The Coming $10 Trillion Loss in Paper Wealth

By FamCore at ATS
This article is somewhat lengthy, and describes how currency flows through the economy while things are produced and consumed. It talks about how the Fed’s issuing of our currency is a liability to them, and how quantitative easing works. It discusses the stock market, and how quantitative easing has helped drive up the price of stocks making it appear that the economy is doing better (not even bringing up the HIGHLY manipulated unemployment rates which also have the effect of making the economy appear to be in recovery – but if interested you can see this thread in which I also discussed how these numbers are highly, highly exaggerated Economic Chaos and How They’re Lying)

On to the article:

Yield-seeking speculation promoted by the Fed’s zero interest rate policy has done two things: On the real side of the economy, this policy has discouraged saving, while channeling what saving that does occur into increasingly speculative areas of the economy – witness the enormous issuance of junk debt and leveraged loans to already highly-indebted borrowers in recent years, as investors clamored for a “pickup” in yield over safer investments.

…That’s really the main effect QE has – to encourage yield-seeking speculation that drives up the prices of risky securities, but without having any material effect on the real economy or the underlying cash flows that those securities will deliver over time.

To cut to the chase…

At about $23 trillion in U.S. non-financial equity market capitalization, and over $100 trillion in total U.S. private net worth, a standard, run-of-the mill bear market decline in stocks on the order of 30% would likely be associated with total paper losses in the private sector on the order of $10 trillion.

When all is said in done, the impending drop in the stock market is going to hurt the private sector more than many realize.

This article has a LOT of information, and it took me awhile to go through it but essentially the unrealistic expectations of the Fed and Wall Street are once again going to result in a major market shift which we really don’t have a lot of control over at this point. Our representatives, private banks and Wall Street have sold out the U.S. economy and the “American Dream” is becoming less and less attainable. Their greed and negligence will have a negative impact on generations to come.

Hussman Funds Article


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