Creditism Crisis Deepened By Covid Catalyst

May 17, 2020

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I believe the chart above shows how our financial system morphed into creditism from the late 1960s to the early 1980s, and then financial assets took off. 

Here’s what’s poorly understood: globalization and financialization die when they stop expanding. Just as a shark dies if it stops swimming forward, globalization and financialization die once they stop expanding, because their viability depends on expansion.

As Charles Hugh Smith describes in the link above, this is an ever expanding system.  However, it constantly needs rescuing, but the rescues have to get bigger too. At some point the natural ability of the underlying economy to feed the financialization beast will get too burdensome. The link above details the challenges for the underlying natural economic system.

On January 2, 2020 my review detailed the already fragile state of both the economy and the markets. That was before the virus hit the economy. 

‘Our economic system, Creditism, was fragile and on government life support before the Coronavirus hit the United States.  Now it is in intensive care.  From an economic policy perspective, what happens next depends almost entirely on how much the US government spends and how much money the Fed creates.” 

Stan Druckenmiller details why many of the greatest investors are not especially optimistic.

​Yet small traders have never been more bullish!

A few weeks ago I pointed out that the US banks looked like they were at a key resistance level on their bounce off the March lows. It now looks like they failed that test. Not just financials are struggling, but also industrials and transports.  

Northman Trader sums it up in his new gig with 2 other traders.



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