Warning: Crash alert!

[Bill Bonner’s Diary]( Warning: Crash Alert! By Bill Bonner Wednesday, May 12, 2021 [Bill Bonner] YOUGHAL, IRELAND – Oh my… look up. There it is. Our old, tattered Black & Blue… Our trusty “Crash Alert” flag, proudly signaling the alarm. Yesterday, [we saw consumer prices moving up](. And we saw how the supply of “money” is far outstripping the supply of goods and services you buy with it. So far this century, the Federal Reserve’s balance sheet (a rough way of keeping track of the supply of dollars) rose 15 times. U.S. GDP (an equally approximate measure of output) only doubled. That is the classic definition of inflation. Today, we’re going to look at what kind of inflation it is… and how long it will be with us. Is it “transitory,” caused by a booming recovery and trillions in stimmy money? Or has it come with big suitcases and its favorite pillow… as if it intends to stay? We’ll come back to those questions. But first… the big news… Recommended Link [The 9 Best 5G Stocks To Buy and Profit From the Biggest Tech Upgrade of This Decade]( [image]( Forget AT&T and Verizon. The biggest returns are going to come from companies most people aren’t even looking at yet… [Click here to get the full details.]( -- Crash Alert! Our Doom Index is registering an 8 – which is Crash Alert territory. We created the [Doom Index]( a number of years ago to improve on our (often faulty) intuition. It tracks 12 key indicators to try to detect when there are dangerous excesses in the economy and markets are out of whack. Yes, you can see the full report on the latest Doom Index Reading [here](. But here’s the short version from our ace research team: The first chart below shows our Doom Index levels by quarter. The red bars indicate a reading of 8 or higher. That’s when we raise our “crash alert” flag and tell investors it’s time to prepare for a market crash. The last time we raised our “crash alert” flag was at the end of Q2 2019, when the Doom Index hit 8. We stayed in the “Danger Zone” for the next four quarters. Economic conditions improved slightly in the second half of 2020, as evidenced by our Doom Index reading dropping to 7 for Q3 2020 and Q4 2020… Our recent Doom Index reading – based on the Q1 2021 data – is 8… [image] …which means we’re raising our tattered “crash alert” flag. [image] […]it appears that the stock market is getting way ahead of the economy… Nearly all stock market valuations are at all-time highs, investors are using more leverage, junk bonds are looking riskier, and of course… the feds keep printing. [Featured: New Investment “Craze” Hits All 50 States]( More Inflation Sightings Meanwhile, we looked at some of the [inflation sightings]( yesterday. Here’s The Wall Street Journal with more: Americans accustomed to years of low inflation are beginning to pay sharply higher prices for goods and services as the economy strains to rev back up and the pandemic wanes. Price tags on consumer goods from processed meat to dishwashing products have risen by double-digit percentages from a year ago, according to NielsenIQ. Whirlpool Corp. freezers and dishwashers and Scotts Miracle-Gro Co. lawn and garden products are also getting costlier, the companies say. Some consumers are feeling stretched. Recommended Link [CNBC: “Market Bubble Is Here” (What To Do Next)]( [image]( The rich are getting nervous… According to CNBC, “The wealthy are investing like a market bubble is here” and “are making portfolio changes.” But what changes? Former Wall Street insider and hedge fund manager Teeka Tiwari uncovered [a growing trend among America’s 1%]( Quietly and behind the scenes, some of the smartest, wealthiest investors in the country (including Warren Buffett) are making an important shift with their money. They’re not rushing into cryptocurrencies… gold… tech stocks… or real estate. And they’re not hiding in cash either. [Find out what the rich are doing with their fortunes HERE]( -- No Big Deal But don’t worry. Jerome Powell at the Federal Reserve and Janet Yellen at the U.S. Treasury both assure us that inflation is no big deal. The Fed is still “printing” $120 billion per month… trying to overcome the “low inflation” threat. According to Powell, the nation’s economic health is threatened not by inflation, but by the lack of it… that is, by persistent Consumer Price Index (CPI) readings below 2%. He thinks stable prices somehow inhibit growth. As for Yellen, she believes the feds can hit whatever pitch comes their way. Here’s what she confidently told a Wall Street Journal CEO Council event last week: I don’t think there’s going to be an inflationary problem. But if there is, the Fed will be counted on to address them. That settles it for us. Nothing to be concerned about. There is no inflation. And if there were any, just as a hypothetical, the Fed would smash it out of the ballpark. And Ms. Yellen should know. She used to run the Fed. [Featured: Biden, Elites Set to Roll Out Elites’ “Great Reset” of America]( Intellectual Exercise But… just in case – not that we’re doubting Ms. Yellen… or second-guessing the Fed – but just as an intellectual exercise, for our amusement… …what if they’re all not really up to playing in the Major Leagues? What if they are better suited to the Special Olympics? Before last [Friday’s jobs report]( came out, Ms. Yellen suggested that interest rates might