Wednesday, August 10, 2016

Easy money policies , Central Bankers prevail for now!

The central bankers policies encourage people to spend no save but the problem now is the policies are not working , people are not spending resulting in deflation and recession instead of growth and inflation . The easy money has created mountain of debts and inflated assets. The central bank has only one way out , they need to 'inflate all the debts away' . If the money printing experiment fail  , asset prices will ballooned to ridiculous levels, the greater fool stops buying, bubbles burst, and debts cannot be paid back, business fail, unemployment climb.

Actually deflation is not a big problem, rather central bank sponsored inflation promoting debts and asset bubbles post the greatest risk if confidence in central bankers policies fails.

In the end, if these central bankers cannot find a solution to the current economic malaise,  there have only one solution left and that is to let the BUST play out!

Lately these legendary  billionaire gurus have been making bearish bets and sell calls:

·         Stan Druckenmiller , May 4 “Get out of the stock market

·         George Soros (June 9, Wall Street Journal): sold stocks and bought Puts on S & P

·         Carl Icahn (June 9, CNBC): “Bubbles”

·         Jeff Gundlach (July 29 interview with Reuters): “Sell everything. Nothing here looks good.”

·         Bill Gross (in his August investment outlook): “I don’t like bonds; I don’t like most stocks”

These big guys have got it wrong so far but you don’t want to betting against these markets gurus for too long because they will eventually be right someday!

All posts and charts are for educational and illustration purposes only

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