The bubble quivers

"Our market is based on nothing more than smoke and mirrors. It is propped up by inflated currency and artificially low interest rates. And now we are stuck between a rock and a hard place."

A while ago, my wife and I attended a financial symposium. The man who was conducting it has a world wide reputation. His speech was about the economy - both at home and worldwide. And his speech was not for the faint of heart. It was basically this - the bubble is about to burst. When it does, it ain't going to be pretty. His advice? If you have any money right now, spend it. Buy something or travel someplace. And do it quickly.

On the way home from our short vacation yesterday, I picked up a radio station airing a financial program. The topic? The minor market melt down on Friday. The expert who was on the radio show was convinced this was only a birth pang of the beginning of the end of the market bubble. And he blamed the Fed as well as the Administration for the cause of it. 

He said what many have been saying for years. Our market is based on nothing more than smoke and mirrors. It is propped up by inflated currency and artificially low interest rates. And now we are stuck between a rock and a hard place. The cancer of our debt will soon go from hidden to very visual. If the economy shows any REAL health, the Feds will need to raise the interest rates. When that happens, the cost to carry this HUGE debt load of $20T (and growing), will break "the bank". The market bubble will burst, and trillions of dollars will be lost worldwide. 

Here is just how fragile the market is. The market fell hundreds of points on Friday based on - fear. One of the Fed Chiefs thought the economy might be strong enough now for another small adjustment upward. Not saying that would happen - it was only one person's viewpoint. That is all it took.

Just imagine what would happen if we allowed the interest rates to rise to normal levels. And we allowed that to happen immediately. The system would crash. Worldwide depression. 

Is that a bad thing? Some economists say no. To fix the system, and have it work the way it is designed to work, it first might have to be allowed to fail. Once it fails, we need to get ready to pick up the pieces and rebuild it the right way.

The problem for many, is there will be pain. And suffering for those who are ill prepared. But to save our economy and have it work correctly for our children and generations yet to come, we need to do it. The longer we put it off, the more pain there will be. If we had addressed this ten or twenty years ago, their would have been some pain, but nothing like now.

One more thing. When the crash comes, it will put a merciful end to the decades long "tax and spend" orgy we have been experiencing. We will learn once again how to live within our means. How to budget and live within that budget. There simply will be no choice.

Regardless who becomes our next President, the bubble will continue to quiver. More and more all the time until it pops. We need a President who is willing and ready to address this bubble, and to do it with all the seriousness it deserves.

Pain is coming. It is now just a matter of how much and how soon it will be here.