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Dawn J. Bennett Says the U.S. Economy is Not on Solid Ground

In a recent article, financial specialist Dawn J. Bennett challenged Janet Yellen of the Federal Reserve’s notion that the U.S. economy is on “solid ground”. In a conversation with CNN’s Fareed Zakaria, Yellen claimed the economy was not a bubble economy, but rather on solid course.

Yellen said, “We try carefully to look at evidence of potential financial instability that might be brewing, and some of the hallmarks of that are clearly overvalued asset prices, high leverage, rising leverage, and rapid credit growth. We certainly don’t see those imbalances.”

Dawn Bennett questions how she and the Federal Reserve are not seeing these things and can assert that the economy is on solid ground despite clear indications. Bennett notes that U.S. factory orders have been on a year-over-year decline for 16 straight months, which we haven’t seen in 60 years without a recession. Not to mention, first quarter corporate earnings are expected to be down 8.5 percent over last year’s, resulting in the fourth quarter in a row with year-over-year declines; S&P 500 earnings are down 18.5 percent from their 2014 high; corporate debt defaults have risen to the highest level since 2009; and U.S. oil rig count is at a 41-year low.

Additionally, American consumers have amassed more new credit card debit during the last quarter of 2015 than during all of 2009, 2010, and 2011. The country has $19 trillion in national debt, which has grown $100 million every hour of Obama’s presidency.

It’s in this environment that America finds itself in an all-out war on cash, claims Bennett.

According to Bennett, “Interest rates are negative in Japan and several European countries, and we seem to be trending toward that possibility in the United States. Central banks keep printing more and more money, but that money isn’t tied to any real value. The assumption is that these negative rates will force banks to lend their reserves, and that lending will boost aggregate demand and help struggling economies, but it just isn’t happening. No one’s buying into it. Meddling with interest rates creates an increasing disconnect between supply and demand over time, and the wider that disconnect gets, the more risk there is when things eventually and inevitably realign to reality.”

The U.S. government and financial institutions continue trying to convince Americans that gold is not currency, though it has always been a reliable source of wealth. Meanwhile, Chinese and other governments are encouraging their citizens to acquire and hold gold. While U.S. central banks, including the Federal Reserve, are discouraging Americans from holding gold, they themselves are keeping it as an asset on their accounting ledgers..

“The system runs to benefit the system, and the notion that the government is going to protect us in the next crisis is groundlessly optimistic,” says Bennett.

Dawn J. Bennett Interviews Doug Noland, Writer & Publisher

Dawn J. Bennett, host of Financial Myth Busting and CEO and founder of Bennett Financial Services, recently interviewed Doug Noland, financial expert, writer and publisher of the Credit Bubble Bulletin. In his latest issue of the Credit Bubble Bulletin, he discusses how the broadening credit slowdown could result in a weaker U.S. GDP and corporate earnings.

In his interview with Dawn Bennett, Noland discusses the volatility of the U.S. financial market. Though Dow and S&P recovered most of their losses in March after the year had gotten off to a rocky start, Noland says, “we’re not out of the woods, by any stretch.”

Noland said, “It was just a few weeks ago that the markets were in the midst of a crisis of confidence in central banking. It appeared that the ECB was out of bullets, the Fed was going to continue to raise rates, the markets were unwinding because of this crisis of confidence. Well, what do you know? Over the last few weeks, there’s been a concerted effort by global policy makers. We’ve seen dramatic steps taken by the Chinese to stimulate their credit system and to stabilize their currency. We saw Draghi and the ECB reverse course and actually increase QE by almost a third, and said that they were going to start buying corporate debt and do other things; basically throwing the kitchen sink at this. And the Fed came out, basically, and they’re in no hurry to even begin to normalize interest rates. So we have this market environment that’s very unstable. When the markets are nervous, there’s tremendous selling that comes across the globe. But then when central bankers get the markets reversed and you have these short squeezes, and then everybody jumps on board the rally; folks can’t miss the rally. So you get this dramatic volatility, and the markets have recovered over recent weeks. But no, we’re not out of the woods, by any stretch.”

