XJO - Bear Posts only (Factors which might cause the markets to fall), page-12056

I read that book 4 or 5 years ago, and everything he spoke of rings true to how global markets and finance have played out since 2015. I dont like his political views, but he is a very good economist imo.

His only mistake of course, was to try and predict a timeline. This is the mistake that all analysts have made, because not in their wildest dreams could they have believed the US Fed would blow out the balance sheet to 9 Trllion and drive interest rates to 0% levels.



Technically the market was due for a correction in 2016, aided by Brexit and Chinese decline , but those markets recovered, and the balance sheet remained at a relatively high $4Trillion..

The market needs a solid correction every 8 years on average to get back to sane levels. Many were calling this in 2016 and it never came. So consequently, the US's cavalier attotiude to balance sheet expansion now sees them at almost a level that they were at in 1935 trying to cure the ills of the 1928 crash.



The fact that the US economy requires so much stimulus whilst apparently the economy is "booming" tells you the narrative is fake. That is why Rikards has been saying for years we are in a type of depression already. The economy does not sustain itself, its on "QE drugs". That addiction has an expiry date where it will overdose and die.

With the US govt's credit rating now down a notch, and quite a few of their banks being downgraded, are they going to expand their balance sheet to $20 Trillion now? For one, they cant since since demand driven inflation overruled their attempt to force QE-spawned ultra low rates.

Somewhere there has to be a solid correction to wash out all this rubbish. So a lot of debt and asset values is going to be written down - trillions of dollars. It feels like it is now at hand, especially in the commericial property market, but as long as the US debt ceiling keeps getting raised I suppose they keep partying?