The Road To Skyrocketing Inflation, Stock Market Panic And Global Chaos

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The Road To Skyrocketing Inflation, Stock Market Panic And Global Chaos

Today one of the top economists in the world sent King World News an incredibly powerful piece warning about the coming massive inflation, stock market panic and global chaos. Below is the fantastic piece from Michael Pento.

By Michael Pento of Pento Portfolio Strategies

The most important question investors will soon have to face is: What is going to happen once central banks finally meet their inflation targets?…

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Michael Pento continues: For example, let’s assume after years of monetizing government debt, bidding up equity prices and forcing debt on the public by keeping borrowing costs at or below zero, that the ECB is finally able to achieve its inflation target rate of 2%. This would only occur once money supply growth becomes both robust and sustainable.

It is silly to believe ECB President Mario Draghi can bring inflation to just 2% and nail it at that level. Inflation will continue to rise past 2% until the ECB raises interest rates by reducing its pace of bond buying. So, we will have the environment where inflation is rising north of 2% and the central bank will be forced to start cutting back its purchases of debt and preparing the market for eventual outright sales.

KWN I Pento 12:19:2015The Most Violent Interest Rate Spike In History!
Here is the problem: $2.1 trillion dollars, or 1/3 of the $6.3 trillion European sovereign debt, has a negative yield. The ability to produce sustainable inflation that is rising past the ECB’s 2% target, along with the removal of the massive central bank’s bid for sovereign debt, should cause the most violent interest spike in history.

Indeed, asset bubbles exists all over the planet due to central bank overreach from which there is no escape. The carnage will be especially acute in Japan, where a 2% inflation rate won’t jive too well with a 10-Year Note that yields just 0.3%. The Bank of Japan (BOJ) certainly cannot keep wrecking the value of the yen at its current pace of depreciation (down over 30% since 2013) without eventually creating a currency and inflation crisis.

Therefore, Japanese investors will soon have to deal with imploding bond and stock prices, as investors try to front run the huge sell orders coming from the BOJ trying to unwind its massive 385 trillion yen balance sheet (75% of its GDP) to boost the value of the currency. However, the BOJ’s balance sheet now consists of both bonds and trillions of yen worth of stocks. The inevitable ending of the BOJ’s support for bond and equity prices will cause an unprecedented economic crisis in Japan…..more here

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