Noland says the current state of the market is a sophisticated variety of inflationism. He explained, “The central banks inject liquidity into the markets. And it’s been almost seven years ago, in my blog, that I warned that the crisis response to the collapse of the mortgage finance bubble could lead to what I referred to as the global government finance bubble, a bubble driven by these enormous deficits and this monetization, this money printing by central banks. But I never imagined it would go to this extreme. The problem with inflationism, things always look good when you start to print some money—it helps the economy, it can help asset prices—but you can’t rein it in. And you do become addicted, because you elevate price levels, and if you don’t continue to throw purchasing power, new liquidity, new credit at the system, these prices will start to deflate. And that’s where they are; they’re trapped right now.”

Noland also noted that the U.S. is currently experiencing some major losses in the hedge fund community. “I think, importantly, we have a lot of volatility, unpredictability in currency markets, which again, I think is going to lead to a lot of unwind of leverage. I believe the global bubble has burst, where you have de-risking, de-leveraging, less liquidity, and weakening asset prices, and that feeds on itself. But then again, we can have these short squeezes and these rallies, and during these rallies, it looks like liquidity abundance. But now we’ll just have to wait for the next risk-off and see how quickly again markets become illiquid, because I think they’ll become illiquid very quickly,” Noland said.

To Dawn J. Bennett’s full interview with Doug Noland, visit http://www.releasewire.com/press-releases/dawn-bennett-host-of-radio-show-financial-myth-busting-interviews-doug-noland-publisher-and-writer-676147.htm.

Dawn J Bennett Interviews Financial Commentary Writer and Author, Charles Hugh Smith

Dawn J Bennett, CEO and Founder of Bennett Financial Services and host of Financial Myth Busting, recently interviewed financial writer and author, Charles Hugh Smith. Charles Hugh Smith writes financial commentary that regularly appears on different financial sites, such as, David Stockman’s Contra Corner, and on his own personal web site called Of Two Minds. He is also the author of seven novels. Dawn J Bennett asks Smith is the middle class is eroding.

“Well, the middle class is eroding, and we’re looking around, as a society, for causes,” said Smith. “And some people look at it at politically related causes, such as tax rates or high regulatory burdens on new business, and those are definitely factors. But my thesis, which is shared by a lot of other people, is that the economy is changing in fundamental, systemic ways, and so we’re forced to adapt sort of on the fly. Because no one could really predict with any accuracy the impact of technologies like the internet, robotics, software, all these forces which are automating human labor. And so for the factory worker, it happened quite a while ago that automation sort of ate a lot of factory floor jobs, and now software and technology is advancing so quickly that it’s starting to erode higher level jobs, and so that’s a huge impact on the middle class.”

According to the Pew Research Center in December 2015, the number of middle class citizens is shrinking. It has shrunk 11% since 1971 while says that the number of households that are classified as wealthier have increased from 14% to 21%. So is the middle class shrinking because people are becoming richer? Dawn asks Charles Hugh Smith for his opinion.

“Well, Dawn, that’s an excellent question, because that statistic you just quoted suggests that the upper middle class, which we can define it in a lot of different ways, but say it’s people or households earning $150,000 and up, has grown dramatically,” said Smith. “And this is generally ascribed to the difference in skill sets, that those people with the skill sets to benefit most in a rapidly changing, tech-heavy economy are being rewarded for their profitability, if you will, by their employers, where people with fewer skills and fewer tech skills, their income is stagnating, because they just can’t be profitable in the same way to their employers. So I think that impact is real, and it’s something that sort of forces the traditional middle class into either upgrading their skills or tightening their belts, so that they spend less and have more available cash to invest in themselves and the future. ”

Read more from Dawn J Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-host-of-radio-show-financial-myth-busting-interviews-charles-hugh-smith-financial-commentary-writer-and-author-662765.htm

Dawn J Bennett Offers Financial Predictions for 2016

According to Dawn J Bennett, CEO and Founder of Bennett Group Financial Services and host of Financial Myth Busting, the so-called “recovery” being promoted by the government and mainstream media is propaganda to cover failed policy initiatives from both the White House and the Federal Reserve. Unfortunately, real Americans just aren’t seeing the supposed benefits. A good example of this is this year’s holiday retail numbers. Consumer spending makes up 70 percent of our GDP, and holiday retail sales have been disappointing if not depressing; Black Friday sales were down by nearly $1.2 billion.

