Thursday, October 25, 2018

Will Trump "Crash" The Economy? (Don’t Be Fooled!)

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Don't Be Fooled

The Trump Economy Is Just
As Disasterous As The
Obama Economy Was!

Whether you love him or hate him, there's no question President Trump has shaken things up.

However, despite the warnings of several financial analysts, the public seems to be euphoric over the economy since Trump took office.

While euphoria can keep things running for at time, hard economic truths will still prevail, no matter how enthusiastic the public is.

And the hard economic truths are the same today as they were when Obama was in office.

When the economy does finally collapse and the supply lines stop running, will you be safe and ready... or will your family starve?

All the signs are still there.

The economy is in trouble, and there's nothing President Trump can do about it.

If he wanted to save the economy he's about 20 years too late.

Lots of people have made the comparison between Trump and Reagan, but the economy was in a completely different place when Reagan took office.

Just look at this graph of the US Federal Funds Rate from the US Board of Governors:

You can see that in January of 1981, when Ronald Reagan took office, the Federal Fund rate was over 19%.

And in August of 2018, the rate was 1.91%.

From the time that Ronald reagan took office until today, the trend has been lower and lower interest rates. Lower rates leads to higher asset prices and a feeling of wealth without creating it.

In other words, the feeling of wealth was created through credit...

But it's time for the bill to come due!

Clearly there were some hiccups and some setbacks, but all in all the economy has been on an upward trend since the early 80's and the Federal Funds rate has been falling over the same period of time.

That is not a coincidence!

The trend of lower rates allowed the economy to feel good, even though the rot was growing.

At this point the rates – basically – have nowhere to go but up. And higher rates means higher borrowing cost for the US. That means more money going to interest on the outrageous national debt.

We already spend $310 billion to pay the INTEREST on the debt now. If the rate goes up even a modest amount the US government will be bankrupt!

But the Federal Funds rate isn't the only indicator of problems.

Below is a graph from a John Williams Shadow Stats. Mr. Williams is a highly regarded economist, and while I don't want to put you to sleep with a bunch of economic mumbo jumbo, I do want to point out the blue line on the chart.

That is the rate of inflation if the government used the same formula they used when Reagan took office.

If you look close, the inflation rate is over 10% if calculated with the 1980's formula.

And that's after the Fed has increased rates several times, which normally lowers the inflation rate.

What that means is that inflation – true inflation – is out of control. But you already knew that in your heart didn't you?

On top of all that, the stock market is in a remarkable bubble!

As I write this we are in the longest stock bull market in history. The current Price to Earnings (P/E) ratio for the S&P500 is 25.16.

The Median P/E ration since they started measuring before 1880 is 14.73, and that includes several massive bubbles over the last 20 years or so.

A good solid P/E ratio is 10.

The P/E ratio takes the total price of a share of stock and compares it to the earnings per share for a company, and in this case, for the S&P500.

This is important because it gives an idea of the real value of the company as opposed to the price of the stock.

In short, a P/E ratio over 20 indicates a massive bubble.

So we have a stock market in a massive bubble, out of control inflation, and a Federal Fund rate that has to go up and will bankrupt the government when it does.

And you think that Trump can turn all of this around?

NOT A CHANCE!

We are on the precipice of a full blown financial collapse.

Banks closed, ATM's empty or shut down, food supply lines not running, Federal benefits – like food stamps – welfare payments… and even social security payments stopping...

I predict food riots within 36 hours after the system collapses.

And mark my word friend, it will collapse!

If you don't have proper food storage, right now is the time to get yourself ready.

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