Submitted by William Bonner, Chairman – Bonner & Partners
No More Juice
Friday’s 391-point drop in the Dow – a nearly 2.5% fall – ended the worst 10-day start to a year in U.S. market history.
The average stock in the S&P 1500 – which includes about 90% of all stocks in listed in the U.S. – is now down more than 26% from its high. The standard definition of a bear market is a sustained fall of 20% or more from recent highs.
The bear got loose somehow. Who let him out?
Photo credit: Lukas Holas
“Woeful earnings,” suggested MarketWatch as a cause. Another guess: “The stock market is freaking out over Trump and Sanders.” Barron’s was closer to the real source of the plunge: “Without Fed’s Juice, Market Suffers Withdrawal Pains.”
In 1971, phony fiat money replaced the old gold-backed dollar… and money that came “out of nothing” replaced real savings. At first, inflation rates rose. No one trusted the new fiat dollar. But then, incoming Fed chairman Paul Volcker showed the world that the U.S. could manage its currency in a responsible way. Continue reading