Monday, 23 December 2013

The Catastrophic US Nightmare As 2013 Comes To An End

The same stock market carnage awaits investors just around the corner if the Fed decides it is time to end QE. Only this time the spike in rates won’t be caused by inflation but by the central bank itself. It doesn’t matter if inflation causes investors to fear that the Fed will raise rates (as it did 1987); or if borrowing costs increase due to the fact that the Fed has to stop its indiscriminate and massive manipulation of the yield curve -- the result will be the same.

The Doves at the helm of the Fed realize this and that is why they are extremely reluctant to end QE. Investors most likely have at least until March of next year before they have to worry about a genuine tapering of Fed asset purchases ... if at all; because the economy should take another turn downward due to the implementation of the Unaffordable Care Act and interest rates that have already increased. Nevertheless, it is essential to have a plan in place to preserve your assets and profit from the equity market crash in the unlikely event the Fed does go down the tapering road early next year.

If the Fed does not begin winding down QE by the early part of 2014, the markets will understand that the central bank will be in the debt monetization business for many years to come and risk assets will soar. On the other hand, if the Fed begins tapering assets within the next few months, the markets and economy will tumble. The global economy sits on a narrow ledge. On the one side there exists massive asset bubbles and inflation; and on the other side there lies a deflationary depression. It is now crunch time for the Fed to choose which way we fall.


- Source, Michael Pento via King World News, read more here:

Like this post? Subscribe to our free gold and silver newsletter