“Revenues for individual corporations in the market are off: juggernaut IBM hasn’t seen a revenue increase in five years, and even Caterpillar has not seen an increase in sales in 36 months, which is unprecedented in company history,” said Dawn J Bennett. “Junk bonds are being liquidated at an increasing rate, and not at a premium. Corporations are leveraged at record rates. Public and private debt levels in the U.S. have climbed to almost 327 percent of GDP, and nearly 600% of Federal tax revenue. And of course, Janet Yellen and the FOMC raised interest rates last week, sucking up liquidity and increasing risk.”

Below are Dawn J Bennett’s predictions for 2016:

  1. The Fed will continue tightening monetary policy until our fragile economy rolls over even more. As one of the longest controlled economies in U.S. history, there have been six recessions since the rise of modern fiat currency in 1971, and those recessions have on average brought the S&P 500 down 36.5%. The next crash could well be close to what we had in 2001 and 2008, when all major indices were almost cut in half.
  2. The junk bond asset class is going to continue to liquidate. This started in August and September of this year.
  3. Corporate profits and revenues will continue to be weak, along with manufacturing and exports in general, pointing to the fact that we are already in a recession.
  4. The Fed’s rate hike will prove to be very painful. It will continue to soak up liquidity for 2016, which could be as much as $800 billion in excess liquidity taken out of an already fragile system.
  5. Worldwide, the Greek tragedy was not averted, just delayed. Greece’s problems will become worse along with Europe’s.
  6. Gold and silver have a strong potential to rise 25 to 50%.

Read more from Dawn J Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-writes-article-the-year-ahead-regarding-the-economic-year-ahead-652454.htm

 

The Bigger the Bubble: Delving Deeper Into Competitive Devaluation

In anticipation of the FOMC meeting two weeks ago, the markets tumbled. The Dow dropped 582 points, or about 3.3 percent, and the S&P 500 lost 3.9 percent, 79 points. For the S&P, that was the steepest decline since the August 2015 correction. According to an article by Dawn J Bennett, “Investors are starting to understand that credit is tightening, as is monetary policy. Earnings are weak, and speculation about the actions of Janet Yellen and the FOMC this week added to the uncertainty. Of course, the FOMC did walk away from their zero interest policy, raising the Federal Funds rate for the first time in nearly a decade by 25 basis points, but will Yellen be able to make it stick? Worldwide, five central banks have raised interest rates since the financial crisis, and all of them were forced to reverse that decision almost as quickly as they made it. This could easily happen in the U.S. as well.”

Even this small hike could create a dangerous situation for the Fed and Europe, when the markets are finally beginning to sell off for everyone. When the U.S. Federal Reserve released its discount window documents in 2011, it became clear that most U.S. quantitative easing funds went to foreign banks in the European Union. In 2012, when the European banking system was at its worse. The Fed coordinated with the ECB to announce QE3 to help prop up the European banking system. Central banks work together globally to maintain stability but when things start to become difficult, they begin to look out for their own interests; this is when competitive devaluation of currencies starts.

“I believe that the cooperative relationship between the Fed and the ECB may be set to break down,” said Dawn J Bennett. “The Euro comprises 56 percent of the basket of currencies against which the dollar is valued, and Europe holds over $9 trillion in U.S. dollar denominated debt, which is called the U.S. dollar carry trade, and the FOMC move to raise interest rates could easily cause fault lines throughout that trade. Investors need to keep an eye on ECB monetary policy in the next months, because their actions carry significant impact to us in the United States.”

