Source: The Daily Reckoning
“In 2017, the financial world was filled with talk of synchronized sustainable growth in major economies for the first time since before the 2008 global financial crisis…Now that vision is in ashes. Synchronized global growth has turned into a synchronized global slowdown…Growth is also slowing in the U.S. The 2009–2018 recovery has already been the weakest recovery in U.S. history despite a few good quarters here and there… But the trend is pointing down. Since this April, we’ve seen growth of 4.2% (Q2), and 3.5% (Q3). This trend tends to confirm the view that 2018 growth was a “Trump bump” from the tax cuts that will not be repeated. And Q4 GDP will probably be lower than Q3…Global slowdowns of the type we’re seeing now are exacerbated by the escalating trade wars and a new Cold War between the U.S. and China. But while global growth may be slowing down, debt creation is not…The combination of slow or negative growth and unprecedented debt is a recipe for a new debt crisis, which could easily slide into another global financial crisis…But the problem is made worse by the Fed’s monetary tightening policies…It’s determined to stay on its course of raising rates…It continues to see strong growth…But these views are highly misleading…If another crisis happens, the Fed will cut rates back to zero. But it won’t be enough…The market sees this coming, but the Fed does not…Investors should prepare now for the inevitable crackup.”
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