Michael Pento says the world economy is actually in worse shape than we have been led to believe. China and the other emerging market have historic level of debt. The US corporate debt is at historic levels. Corporate profit is based on being able to roll over debt at historically low interest rates. What happens if interest rates rise. The housing market has also been floating on historically low interest rates. What happens it interest rates rise? Today’s housing market will crash.
We have had 2.5 stock buybacks since 2009. Stock buybacks lower the amount of outstanding stock shares. This artificially ra earning per share which causes the stock market to go up. But that increased earnings per share is not based on increased revenue.
FED cannot normalize interest rates without dire consequences. If they normailsed interest rates, with these historic levels of debt a major portion of the GDP will solely go to paying the interest. Michael believes we are heading into a serious recession.
Inflation comes when the markets lose faith in fiat currency. Michael believe thy may start rate hiking rates. They want to raise rates but they are also afraid to raise rates because of the historic levels of debt.
QE doesn’t work. So what will the FED do? Direct cash to people? Ban cash?
The every day person will see a repeat of 2008 only worse.
If you have any fixed income bond fund Michael advises get out as soon as possible.
You will see more unique actions that will shock many people. What happens in an economic depression? Look at history as a guide.
Get a copy of Michael Pento’s book [easyazon_link identifier=”1118457080″ locale=”US” tag=”profitnow-20″]The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market[/easyazon_link]
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Visit Michael Pento at PentoPort.com and find out more about Pento Portfolio Strategies. Go to the website to and find out how to subscribe to his weekly podcast.
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