Investing and the Debt Bubble

The Federal Reserve keeps pumping more money into the system expanding it's balance sheet to unprecedented heights.

It is inflating the stock market to a bubble that will eventually make 2008/9 look like child's play. Debt is being inflated as banks need liquidity to lend out to borrowers. The fed has stepped in to be the lender of last resort.

It also is a buyer. It buys treasuries to support the yield curve. You can just bet that when the interest rate on a 1 year bond exceeds that of a 10 year bond, the fed will step in to support the long end of the curve.

Why would anybody buy bonds at 1.5% when inflation is running at 2.2%? Why would anybody lock up money for 10 years when you can get the same rate for one year?

The short answer is, they don't usually. There is speculation that interest rates in the U.S. are soon going to go negative. The President has been complaining about how high rates are for 3 years. He would love for that to happen but never explains how that would help middle class working people.

Instead of helping it would eventually wipe them out in my opinion.

So, the fed is printing money and then using that helicopter money to buy treasuries and lend to investment banks. They then use that money to lend, use on share buybacks and pay out bonuses.

Yesterday's Headline

Dow Rips 500 Points Higher as $94 Billion Fed Repo Juices Stock Market

How does one invest while this game is going on?

Become your own central bank.

Now is the time to own hard assets as a hedge against this massive debt bubble that is hyper inflating the stock market.

Forget the virus hype and bluster. The S&P 500 has risen over 2% since the outbreak started. It's not about the corona scare. It's about the fed's money pumping.

Crude oil has a correlation to the general stock market. Not always but when it goes up so does the market. It diverges and then comes back. It's not an exact line but it does follow in the general direction.

Crude is down 20% since the start of the year.

Just a hint that OPEC and Russia are getting together to discuss production cuts is enough for oil to catch a bid. We are awash in oil but still these major economies need and feed off of a higher oil price.

If you are trading stocks for short term capital gain then watch crude for a lift up. It's not the only thing but it's a big thing. Don't let a short term virus scare distract you from the big picture which is the price of crude and the massive debt bubble the fed has created.

What to Do?

I'm placing bets against the debt. Like buying:

• physical gold
• physical silver (cheapest precious metal out there)
• crypto currencies (BTC, BTC cash, Litecoin and Ether)

NOT to get rich but as insurance against this debt. Protect yourself and diversify some of your wealth into hard assets. This is insurance. Think of it that way and not as an investment. I have allotted 10% of my portfolio to hard assets and crypto. If you don't like crypto then don't buy it. This is just what I'm doing at the moment.

This is just a hedge against the massive money printing of fiat currencies by central banks around the world. 

When interest rates go negative here like has happened in other countries it will be good to own alternative assets. A lot of people say that is Europe and it will never happen here. Those same people trust what governments say and do.

I'm a bit more pessimistic than that.

You're either a contrarian or you become a victim. Good luck!