have to go up to contain rising price inflation, caused by a robust recovery. That is, she said she was concerned about “overheating,” whatever that is. Then, after stocks began to fall, she backtracked, letting the speculators know that she didn’t really mean it. In the space of less than 24 hours, she determined that the economy’s temperature was just right after all. She must have breathed a sigh of relief on Friday. The employment numbers made it clear that the economy is not heating up; it’s cooling off. Phew! This takes the pressure off Yellen and Powell to “address” the inflation issue. But only by misunderstanding the nature of the inflation – which both Ms. Yellen and Mr. Powell are eager to do. More like “Marvelous” Marv Throneberry than “Boog” Powell, both want to win the game… but neither has any idea how to play it. They believe that inflation is purely cyclical, caused by rising demand in an expanding economy. (They also believe they can cause the economy to expand by pretending, that is, by inflating the money supply to look like real demand is increasing.) Recommended Link [Elon Musk’s Latest Move]( [image]( He led a young tech startup into the spotlight. He inspired an entire generation of innovators and optimists. He changed the world. But what Elon Musk has done now… and where he’s “gone”… It’s startling. Where he went – and why – is something every single American needs to hear about. Because he isn’t the only one who left. Something strange is happening in this country… and it doesn’t look good. [Click here to learn more]( -- Double Act But this is no natural cyclical inflation. It is systemic. It is not driven (or, at least, not entirely) by the business cycle. Instead, it is man-made… caused by the two illustrious strike-outs themselves – Yellen weighing down heavily on the White House’s fiscal bench… and Powell heading up the Fed’s monetary team. The fiscal team spends. The monetary team prints. And they’ll both keep at it until the final inning… when the game is lost. Regards, [signature] Bill --------------------------------------------------------------- Like what you’re reading? Send your thoughts to [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Warning: Crash alert!). --------------------------------------------------------------- MAILBAG In Monday’s mailbag, in response to Bill’s essay on the [wastefulness of government spending]( Dear Reader Thea T. said: I don’t mind paying reasonable taxes – it’s a privilege of being a citizen of the U.S. But what really ticks me off is how much waste/corruption goes into spending away the tax dollars collected. – Thea T. Today, another dear reader responds… Regarding Thea and her “reasonable” taxes: “Reasonable” is one of those words, like “fair,” that mean 100 different things to 100 different people. Her complaint about waste and corruption reminds me of an old Libertarian line: “Be glad you’re not getting all the government you’re paying for.” – Kurt H. Meanwhile, a third dear reader praises Bill’s daily Diary… I enjoy Bill’s editorials, especially the last few outlining the ridiculous manner in which government projects continue beyond their own purpose or public needs. His examples are both humorous and horrid in their foolishness. – George O. Is America getting the government it's paying for? How else could the U.S. government spend its tax money? Write us at [feedback@rogueeconomics.com](mailto:feedback@rogueeconomics.com?subject=Warning: Crash alert!). IN CASE YOU MISSED IT… [Welcome to an empire of debt]( Our credit system is currently sitting at $68 trillion. It’s the largest debt ceiling in the history of the world – in fact, it’s more than twice the value of every single home in America put together. It’s the most crucial part of our economy. And despite stagnant wages and rising costs, America still appears to be getting richer and richer (at least on paper). And there’s the problem… This massive credit system is about to collapse. But this system has a dark secret about where they’re going to get money to pay off this massive debt. This will affect EVERY American citizen! [Click here before it’s too late.]( [image]( --------------------------------------------------------------- Get Instant Access Click to read these free reports and automatically sign up for daily research. [image]( [The Ultimate Guide to Taking Back Your Privacy]( [image]( [The Gold Investor’s Guide]( [image]( [How to Earn Free Bitcoin]( [Rogue Economincs]( Rogue Economics 55 NE 5th Avenue, Delray Beach, FL 33483 [www.rogueeconomics.com]( [Share]( [FACEBOOK]( [Tweet]( [TWITTER]( To ensure our emails continue reaching your inbox, please [add our email address]( to your address book. This editorial email containing advertisements was sent to {EMAIL} because you subscribed to this service. To stop receiving these emails, click [here](. Rogue Economics welcomes your feedback and questions. But please note: The law prohibits us from giving personalized advice. To contact Customer Service, call toll free Domestic/International: 1-800-681-1765, Mon–Fri, 9am–7pm ET, or email us [here](mailto:memberservices@rogueeconomics.com). © 2021 Rogue Economics. All rights reserved. Any reproduction, copying, or redistribution of our content, in whole or in part, is prohibited without written permission from Rogue Economics. [Privacy Policy]( | [Terms of Use](