World Economy

Forbes: US Growth Fabricated

Forbes: US Growth FabricatedForbes: US Growth Fabricated

Is the US economy going to crash this year? Is the stock market going to crash in 2015? Is a bear market underway? The answer is a resounding “yes,” according to many pundits across the financial media from CNBC to the Wall Street Journal. Considering that some doom and gloomers have been predicting financial Armageddon since the book of Genesis , should you believe them now? And if they are years early in making their calls, are they still correct?, Ky Trang Ho wrote for Forbes.

“I have interviewed several bearish economists and investment advisers who have been screaming of economic apocalypse every step of the way since the bull market started in 2009. They contended the economic recovery since 2009 has been fabricated by massive government debt and money printing, also known as quantitative easing.” The mountains of money created out of thin air will skyrocket inflation, which will eventually cripple the economy, they said. Everyone should buy gold and silver—the only real store of value when the US dollar loses value owing to the onslaught of money supply.

In 2012, one investment adviser—who manages hundreds of millions and has written several books predicting a crash—projected the US inflation rate would hit 5% in 2014 or 2015. He believed the Dow Jones Industrial Average index could rise above 14,000 but was unlikely to hit 15,000. These levels are equivalent to $140 and $150 a share for SPDR Dow Jones Industrial Average ETF.

So how did he do with his predictions? He was spot on about US government debt. Uncle Sam’s debt load amounted to 94% of US gross domestic product in 2012, according to the World Bank. It now amounts to 103% of US GDP. This ratio is sky high compared to its historical average of 61%.

Indeed the Federal Reserve fired up the printing presses, setting new records for US money supply in 2013 and 2014.