She continued, “We really do seem to be in an echo of the ’07/’08 crisis, and one that has the potential to be exponentially worse than that event. In 2007, the Bear Stearns High Grade Structured Credit Fund started to show signs of trouble, which eventually led to an emergency loan from the New York Fed than ultimately failed to save the company. Just as Bear Stearns froze redemptions on its credit hedge fund in 2008, two big hedge funds (Third Avenue and Stone Lion Capital) have done the same in the last few weeks. Add that news to the increased volatility resulting from commodity and energy selloffs, and we should be seeing a big red flag for risk assets. ”

Read more from Dawn J Bennett here: http://www.releasewire.com/press-releases/dawn-bennett-writes-article-the-bigger-the-bubble-regarding-the-recent-drop-in-markets-650714.htm

Latest Republican Debate Offers a Better View of Fiscal Policy

One of the major complaints about the recent Republican debates has been that many of the issues tackled by the candidates have been incredibly topical. Indeed, there was a great deal of backlash after the first debate by everyone from left-wing pundits to financial analysts like Dawn J. Bennett. According to critics, a large number of the candidates had devolved into name-bashing and lacked a substantive punch. However, there has been some progress since.

Republican debate candidates
Image courtesy of REUTERS/EVAN SEMON

Despite some truly comical questions from the moderators in the third debate, certain fiscal stances were established and a conversation on the topic was at least started. In the most recent fourth debate held in Milwaukee, WI, on November 10th, some of these economic issues and the envisioned policies to deal with them were fleshed out a bit more, at least by some. Here are two of the more important topics that were spoken about at the debate:

Minimum Wage

Whether or not raising minimum wage would harm the economy was a highly contested question at the recent debate. While John Kasich, the current governor of Ohio, claimed that his state has implemented a somewhat higher minimum wage, citing that “people need help,” Ben Carson and Donald Trump were both staunchly against any government controlled increase.

Fellow candidate Marco Rubio elaborated on his stance, saying that “If I thought that raising the minimum wage was the best way to help people increase their pay, I would be all for it, but it isn’t. In the 20th century, it’s a disaster. If you raise the minimum wage, you’re going to make people more expensive than a machine.” Instead, he argued for more vocational education in order to create and fill higher-paying jobs.

Bailouts

On the subject of bailouts, Kasich was also on the side of occasionally helping out banks and other institutions that were failing, based on an assessment of the patrons of these banks and who could afford to lose the money. Ted Cruz took issue with his stance, and called for a return to the gold standard and for the Fed to act as a last resort lender.

Marco Rubio lamented a system that he believes allows small banks to be kept mired in regulations, while larger banks simply hire teams of lawyers and work around the rules. He suggested a repeal of the Dodd-Frank Act (Obama administration regulations intended to keep banks from becoming too big to fail), as he deems it to be helping big banks to get bigger. Ben Carson similarly called for policy that wouldn’t allow these banks to get so large in the first place, but held back from saying that these banks should be broken up.

This debate has certainly provided more answers to the questions on everyone’s minds than the prior ones. However, whether knowing what the candidates have to say about monetary policy will actually effect any change is another matter.

Dawn J Bennett Interviews Chris Duane, Author and Self-Made Millionaire

Dawn J Bennett of Financial Myth Busting recently interviewed Chris Duane, the founder of Sons of Liberty Academy, U.S. Marine, venture capitalist that made him a self-made millionaire by age 30, as well as a YouTube sensation. He also wrote the book, “Thrivalist: How To Survive After The Collapse”. Duane doubled his wealth several times during the Great Recession. Dawn Bennett begins the interview by asking him about his backstory, as well as his strategy during the Great Recession.

“I was a part of a family business that was very successful, and I’m the second generation,” said Duane. “And I saw in 2005 that the economy was too good. I woke up very wealthy and wondered why things weren’t always this way, and it actually scared me. And it made me start questioning how things were so good. I mean, the property value of my house had doubled in three years, our sales were going through the roof, and I started to question that reality, and what I found scared me, saved me, and ultimately it made me a lot of money. I found that our entire economy is built off of debt, and that our money is actually debt, and it was a weird thing for me to have so much of it and have very little understanding of the very nature of our money, and this is something that your listeners have got to understand; every dollar that comes into existence is backed by a dollar’s worth of debt plus interest.”

