The bond market is telling us that the global economy is headed into depression.

A friend of mine and I were discussing how much of his investment portfolio should be in precious metals (or mining stocks).  I low-balled with 30% because I knew he would recoil from that number – which he did.  The reality is that eventually the dollar, like all fiat currencies, will be devalued to zero.   That would suggest that you should keep everything in physical gold/silver and some in mining stocks for wealth appreciation.

He asked me if I thought “it was that bad.”  To which I replied:

John, it’s probably worse than I think. It’s amazing how blind most are to it. That’s why it’s gotten so bad. For god sakes, look who’s running for President. Two criminals. Hillary is a confirmed criminal and Obama is obstructing the investigation and prosecution of her by telling the Justice Dept to leave it alone. That tells us how corrupted the system. It’s been largely hollowed out – our rights and our wealth. Right now they’re picking at the carcass. It’s a house of cards that could collapse at any time. If the Fed stepped away from the stock market, the Dow would get cut in half quickly and still be overvalued by any rational historical measures. 

The bond market  is telling us that the global economy is headed into depression.  Despite the efforts of the Fed to convince everyone that they are going to raise rates, the yield on the long-maturity Treasury debt continues to head lower.  The yield curve is become flatter by the day, which historically has signaled the onset of recession.   The Fed has made every effort to prevent other traditional measures of economic turmoil from sending up systemic warning flares – most notably the stock market and gold – but it appears to be powerless to stop the compression of Treasury bond yields.   Something really ugly is brewing in the horizon.

Live blog and video of Fed decision and Janet Yellen press conference

Fed reduces 2016 GDP forecast to 2% from 2.2%
Fed trims longer-run fed funds target to 3% from 3.3%
FOMC forecasts three rate increases each in 2017, 2018
Six Fed officials predict single rate hike this year, up from one
‘Dot plot’ still signals two rate increases in 2016
Fed leaves interest rates unchanged in June
2:49p Yellen: Global factors like productivity pushing down rate path, makes predicting future policy path difficult

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2:52p Yellen: Labor market appears to have slowed down

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