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The Ongoing Global Financial Markets Collapse – Dave Kranzler

Sunday, January 17, 2016 22:30

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TND Guest Contributor: Dave Kranzler |

Remember the economic catch phrase, “when the U.S. sneezes, the world catches a cold?” The idea being that the U.S. is the economic engine of the world and if the U.S. economy tanks, the global economy tanks. The current “vogue” in the financial media is to blame the incipient melt-down in global stock markets on China’s move to devalue its currency.

But nothing could be further from the real truth. China’s devaluation process may well be the proverbial “straw breaking the camel’s back.” However the real causation of the global economic meltdown is a result of the world’s fiat-currency-based Central Banking system losing the ability to control the natural market forces which are acting to destroy the financial market bubbles and economic excesses that have been allowed to breed since the dollar became the global reserve currency.

The reasons that the U.S. stock market looks like it may be starting to collapse are both simple and complicated. Craig “Turd Ferguson” Hemke of the TF Metals Report and I discussed some of the real factors which have conflated to “prick” the global financial/economic bubble: stocks, bonds, real estate, derivatives, paper currencies – anything connected catastrophically to the global paper fiat currency “Frankenstein” that was born with the Bretton Woods Agreement in 1947.

You can listen to our conversation by clicking here.

This graph is part of our conversation in which we discuss why the sell-off in the U.S. stock and credit markets may be attributable to an unwinding of the yen/yuan carry trade –which no one on Wall Street/CNBC/Bloomberg/etc has mentioned:

Note that the yen has appreciated significantly more than the dollar vs. the yuan since China’s currency deval began. How come no one on Wall Street is discussing this?

My latest issue of the Short Seller’s Journal will be released Sunday evening. You can subscribe by clicking here: Short Seller’s Journal This week will feature a section which outlines a strategy and the pros/cons for using put options to replicated shorting a stock.

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About Dave Kranzler:

I spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, I traded junk bonds for Bankers Trust. I have an MBA from the University of Chicago, with a concentration in accounting and finance. My goal is to help people understand and analyze what is really going on in our financial system and economy. You can follow my work and contact me via my website Investment Research Dynamics. Occasionally, I publish on Seeking Alpha too. As a co-founder and principal of Golden Returns Capital, LLC Mr. Kranzler co-manages the Precious Metals Opportunity Fund, a metals and mining stock investment fund.