Duane described the fact that the entire economy is backed by somebody else’s debt – from credit cards to treasury bonds to mortgage payments. When debt is created, money is created; when debt is paid off, money is destroyed which is why our federal government’s debt continues to rise. Debts continue to grow because our monetary base is growing.

Duane continued, “So I saw in 2005 that the only reason why the economy was doing well was because there were so many baby boomers taking out so many mortgages, buying all these investment properties—it was creating a lot of money and it was flowing through the economy, to the restaurants and businesses and through the regular economy. But I saw that it was unsustainable, because I saw that at some point, I couldn’t even afford to buy the house that I had bought four years ago, because the property prices had gone up so much, because everybody was doing it. And it was as a direct result of the Federal Reserve, which is a privately owned bank.”

“I recognized that things were growing too good, and I got out. I sold everything. I sold all my stocks, I sold my house, I sold my business. I got out, and I invested everything into gold and silver, because I just looked, and what else could I put it into? And trust me, none of my business partners or my family was happy that I did all this stuff, but it was the ultimate deciding factor in making me financially independent now.”

Dawn J Bennett brought up the fact that the Fed quietly revised their total U.S. debt from 330 percent to 350 percent of GDP and Chris Duane wasn’t surprised. “…the United States federal debt has been frozen since March at $18.2 trillion. We literally have had it frozen for months, and nothing seems to happen. And the reason why is because the people who do know profit off of it.”

Read the full interview between Dawn J Bennett and Chris Duane here: http://www.releasewire.com/press-releases/dawn-bennett-host-of-radio-show-financial-myth-busting-interviews-chris-duane-founder-of-sons-of-liberty-academy-and-author-638283.htm

44 Years Later: The Nixon Shock Goes to China

By Dawn J Bennett of Financial Myth Busting

Richard Nixon’s presidency is known for a lot of things, but lost amid Watergate and the Vietnam War is one of his most influential decisions as a president, which happened 44 years ago in August. On August 15th in 1971, Nixon cancelled the direct convertibility of the US Dollar into gold, effectively ending the gold standard for the United States and most of the world. While it may not seem like there have been any lasting effects of this move, if you dig a little deeper, you can see the ripple effects clearly.

The Gold Standard began in 1944, thanks to the Bretton Woods agreement, named after the city in New Hampshire where many of the world leaders met to formalize how nations dealt with currency exchange on a global level. Things changed in 1971 when foreign pressures demanded the US Dollar to be exchanged gold. Nixon acted against this “price gouging” by ordering Treasury Secretary, John Connally, to suspend this exchange practice. The move was initially supposed to be temporary, but Richard Nixon never re-opened the dollar-for-gold exchange, which was partly responsible for the conversion to flat currencies, which were determined by national governments and their national banks.

Not long after this decision, the Oil Crisis hit in 1973, along with 11 other financial crises since the move away from the gold standard. In contrast, between the Bretton Woods agreement and 1967, there was only one financial crisis and that involved the British Pound. During this time, there were also no bank failures or Wall Street disasters. History tends to repeat itself. Nixon believed that our economy could sustain itself indefinitely. This sort of attitude mirrors the same sentiment seen in the years leading up to the Great Depression.

Nixon’s decision to move away from the Gold Standard has bigger ripple effects than what appears on the surface. When it comes to the economy, it takes a little digging before the full story develops.

The Current State of the Stock Market According to Expert Michael Belkin

The state of the economy hasn’t seemed too certain in the last few years. The recession hit us hard, and the lingering effects have kept investors on their toes, constantly wondering what’s next. And while many analysts will tell you that the stock market has improved a great deal and that there is plenty of reason to assume that the trend will continue, experts like Michael Belkin disagree.

Recently, Belkin, a hedge fund consultant and well-known financial expert, was interviewed by Dawn J. Bennett for the radio program Financial Myth Busting. During the Q&A, Belkin expressed concerns that the stock market in the U.S. looks healthier on the surface than it appears. He claimed that, essentially, certain incredibly well-performing stocks are making the overall market look good, while individual stocks and whole sectors are underperforming. This trend and the false confidence that it builds could lead to an economic slowdown.

