SGM Metals: The 'Madoff Stock Bubble' is About to Pop, Are You Holding Real Wealth?

PALM BEACH GARDENS, Fla. - March 11, 2013 - PRLog -- Munknee.com reports: [ In our topsy-turvy world of government-in-wonderland economics, myths buttressed by phony statistics & smoke & mirrors is the rule. Reality does not seem to matter.

We live in a world manipulated by government interventions. Whether it be bailouts or liquidity, the rules of society have been altered:

   Lying about economic statistics is now acceptable.
   Fudging earnings reports to achieve a proper EPS pattern also is winked at.
   Billions of dollars can disappear (a la Jon Corzine) & not even be investigated.

The corruptness of the system is stifling but the biggest culprit is the Federal Reserve.

The Fed is increasing its balance sheet (& hence the base money supply) by a Trillion dollars per year. That money has to go somewhere. It can go into financial assets or real assets. Real assets are not increasing in supply or much in price. That suggests that the excess liquidity is going into financial assets up to this point. They too are reasonably constant in supply in the short-run so that increased demand (generated by funds looking for a place to go) drives up asset prices. That is exactly what is happening [&] major changes in P/E ratios are almost always correlated with changes in the rates of expansion in the money supply.

Given the economic outlook, there seems little reason for stock prices to be as high as they are. However, as John Maynard Keynes once observed (one of his true observations), markets can remain irrational longer than you can remain solvent. This market could be called a “Madoff Market” in the sense that it is a Ponzi scheme…[based,] not on the classic Ponzi scheme where exponential growth of new dupes is necessary to keep the scam going,…but on exponential money creation. Unlike a traditional Ponzi scheme…[however, it] is difficult to determine when it will end. There are no physical constraints like new buyers that must eventually fall short of what is needed. This one is dependent on paper & ink (more properly electrons these days) which are readily available in large quantities.

When one considers that the denominations which can be imprinted on the paper, the potential fuel for this Ponzi scheme might be considered infinite &, for a while, that may be true.

At some point, however, either politics or markets will terminate the fraud:

   either the political class will stop the Fed if the heat becomes too great (that is probably unlikely)
   or (and more probably) high inflation, possibly hyperinflation, makes the dollar increasingly less acceptable to merchants here & abroad…

& whether it is either a political shutdown or a market showdown, the end is the same — a Depression… ]

“The Madoff Market” is an investment bubble of ‘irrational exuberance’ fueled by endless money printing that will correct itself which will bring certain consequences beyond anything we have ever experienced. A highly respected official said “the US can never have a true financial crisis because it has the capacity to print endless money”! To me this seems like a suicidal & illogical concept that carries with it very real consequences that can & will change the world forever more. The problem is that the average American is unaware of the fact that the fed is a private banking cartel & has nothing to do with the federal govt., regardless of what its cunning title suggests. They also are unaware that the US foreign policies have for decades been abusive to many around the world that wouldn’t bend over & let US interests come into their third world countries & carve up their assets & resources in order to make their supranational corporation allies profits while giving the table scraps from this heist to the host nation. Rest assured these nations are so desperate to escape the abusive nature of the FED exporting USD inflation for decades to these countries that they would almost be willing to follow a worse option so they could ensure the defunding of the US foreign policy & get US interests out of their countries borders.

US banks got flooded with $50 TRILLION of newly printed money & were told under NO CIRCUMSTANCES lend this money to main street because that would create immediate inflation at WalMart. Instead they were given sweet heart deals where 1/2 of the money was handed back to the FED so they could redistribute wealth to the govt that lent it to them to begin with so the govt. could BORROW IT BACK at interest from the banks they bailed out! (banks make 85% of their income from lending to the public w/ a 5% interest rate markup, their profit margin stays intact w/ ZERO lending risks as they collect 5% on Tbills) The other 1/2 of the money then finds a home in the stock market because who wouldn’t go to the casino you control if you were loaded with trillions of risk free dollars? As this is being read, families across the nation are looking at their Feb. 401K & IRA statements & expecting to see their retirements back to the level they were before the housing crash. We all knew the DOW would get pushed back up to 14K but ONLY because buying $1 of stock now requires roughly $2 of devalued dollars which reflects a higher priced DOW index, not real growth or wealth. The Wall Street insiders know these families will be looking at this distortion more clearly now so they are dumping stock at record pace. Zerohedge.com is reporting alarming insider selling at well above 50/1! This is exactly what the insiders did in the months ahead of the housing crash of 2008! This avoided trillions in losses & made them tens of billions when they decided to come back into the markets & pick the carcasses like vultures of the average Joes portfolios.

Think maybe selling your stocks at an all time high might be a sound idea? Maybe you should consider yourself lucky for having got back a portion of your retirement monies as a result of the greatest bank heist in human history & maybe you should run? Think maybe it would be wise to move what you have recaptured into hard assets like gold & silver bullion that will not only hold value but also rise in value as the consequences of all the money printing we have witnessed thus far comes into focus? Stop being a sheep in the herd that’s being marched to the slaughterhouse & break away from the pack to do something for yourself for once. For those who are wisely taking whatever gains they have acquired & moving them into a store of wealth like gold & silver bullion, well played. For the sheep who are staying with the “DOW will keep going up indefinitely because the FED cant print money into infinity” BS let me assure you that the stock market will go baaaaaack down. There is no economy to support the DOW at these levels & the big boys have already run for cover, maybe you should too. By the way, the insiders who dumped their stocks have dove head long into the precious metals markets so don’t say you haven’t been warned.