2018 Economy Goes Cold – Inflation Hot – Danielle DiMartino Booth

By Greg Hunter’s USAWatchdog.com 

Former Fed insider Danielle DiMartino Booth is not optimistic about a surging economy in 2018. Booth contends, “We have seen 24 consecutive back-to-back months when credit card spending has outpaced incomes.  That tells you households are struggling to get by.  This is not Eve Saint Laurent handbags and Jimmy Choo shoes.  These are families who are using their credit cards to take care of the necessities, to fill up the gas tank, to buy groceries and fill up their refrigerator. . . . We have seen month after month of subprime automobile delinquencies, and we are starting to see a big tic up in FHA mortgage delinquencies as well. . . . We are at almost 10% (delinquencies) of FHA mortgage loans.  Underlying this sugar high that we will see from all of these hurricanes and rebuilding efforts and wildfires, underneath that, still waters run deep and the economy is not doing well.  We are a consumption driven economy that is weakening underneath.  The sugar high will absolutely wear off in 2018.”

What about the bond market in 2018? Booth says, “We have gone from $150 trillion (in global debt) in 2007 to $220 trillion and counting today.  If you delude yourself into thinking a rising rate environment can be good when we have tacked on $70 trillion of debt in the last decade, you are fooling yourself.  It is an accident waiting to happen, and anyone who doesn’t think that it will take the stock market down with it is more optimistic than I am by a country mile.”

Booth says, along with a “bond market debacle,” the world will see inflation right along with it. Booth explains, “Look at lumber prices, look at the cost of packaging, plastics, raw materials, the producer price index . . . is at a six year high right now.  It’s called the mother of all margin squeezes.  Companies are suffering.  We have inflation.  We have very real inflation, and it is hitting corporate America between the eyes.  We have seen inflation happening, and we continue to see it happening . . . Rental inflation is off the scale. . . . Inflation is up for 2018, and it has been up.  We can have deflation and inflation at the same time.  If all of this debt that has built up, especially for households, if they are allocating more of their income to servicing debt, then they have fewer dollars to spend on other things.  So, you are going to have deflation and inflation at the same time.”

What does the regular guy on the street do? Booth says, “Figure out a way to have exposure to precious metals.  Put your bubble vision on mute.  You do not have to be invested in the market.  That is a fallacy.  Take what you have and pay down your debts.”

Join Greg Hunter as he goes One-on-One with former Fed insider Danielle DiMartino Booth author of the popular book “Fed Up.”

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After the Interview: 

Danielle DiMartino Booth said after the interview, “I am scared because we (America) are in a really bad place right now. People (in the markets) are going to get shellacked.  They have no idea what the momentum is going to look like on the downside.”

There is always some free information and analysis on DimartinoBooth.com. If you want to subscribe to the “Money Strong” newsletter, click here.  Booth also offers consulting services for both individual investors and companies.  Right now, until January 5th, Booth has turned off the pay-wall at DiMartinoBooth.com.  So, you can see all of the newsletter for free, just click here.

If you haven’t gotten a copy don’t forget Booth’s very popular book “Fed Up.”

 

 

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Comments
  1. Anthony Australia

    What a brilliant way to start 2018!
    Thanks Greg.
    I’m not sure if 2018 will bring something that could cease Australia’s 26 year record without a recession.

    • FC

      Come on AA you really think Australia is resilient against what is about to happen.
      It’s a front fender economy shiny on top, sh!t underneath.

      • AA

        Na, I think the numbers have been fudged for years and as you say the the States, we are being “Duped”

        http://www.smh.com.au/business/the-economy/gdp-australia-grabs-record-for-longest-time-without-a-recession-20170606-gwm0o2.html

        • Colin - 'the farmer from NZ'

          AA
          We sure are being duped….
          GDP “growth” is always quoted as a nominal figure, ie it is not inflation adjusted.

          If the modern world was truthful about our economies we would admit that many of our countries GDP’s are in decline when adjusted for inflation. Consequently, these countries are in recession year in year out….guess what this equals….thats right…. DEPRESSION!

          Cheers
          Col

      • Bob.C.

        Here is the ever old reliable Holden FC….

        https://en.wikipedia.org/wiki/Holden_FC

        A gem from the 1960’s, mum and dad had one, remember it well. On current form it would give the current Australian Economy an absolute thrashing, leaving it eating dust !

  2. Paul ...

    If inflation is up and rising as Ms Booth says … don’t stocks usually rise with inflation?

    • Paul ...

      However … something “sure to be taken down” will be all the pedophiles … as explained in this very interesting analysis of the Mueller prosecution of Trump! … https://www.youtube.com/watch?v=Ke3H1OtJY58

      • Paul ...

        The stock market usually crashes when we get an inverted yield curve (and we are close to inverting) … however … the Fed is sitting on $2.45 trillion of Treasury securities and $1.76 trillion of mortgage-backed securities … and can push up long-term yields by doing a “QE Unwind” … thus preventing long term yields from falling below short term yields … thus the Fed can increasingly sell its Treasury and mortgage-backed securities holdings “to keep the yield curve from inverting” … so the Fed’s “balance sheet normalization” which will accelerate as 2018 progresses (in the first quarter the Fed is scheduled to sell $60 billion in securities, in Q2 $90 billion, in Q3 $120 billion, and in Q4 $150 billion … for a total of $420 billion) … and this selling is scheduled to increase to $600 billion in 2019 … so if the Fed can keep the yield curve from inverting by driving up long term interest rates to keep pace with rising short term Fed Fund rates … they can keep the stock market rising for Trump by preventing the yield curve from inverting!!

        And if the Fed wants to spook the markets into jacking up long-term yields, it could accelerate further its “balance sheet normalization.” For the first time in history, the Fed can actually do something that will drive up long-term yields.

        • Paul ...

          So from the looks of things … until the Fed is through doing its “QE Unwind”… an inverted yield curve (and hence a stock market crash) can be prevented by the Fed … and because they have $4.21 trillion dollars to play with this can go on for a long time as inflation roars ahead driving gold and silver prices higher and higher!!

          • Paul ...

            T