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July 29, 2017 | The Coming Melt-Up or will it be Melt-Down?

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

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Both schools of thought think that a huge CRASH is coming within the next 18 months. But there is now a school of thought which thinks that we will have a major ‘melt-up’ phase prior to the historical crash and then there is another school of thought which thinks that a ‘melt-down’ is coming this fall. So which is it? Will the stock markets melt-up to 45,000 or 50,000 (as many are now thinking) or will the crash come this fall with the markets (the Dow) at say 22,000 (+-)? Personally, I am uncertain and I am waiting to discern what our Central Banks will do!

Those who think that a melt-up is coming first base this theory on past history with bubble markets. Most of our past bubbles (Japan, NASDAQ, 1929, 1637 tulip, etc.) believe that a doubling or tripling from here is in the cards. This would mean a Dow of 45,000 or possibly as much as 65,000 prior to the great CRASH of all history. These thinkers believe that getting out of the markets now (stock markets) would be foolish as the start of this melt-up is just beginning. It will grow into a mania phase later in 2017 and most of 2018. Stay for the ride is the mindset!

The other school of thought is that the mania and bubble situation has already arrived and we now must think in terms of getting OUT of all stocks and into safe-haven investments (now). This mindset is predominate at this moment in time, but the melt-up theory is growing with many as I write. There are some $70 trillion dollars sitting on the side-lines which could jump into our stock markets at some point (say the mania thinkers). This would be the catalyst for this mania phase which many think is developing as I write.

The big buyers in this mania phase will be our Central Banks (this is the assumption) as our Central Banks now trade all our markets. Japan already owns some 20% of their Nikkei 225 index and some 40% of all their own government bonds. China is heavily into their stock markets as are Switzerland and other Central Banks. Many think our Fed will follow as the markets start a correction phase then move to mania. With some $70 trillion on the side-lines now, this theory seems to have some merit.

The future, however, is impossible to predict with any assurance. Will a melt-up develop or has the melt-up already happened? The future is unknown and I certainly don’t know with any assurance. My sense is that we are NOW at a crucial fork in the road and either our Central Banks must commit fully to this melt-up mindset or it might not happen. Personally, I am betting on a fall 2017 crash. The 18 month melt-up mania phase is beyond my ken to discern. Watch the markets for signs! I will do likewise! Think for yourself!

The CRASH of all history, however, is booked (and waiting) in the minds of both schools of thought. It could happen this fall or it might be delayed until after a mania stock market phase initiated by our Central Bank trading desks (say 18 months down the road). With unlimited $$$$$$$$$$$$$$$$ to pump into our markets, it is possible that human nature will buy into a wealth effect as the markets MELT-UP to 45,000 Dow and then 65,000 Dow. With money being mere digits (imaginary) this outcome is certainly possible! Enjoy the ride UP or DOWN! I will do likewise! I am:

P.S. The theory of some is that the money system needs to experience an end point which usually follows a mania phase. Are we at the end point now? To many this is not evident. History seems to suggest that we have a way to go before the CRASH of all history develops!

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July 29th, 2017

Posted In: Kingdom Economics

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