Everything Will Grind to a Halt in 2017
Zen Notes, 20170228
- On March 15, 2017 the debt ceiling freezes.
- Donald Trump has a monster debt problem and there will be no Fed bail out.
- Trump will hold the money reins.
- The 300 trillion dollar global markets will seek safety in the only hard currency left - GOLD.
The Obama Debt Ceiling Holiday Expires
Greg Hunter talks with David A. Stockman, former white house budget director in the Reagan administration about his new book - Trumped.
On March 15, 2017 the Obama Debt Ceiling Holiday expires and the hard debt ceiling of twenty trillion becomes law. The treasury will have $200 billion in the coffers and burning it at $75 billion per month.
The US summer will be a bloodbath with no magic bullet, no knight in shining armor coming to the rescue, no booming recovery, no Fed stimulus passing the baton.
Look out for a 20% correction, there will be a recession, there will be a greater market depression than 1987.
The Fed money printers will be quiet so the interest rates have to rise.
Donald Trump is not one to roll over to whatever the Hill demands. When the Treasury runs out of cash and the debt ceiling has been reached, "the president has authority to allocate spending".
In the past if you don't have the cash you put the bills in the drawer and a new bill is passed in the wee hours while the ceiling is raised. No more!
Time for uncertainty, a maelstrom and the markets are not prepared. The Stock Market Casino will learn there is no handout and is headed for a crash landing.
Trump has been thumping "we're going to deal with this debt" and he's the great disruptor, we need things to blow up first. He has inherited a problem 1000 times greater than anything he could have imagined.
- he won't cut the trillion per year social security?
- he won't touch the $600 billion per year medicare?
- or the $185 billion per year on Veterans?
Oh, cut the arts you say. That will save an hour of Fed spending, $400 million...
Trump is in for a harsh education.
The big correction will be in the $62 trillion of outstanding debt in the country, $35 trillion tied up in stock value and that will spill over into the real economy. The silver lining of the phony recovery since 2008 is main street hasn't really recovered, there's not a big bubble of jobs, income and living standards left to pop.
The strongest recovery has been in the financial markets and that's where the hurt will happen.
The gold floor is building because some people realise the Fed is out of powder and governments around the world are close to bankruptcy. That will trigger a reset in the value of assets.
The central banks said it'll all get sorted in the end but it's not. They failed completely.
The only monetary asset left is gold.
Gold is a tiny market compared to the global $300 trillion market so it won't take much of a shift in margins to cause gold to soar. Be patient and be long gold.
Brought to you by Michael McDonald, founder and editor of Zen Notes.