Do you sometimes feel like your world is upside down? Well it is.
With international monetary policies pumping money to finance debt not productivity, everyone in the world will be drinking the Kool-Aid but wondering when it will end and with what country.
The answer is China.
Everyone knows China is the last growth engine. So everyone is investing in the Chinese stock market. Even Chinese teenagers are investing in it.
But some major financial analysts are very, very concerned with China’s debt which is 3 times over an international threshold.
Analysts are also concerned with sudden spikes twice this year in the cost to borrow yuan.
http://www.marketwatch.com/story/jump-in-overnight-hibor-a-sign-of-yuan-in-tumult-2016-09-19
But soon the money will run out as Chinese debt peaks and a huge panic will cause the Chinese stock market to crash. That is why smart Chinese economists are buying up gold.
When the Chinese stock market crashes so will all International ETFs. There will be no growth countries to move to. All countries will be equal – equally bad.
The international oil companies will especially be hit hard. That is because the drop will cause a further drop in oil prices. Thus all highly leveraged oil companies will fold. That will create a tidal wave of unpaid debt that someone will have to forgive.
The result will be huge banks with only 4% in equity will fold. But this time the statement “too big to fail” will be ignored.
The Federal Reserve will take a lot of blame and will be totally revamped. Most of its new members will be economists found outside of Wall Street.
New innovative policies like the Kelley Monetary Policy Rule will be adopted.
https://michaelekelley.com/2015/03/27/the-kelley-monetary-policy-rule/
Finally investment in infrastructure will be given priority like the Civilian Conservative Corps. Like a Phoenix, the US economy will be reborn faster than most.
Michael E Kelley 