THE CRASH WILL START IN THE BOND MARKETS

https://www.telegraph.co.uk/business/2021/02/26/fed-has-lost-control-bond-markets-europe-victim/

It's true, it's the usual sensational copy from a most creative hack.

But it's not true that Armageddon is coming. We are told that this is bond traders, sniffing inflation, and goaded by Biden's billions, pulling out prematurely, with yields rising, although the only place to run with the money would ultimately be into stock markets.

So, in terms of actionable advice, the advice is sit tight and even better, buy into the dip.

However, longer term, of course Armageddon is coming: we're in the final phase three of three. First, there was repayment mortgages but to help house the poor, terms were lengthened, you got interest-only loans, then no-checking loans until in 2008 we had our Minsky Moment (poor man died in 1998).

Then came QE where central banks buy up govt debt to provide a ready-buyer, maintain prices and effectively diminish yields, encouraging pensioners to bet their savings on stocks and spend the winnings on holiday cruises. That decade frim2008 was great for markets but now CAPE is saying the party's over.

Finally, along comes covid, threatening to load the boat with debt till it sinks, while govts hand out newly-printed strings-free mostly to small companies and private citizens. (Real helicopter money this time.) Let's get real: it'll never be repaid.

Central banks have been captured by politicians, which is why inflation together with money supply is flashing Red warning lights.

We have Legarde at the ECB , Yellen in the US Treasury, Draghi as Prime minister of Italy. Fact is, there has been a great amount of money digitally created by the govt-centralbank duo and transferred from the state balance sheet(s) to firms & individuals, who are now desperate to spend after being locked up.

UK & US will boom and UK GDP in 21/2 will be 7.3% the only educated person at the bank Haldane gets ridiculed but he is spot on.

EUR on its way to 0.87 v dollar and 0.6770 v Sterling.But globally ? ...

Of course it's going to end badly ... what is anyone thinking about? The output gap will close, labour markets will tighten, technology will fail to bring further productivity gains. Then inflation will grip borrowers and ... we've seen where that goes in Weimer, Zim and Venezuela.

To me, short of war (to destroy oversupply), hyper-inflation is the only way out. It will hit emerging economies as it did in July '97 in the Tom Yam Kung crisis, but there will be a 2008-style credit crisis. We're due a crunch.