Bill Fleckenstein – The Fantasy Is Unraveling As Disastrous Policies To Impact The Net Worth Of Everyone On The Planet, Plus A Bonus Q&A

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Bill Fleckenstein – The Fantasy Is Unraveling As Disastrous Policies To Impact The Net Worth Of Everyone On The Planet, Plus A Bonus Q&A

With chinks beginning to show in the U.S. dollar’s armor, today one of the greats in the business sent King World News a powerful piece warning that the fantasy is now unraveling as disastrous policies to have a huge impact on the net worth of everyone on the planet, plus a bonus Q&A that includes gold.

By Bill Fleckenstein President Of Fleckenstein Capital

(King World News) – The bonfire of the bond markets continued overnight in Europe, with virtually all of them lower, apart from a rally in Greece. Germany’s yields are now approaching the high end of their recent trading range, as they jumped 17 basis points to around 71 bps.

As has been the case, however, equity markets weren’t impacted too seriously, though they were a bit lower. Once again, the same form held here in America, with our bonds roughed up, but the stock market pretty much ignoring that, as equities traded in a small range around unchanged all day and closed flattish.

Away from stocks, the metals and oil were slightly higher. Meanwhile, green paper today saw a very large break to the downside and one could be encouraged that the dollar is experiencing a failing rally. I say “encouraged” because dollar strength has been the final leg propping up the “all is well” Fed fantasy, and the sooner that fantasy is behind us, the better.

The Fantasy Is Now Unraveling

A quick review of the facts: the Fed printed so much money it drove the stock market to 2,000 on the S&P, made people believe the economy would be able to sustain a recovery. Thus, the Fed would hike rates, in a return to “normalcy,” while every other country was behind the curve and that therefore the dollar would be in demand.

In short, they printed enough money to drive the stock market and, perversely, the dollar to the moon. (Note that I call this a “fantasy” because the huge rally in the stock market has warped people’s thinking about everything, as I have discussed all along.) Now the dollar has been weakening, and the fantasy has unraveled to a small degree, but by and large the belief is still intact when one looks at the pricing of stocks, gold, etc.

The reason it is important for the dollar to decline is because the sooner we put the fantasy behind us and move into the crackup phase, thereby forcing the Fed do what it is going to do next, the sooner it will be discredited and we can finally start to solve some problems. The sooner that happens, the better off we will be, although it is going to take some time….More Here

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