QE: The Illusion of Prosperity
What makes the current financial environment so challenging to navigate is that never before has the world seen Central Banks intervening in the markets on such a large scale and injecting trillions of currency units into the system. Because stock and real-estate markets have been re-inflated by the Central Banks it has created the illusion of prosperity.
However, the reality is that markets are more distorted than ever. Traditional ways of valuing assets are no longer viable as investors and traders are simply following the cues from the Central Banks. Now that the markets are re-inflated the Central Banks are unable to allow the global economy to function on its own, where the business cycle and markets determine prices.
Income Inequality is on the Rise
By injecting so much money into the system the Central Banks have created massive income inequity. Legendary hedge fund manager Kyle Bass recently said in an article in ZeroHedge, “the unintended consequence of QE has been to widen the income gap”. (Source: ZeroHedge 2015 March 28th)
Back in February, Davos, Switzerland hosted their annual global economic summit where some of the most powerful people in the world were in attendance. Oxfam reported at the summit on recent economic trends that indicate 85 individuals own more wealth than 50% of the rest of the world. (Source: johnperkins.org 2015 Feb. 26th)
This is truly a stunning statistic when you think about it. One of the likely reasons this trend has accelerated in recent years is because of the massive amount of quantitative easing by the global Central Banks, which benefits the ultra rich.
Low Interest Rates are a Global Phenomenon
According to an article in Business Insider, average interest rates in 23 advanced economies are less than 0.5%. (Source: Business Insider 2015 March 31st.) So now the Federal Reserve and some advance economies are not able to raise rates without causing turmoil in the financial markets.
History says that record low interest rates, massive income inequality, and distorted financial markets will all have to correct themselves at some point. Physical Gold and Silver can aid the average person because it enhances financial sovereignty, stability, and wealth preservation.
|Older The US Dollar and Gold||Newer Will the Chinese Yuan Become the Next Reserve Currency?|