YOU HAVE TO KNOW THE RISK

Do you? “You have to know the risk” was a forgotten line in an old movie, but the line still has the same meaning today for a variety of life’s situations. You must decide if this time it is different. Can a market continue to rally in the face of declining top line numbers? Can companies continue squeeze every possible drop out of the earnings sponge? Will the available work force continue to accept a declining wage scale compared not only to 6 years ago but to wage earners in many developing and developed countries. Do you believe the military can continue to be extended in an effort to prop up the hegemony of the dollar? Will the public here accept the concept of “Unending War”?  Perhaps more importantly will the rest of the World accept it? How much time can a Nobel Peace prize buy you? 

Maybe you had trouble with math in high school, but the last time I checked its very difficult to service a debt of over 100 Trillion with a current yearly federal tax rev of 1.7 Trillion.  IF you believe the hype then you have to believe we can grow our way  into an expanding tax revenue that will service the debt and bring our yearly deficit to ZERO.  Let’s assume that by hook or crook that can occur during the next two years…..Here is the problem for that “pollyanna” resolution. It’s called the accumulated treasury debt AND the “other 90 trillion in debt and unfunded liabilities”. It’s called the “reversion to the mean” in interest rates. Its called the “law of nature” and it must be obeyed. As the rates rise as the “economy grows” all hell will break loose with the burden of debt hanging over the economy like an Oklahoma thunderstorm ready to dump the biggest flood of chaos the economic system has ever seen.

THIS is the “risk” that professional money managers are frozen in fear over. They know the “risk on” trade is being headlined by the Central Banks ponzi masters but they also know the light at the end of the tunnel that is promoted daily by the MSM and Fed speak could just be a freight train.  They don’t know the timing but they are afraid to get caught in an awfully big crowd trying to go through a very tiny exit door. THAT is the consequence of  a policy of fiat that violates every free market principle known in history. 

You have been the subject of an experiment. Its never been tried in history and it will end. If you believe you can get through that exit door with all of the professional money when the music ends then I wish you only the best. You’ve had your time to prepare and I hope you have used it. Seasons wishes to all.