The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Monday, October 17, 2016.
It's a record; the global debt colossus is now in excess of $152 trillion. And derivatives monster - you better be sitting down for this one - because it's grown to in excess of a staggering $2 quadrillion. There's no putting this into perspective anymore other than characterizing the situation as a high altitude ballooning experiment that has spiraled out of control - dangerously out of control. Don't try and tell this to the globalists of the world however; they want to borrow more in perpetuity (see example here), and they hope you are sufficiently distracted not to notice (see example here). What's more, with Trump on the rise, looking like he will get the populist vote, the globalists are turning up the volume while they still can via propaganda, bad policy initiatives, and trickery - making their current make work (debt) program (and distraction) the most dangerous ever undertaken (in desperation) - the manufacture of World War III (WWIII). (i.e. the Dems will never follow through.)
Visions of sugar cookies are dancing in neocons heads on this prospect - after all - it's almost Christmas right.
And if that doesn't work to scare the plebs into voting for Hillary, the status quo will just have to blame Putin if the election doesn't turn out right, which is why they demonize him, every chance they get. No doubt they will continue this ploy. The question is 'would they get away with it?' Because calling the election a fraud on this basis and instituting martial law would not go over well - big time. This is big idea behind keeping non-internal polls close, so when the deep state attempts to steel the election from Trump via fraud (they will play the Electoral College card again), it will look plausible esthetically / logistically in the mainstream. Because if the true popular vote was allowed to be reflected in the poles today - Trump would have his landslide (not just a marginal lead) - where he would get the 'swing vote' at the end. A surprisingly large percentage of voters are incredibly insecure social creatures that need to be on the 'winning team' no matter who they are - believe it or not.
This is of course part and parcel of the same social dynamic that builds bubbles. The Fedsters enable them, and the crazies do the rest. If present margin debt levels are any indication, being at all-time highs, the enabling bubble (of the other [public] bubbles), the larger debt bubble is primed for a popping, coincident with the US election cycle. So no matter who wins, Trump or Clinton, if this assessment is correct, it won't matter who is in the White House, because the damage has already been done. The debt needs to be unwound at some point, which looks to be dead ahead if interest rates keep rising in earnest, a likelihood not going un-noticed by the chief bubble blowers. On this basis, the future of the stock market bull appears perilous, with bubble dynamics here well into The Twilight Zone. No worries though, because the status quo has your back - honest - that's why 7 of 10 Americans have less than $1000 in savings.
It's Houdini himself at work ladies and gentlemen, saying one thing to distract a gullible public, all the while still serving their masters in the grandest high altitude ballooning experiment ever. And if this level of distraction doesn't work, they just turn the screws on the 'Wag The Dog' routine, which unfortunately might involve WWIII this time around - for reals - no really - this is not just Hollywood fiction. The ultimatums are being thrown around now by both the US and Russians. Thing is, while American's think everything is a big joke, and you were put on this earth to be exploited by them because they are superior, the Russians never joke about such things - so it should get interesting at a minimum, if not lethal by accident. But hey - nobody would dare shoot back at American's right? They'll float one of their aircraft carrier groups your way and bomb the hell out of you. Thing is, with the state of Russian missile technology today, air craft carriers are nothing more than large floating targets - a reality know all too well to US intelligence. (i.e. again, why the manufacture of WWIII directly in front of the election is just more Wag The Dog.)
So you have to wonder what's rally going on with all this nuclear war talk - no? Is this just more Wag The Dog on bad drugs - or do American elitists intend to take everybody down with them? It's no coincidence all this war talk is happening right in front of the election, I can assure you. The idea is not just distraction, but to scare the bejesus out of people so they will do something stupid, like vote for Hillary because she will save them. This is the purpose of the mainstream narrative accusing Trump of being in cahoots with Putin / Russia. It's an alienation technique - who would vote for an alien - right? Of course it's 'just fine' for freshly landed aliens to vote (numerous times) in America, but that helps the deep state, so a bought and paid for mainstream media (MSM) is mum on this subject. So it's a good thing the public is catching on to just how corrupt these characters are, which is destroying not just their own credibility, but also that of the status quo at large. What's more, this is also having a permanent effect on culture, the markets, etc. (See Figure 1)
One possible unexpected result of a popping of the larger debt bubble could be continued pressure on the precious metals complex, where not only do they have more 'natural pressures' such as the above working on them, but man made as well. Above we see that gold is at an elevated level against commodities in general, which means it's at risk of bubble dynamics. Of course if central banks continue to turn the screws in money creation this condition could change rapidly, where a close over $1500 would be viewed as 'constructive' on this basis, signaling a continuation of present bubble economies. In this regard it should be noted the Gold / CRB Ratio is presently testing important Fibonacci related support, which if successful, could propel this relationship to the Fibonacci resonance related target denoted on the monthly plot above. It's important to note odds favor such a result, with the Fed rolling out increasingly inflationary policy, policy that would likely bring on stagflation as process unfolds, and commodity prices take off. It should be noted this is the message in the chart below, the monthly Dow / CRB Ratio plot. (See Figure 2)
Concerning the above, it's important to note that while one more impulse higher is possible, meaning stocks can outperform commodities a bit more, a meaningful reversal should be expected sooner rather than later, signaling an overturn in the stock market's dominance, and quite possibly absolute gains. This is the picture that supports stagflation possibilities in no uncertain terms, the view the Fed will continue to stay ahead of the curve in bubble maintenance, meaning more desperate means of QE, such as helicopter money (HM) will be employed. As pointed out previously, if HM is employed by central planners, it would be a 'last resort' because this would likely unleash money multipliers and hyperinflationary fears as increasing money velocity would send general price levels through the roof, up hundreds of percentage points in a short period of time, making business conditions increasingly difficult, and eventually impossible - just ask Venezuela. This is why the TNX triggered a buy signal last week in anticipation of such an outcome. (See Figure 3)
Technical Note: The Dow / XAU Ratio (see above) might need to correct back up more than the originally anticipated (38.2%), possibly even 100%, or thereabouts. (i.e. will the bottoming pattern be an ending diagonal?) Because in the initial phase of the process, rising interest rates will devastate all things equity for a period of time - usually a year or so.
So precious metal shares might need to correct for a while longer with the larger equity complex due to wholesale de-leveraging (stock market margin contraction), with margin levels currently at all-time highs. That's the way it played out the last two times bursting bubbles of this magnitude had to be digested in the US economy - in the tech wreck of 2000 (see here) and derivatives / subprime meltdown of 2008. This time, it will be much worse you should know, because it will be the big one coming unglued, the bond bubble, which will take everything else with it, as ultimately interest rates rise dramatically in an attempt to stop the dollar($) from imploding. This will be devastating to over-indebted American's already suffering the slings and arrows of outrageous fortune, with the big question being do we see irreversible collapse this time around? We are of course already seeing this not only on the periphery, but also now in core countries, with the US no exception. All we need now is for China's debt bubble to burst, and it would be all over.
Because if you didn't know, Chinese central planners have already been stepping up efforts to stay ahead of the curve - leaving them few options now.
Looks like the Clinton scandals are finally coming home to roost this week. Should be interesting - no?
See you next time.