds, scrap papers. Flood everything that has fallen into a skew and even try to divert money streams.Market players are now stubborn only on the policies of central banks. Hardly anyone is interested in hard facts.
Many even follow a perverse idea: the worse the news, the better it is for my depot. After all, the banknotes use anyway. The stock market rejoices afterwards and the prices continue to rise.Forecasts and analyzes have actually become superfluous.
Above all, the big sign hangs with bold letters: “THE EMERGENCY BANK MUST BE RIGHT!”.
The chaos will soon no longer be controllable
In fact, the question is justified, what can the markets at present still out of date? The stock exchanges are as stable as they are for a long time. The bulls, the stock market optimists, have the scepter firmly in their hands.
The banknotes still have the system under control. This is likely to change soon!
The reason for this is the very existence of many states, the break-up of trade zones and continents. Combined with protectionist measures and a dramatically rising new borrowing.
Donald Trump wants to cut himself off, terminate trade contracts, stimulate the economy and push the new indebtedness further massive. England is leaving the EU. In order to cushion the consequences, new debts will be absorbed. In many other countries, governments are relying on the harshest austerity, because the population is on the barricades.
These foreclosure tendencies and rising new borrowings will fuel inflation dramatically.For the central banks and for the financial system this is a ticking time bomb which soon explodes.
Rising interest rates as a weapon against inflation
Sooner or later, the central banks will be forced to raise interest rates. Probably even clear.Something we’ve seen since the Trump victory in the US. The interest rate has already risen there.
However, the global economic system can not easily handle much higher interest rates.Neither states nor companies, nor private individuals. Debt has reached a level at which interest rates must remain low! No matter how!
The central banks will soon be unable to control the debt chaos. This sets in motion a spiral which suddenly turns so fast that it can no longer be controlled. A vicious circle.
The global economy is already in a phase of instability and major imbalances. The next five years could be much more unpleasant than the past.
For you as an investor and for your assets, this means: secure yourself and prepare yourself.Otherwise you will be hit hard by the turmoil. Harder than in the days of Lehman.