If you haven't figured this out yet, they're in the process of bubbling out of this
mess. Since 1995, we have been in a perpetual cycle of three consecutive bubbles with
the end result always being the same. Our economy is solely built on manufacturing.
Manufacturing bubbles that is.......The last two consecutive bubbles have been caused by
the same bubble machine. The FED lowers the FED's fund rate to 1% and the bubble is formed.
The cycle will be complete when rates are between 5.5 and 6.5 percent. This time
is no different. They lowered interest rates to zero to start the bubble process all over again.
This process usually takes 4 to 5 years to fully play itself out. How do you make money in
this environment? Buy stocks when the interest rates are 1% and below and sell
three years later or when interest rates approach 5%. Will this scheme work this time? Yes,
but to rebubble the bubble this time would all but wreck the value of the dollar. The dollar
index would have to drop well below 70 on the US Dollar index and we would see a brief period
of hyper-inflation. The FED has to play a very dangerous balancing act in this game. If they
raise interest rates to fast, it will collapse the whole system and we'll have a deflationary
depression that will make the Great Depression look like Disney Land. If they wait to long to
raise rates, we will be Zimbabwe or the Weimar Republic part II. If you hedging your bets
on inflation, buy gold, silver, and Oil stocks or physical precious metals. If you buy physical
metals, take delivery. Now if you think we're headed for a deflationary crash - buy gold!
Silver will do O.K., but Gold is the only place to secure wealth during deflation. What do
I think will happen? We should see a brief period of hyper-inflation followed by a deflationary
crash.
As always.....here's my chart to back up my theory.
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