Pretty good explanation, cut out the really schizo and wrong parts, if you want to read the full thing https://archive.ph/t0iws (Obviously WW3 didn’t kick off in Sept 2022.)
The typical American looks at the economic situation and cannot rectify in their own minds how the market says one thing and their eyes and ears sense another.
We see record homelessness, we see record drug deaths, we see moral degradation in our schools, we see accelerating decay in every single one of our cities, and we see a media and government that has been captured by fraud. We see a uni-party that exists to enrich itself and not the people. We see the largest wealth gap in our country’s history with no end in sight…
SO because of this we cannot understand how it is that the market is 20000pts higher than it was a decade ago. We cannot for the life of us see how housing prices are so absurdly high as the price of a SFH went from 190k to 370k in ten years. We cannot for the life of us understand how anyone pays the now $2,000 dollar AVERAGE in rent, or how anyone pays a utility and food bill triple what it was two years ago, and yet asset valuations NEVER seem to fall!
We see the homeless, we see the despair, we see the drug deaths, we see the absolute decay of Western society on every street corner in America and Europe. We see hollowed our rural towns and cities with no jobs or hope left.
We see ALL this and wonder… how are the prices so high? For 14years the Bears have seen with their own eyes and ears that the prices make absolutely ZERO sense. They have applied LOGIC to an ILLOGICAL moment in history so they are unable to understand how both things are possible. Because of this they perpetually tell you it’s all coming down because there’s no way this can last.
They’re wrong.
For the last 14years the world has been collapsing into the United States. This is the main #1 reason for the disconnect between the common American’s senses and their nation’s market prices.
It’s FOREIGN CAPITAL!
One can see the effect of this on real estate in say California, Oregon, or Washington – You can see first hand how many of the buyers of your inflated real estate are not from this country.
The SAME THING has been happening in our stock market. The difference is you can’t see that reality in stocks as you can with real estate in your own town.
This foreign capital has MUCH MUCH bigger issues to deal with than we do. We, as Americans, stay focused on our own nation and are unable to comprehend the crisis that has unfolded beyond our borders.
One example of this would be in 2014 when the European Central Bank made the unprecedented move of imposing NEGATIVE interest rates at the ECB. At various points over the last 8 years the EU members bond markets have yielded NEGATIVE. There were various points during 2019-2021 when the United States was the ONLY bond market in the Western World NOT yielding NEGATIVE.
The insanity of this cannot be understated!
A bond market exists to raise capital – you give me X and I give you Y yield in return after Z period of time. The concept is simple and has been used by governments throughout history to generate money. The citizens invest in the government and the government gives them a guaranteed rate of return. If the government needs money the YIELD RISES to make the bond more attractive. If times are good and the government doesnt need the money the YIELD stays low. That is how it’s suppose to work but once we embarked on QE4EVA we completely destroyed the function of the bond market itself.
Luckily for the USA we were never stupid enough to let yields actually go negative…
But what happens when you actually flip that yield negative like the ECB did? What happens when you literally start driving capital OUT of your trade union because your yields no longer make any logical sense to invest in?
You, as an individual, realize you’ve LOST your guaranteed rate of return with your nation’s bond markets so what do you do? Well you pivot towards American bonds still yielding SOMETHING! You see the average foreign investor understands the American markets are the most secure in the entire world – We’re protected by two oceans. Our border is practically impenetrable. Our currency has not been canceled in almost 160years. Our military might is unmatched. There’s no other industrialized nation in the world you can make these claims about. Not one. This is the real value of America.
The foreigner ends up more interested in protecting their capital in American Real Estate and stocks. The dividend yields in our stock market have become the NEW GUARANTEED RATE OF RETURN as people realize they’ll yield more in stock dividends than in bonds. There’s also a great risk of a debt default in the Western World and in that scenario you are 100% screwed if youre the bondholder. At least with the stocks you maintain ownership of something REAL. The bonds are just paper promises by a government you can’t sue.
So you pour your money into American markets… real estate, stocks, bonds, and yes, THE DOLLAR.
As a foreign investor it makes no difference to you what the standard of living for the average American is. It makes no difference to you their markets no longer reflect their own nations economic picture. Youre just protecting your own capital and how the average American is doing has no real bearing on your investment. All the aforementioned reasons regarding geography, military, and our currency don’t change regardless of how the American consumer is doing.
You don’t care about the average American. You just buy it when it dips and you hang on because you see the world collapsing into America’s markets and the dollar first.
Which brings me the dollar itself…
This process has been ongoing in the dollar as well for some time. It’s why Gold bugs cannot figure out how gold and silver will not take off in this environment.
When the ECB went negative the USDX (Dollar chart) was at 80. By 2018 the USDX was at 90. Today it appears it will close at 108 – the highest close for the dollar since the Summer of 2002.
Despite the record number of dollars printed over the last 10years it has made ZERO DIFFERENCE to the value of the dollar itself. In fact the dollar is UP 35% over the last 10 years!
Go ahead and read that back – THE DOLLAR IS UP 35% IN THE LAST 10 YEARS! Now ask yourself how many “The dollar is dying” articles have you read over the same time period? Every single one of them were DEAD WRONG. I have all the respect in the world for people like Peter Schiff because my introduction into markets was in 2008 with Ron Paul and getting into the Austrian school but what all of these people FAILED to realize is that our ability to EXPORT our dollars outside the border gave us the ability to keep printing without worry of a value collapse in the dollar itself.