Here are some of Belkin’s thoughts on the matter:

economic crisis conceptI think people are being drawn into a false sense that the stock market is okay. Really, it’s a bubble. There’ve been bubbles in Japan, China, the US, and Europe, and really they’re not really going up anymore. Yeah, there was a new high in the NASDAQ, but I think we’re past the peak in the indexes in China and Japan and in Europe. They’ve been going down for a few weeks or a few months. And . . . there’s a story in Sunday’s New York Times called ‘The Economic Forecast for 2016: What it Means for the Election’. Of course, the people who are in power are trying to turn the dial and pull the levers and dangle the strings and make the puppets move, so that the economy looks good for the elections. That’s the game plan in Washington DC, in your neck of the woods. But I don’t think it’s going to work. I think this economic cycle is 73 months long, which is tied for the last economic expansion, which is about 30 months longer than the normal economic expansion.  . . . [Industrial] production is turning down, retail sales, rate of change is going down, and while the planes are still full of people . . . the industrial component of the economy has turned down. China, the economic growth is plunging. Emerging markets that used to export to China are not sending boatloads of iron ore to China anymore, so US exports to emerging markets are falling. The dollar is strengthening; that’s bad for corporate profits. I think we’re in kind of a slow decline that will accelerate into a contraction, economic contraction, which usually lasts about 18 months.

If he’s right, this could signal another dip in the economy, leading to falls in GDP, household and disposable incomes, commercial profits, and investing, and higher unemployment and bankruptcy rates. Whether that slowdown could stretch out long enough to qualify as another recession remains to be seen.

Belkin predicts that the country may slip slowly and eventually fall into contraction or recession. He has also expressed concerns over bailouts and the interference of central government banks and their role in this process. Belkin claims that the Fed is out of touch with the economic cycle and that by trying to force the system to move in a direction, they have only ensured that they are left behind by it. However, he does believe their involvement may be the thing that keeps a sudden recession from occurring, since the Fed is so rigorously trying to avoid that eventuality. He emphasizes, however, that they won’t be able to stop the natural progress of the economy – merely stall it.

Is Gold a Good Place to Hedge Investment?

Gold has always been a more difficult to track and understand resource in the economy.  This has kept many investors at bay when it comes to investing in it, for fear of it how unstable it appears at times.  Dawn J Bennett recently had Jeff Snider, Head of Global Investment Research for Alhambra Investment Partners, on her radio show and Jeff helped illuminate us on how gold needs to be viewed in our current economy.

First, here are the important facts to give you some background.  In 2011, gold was approximately $1900 an ounce and today it is around $1180 an ounce.  That’s quite a big shift, so naturally there are a number of questions regarding why the price has changed so much in a commodity considered as valuable as gold.  Snider explains to Dawn J Bennett and us that gold was so extremely high back then because of the lack of confidence in the stock market and economy as a whole, so people invested in gold because it was considered more secure.  So as the economy has improved a bit the value in gold has collapsed, but now there is a new question.  Is the Fed currently suppressing the price of gold to make the dollar look stronger?

If they are doing this then we could be deceived by how well the economy is actually doing because they don’t want us to realize how poorly the economy is actually doing.  Snider says it’s rather difficult to be certain where the price of gold is being affected because of how the selling side is a wholesale system.  The issue is, when people buy gold, it’s against extreme risks and right now there is less fear in the market, so there is less buying.  Part of this less fear issue is because of the positive job market results which the government has been giving out each month.

Unfortunately, these positive job results are a bit misleading in the way they report their numbers.  They aren’t telling us how many of the jobs are full-time versus part-time and we don’t know how well paying they are.  So even if we are adding jobs, if they don’t pay well then it’s hard for these workers to make ends meet and contribute.  Wage growth has nearly flat lined for several decades now, too, making it difficult for regular people to keep up with inflation and the rising cost of living.

So without a doubt, we know the economy isn’t doing as well as is being reported in the mainstream, so perhaps right now is a good time to invest in gold while it is still cheaper.

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.
For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com
Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com
She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.
She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com