“The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”
– Ludwig von Mises, Human Action
Crank Up the Printing Press
Fed rate cuts are coming. If you believe this will levitate your stock portfolio, you are in for a big disappointment.
The forthcoming collapse on Wall Street can be seen a country mile away. But only by those with their eyes open.
Extreme stock market valuations. Sky high prices. An AI bubble that is running out of greater fools. All the while, the economy is slipping into recession.
These factors, coupled with a behemoth government debt problem, are aligning for something much more than a run-of-the-mill bear market. By our estimation a 50 percent top to bottom decline in the S&P 500 will be the minimum. Practically speaking, if the stock market goes down by 50 percent, then up by 50 percent, you have not broken even. Continue reading