This post to my blog is based on my personal assumptions, beliefs, conclusions, and just plain common sense. I don’t have any proof for my following statements. Therefore any comments you have, either in support of this post or against it, are welcome.
The current stock market in the United States is at a very high level. But this high level of the stock market is not supported by the economy, which may be verging on a new recession, if the true facts were known. When I am speaking about the state of the economy, keep in mind that the official economic reports from the government tend to be false or misleading. I believe these reports purposely understate the unemployment rate and inflation rate, and overstate the growth of the economy.
If you want economic reports that are more reliable, you would have to go to the website maintained by John Williams at: www.shadowstats.com
The high level of the stock market is an artificial creation of The Powers That Be (TPTB). In this case, TPTB are the government and the central bank (the Federal Reserve System, also known as the Fed) of the United States. So let’s discuss this matter in more detail.
Why TPTB want a high stock market – President Obama wants to ensure the election of Hillary Clinton. So having a supposedly good stock market is one way of showing the people that the Democrats deserve to remain in power.
The Fed is getting desperate to prop up the US economy, which it sees as part of its mission. But since the Fed uses the worthless Keynesian economic theory to guide its policy, it now has very few options at its disposal. Propping up the stock market is one of its last desperate measures. They apparently believe that this will create a “feel good” atmosphere and will encourage people to start spending more.
How TPTB create a high stock market – The government has a large slush fund (the Economic Stabilization Fund) that it can use to intervene in the stock market whenever desired.
Since the Fed has a virtually unlimited supply of fiat money (unbacked paper currency) that it creates out of thin air, it can just keep pumping out this phony money to prop up the stock market. Actually, the Fed may use its cronies, large Wall Street firms, to actually purchase stocks or use other devices to maintain the stock prices.
Although the stocks of many of the smaller corporations are falling, by propping up the stocks of large corporations, TPTB can keep the stock indices at high levels. These stock indices are such things as the Dow Industrials and the S&P 500. These stock indices are what financial commentators and stock investors use to determine how the stock market is doing.
How ordinary people can avoid being hurt – Since the stock market has lost its connection to the real economy, it may suffer a serious decline at some point in the future. So anyone with a large position in the stock market may want to review their individual stocks and see if they are still a good investment.
Conclusion – I am not a stock adviser so I really can not tell you what to do in that area. Some people who have a history of making accurate economic predictions recommend investing in physical gold and silver. This could be in the form of either coins or bullion bars. They should be held in your physical possession, or under your control and ownership, in some type of safekeeping.
Some firms try to convince people to invest in what are known as “un-allocated” gold accounts. I think this type of investment should be avoided because you have no control or ownership over this, perhaps imaginary, asset.