- Michael Pento: Financial Crescendo in October of 2018?
by Greg Hunter’s USAWatchdog.com
Money manager and financial writer Michael Pento says the federal government is “burning the furniture to heat the house.” Pento contends, “If you are burning the furniture in your house to heat your house, guess what, you are not too far away from freezing to death. The government is now selling its assets to try to make the fiscal situation look better. We have so much red ink in the government today. Our debt to GDP ratio is now way above 100%. The budget deficits are way over $1 trillion and going much higher. The government is forced now to sell assets to try to make it look better. . . . They’re so desperate for money that they are draining the Strategic Petroleum Reserve. They are selling 100 million barrels and draining the Reserve down 45%. . . . That comes to $6 billion. We are so desperate for money from any place.”
So, what does the Federal Reserve think about the U.S. economy? Pento says, “The Fed is worried about intractable inflation. They are panic stricken. . . . What you have to understand, and these people will never understand it at the Federal Reserve, is that inflation is about a market psychology about the purchasing power of its currency. When the market loses faith in a currency’s purchasing power, you get inflation, and it could go hyperinflation. That’s coming down the road I believe. It’s not coming because people are becoming prosperous and working and finding employment.”
Pento says the biggest unreported story is the skyrocketing interest rate of LIBOR. What’s that? Pento explains, “LIBOR, and people don’t understand or talk about it, is the London Inter-Bank Offered Rate. This rate has gone from 0.3% at the end of 2015 to 2.3% today. The London Inter-Bank Offered Rate is the rate that is applied to $370 trillion of loans and derivatives. I did not say “B” billion or “M” million, I said “T”. $370 trillion worth of derivatives and loans, from credit cards, to student loans, to auto loans are priced off of LIBOR. . . . That is the biggest reason why the stock market is rolling over because the cost of borrowing money . . . is going up very, very sharply. . . . All of this is going to hit a crescendo in October of 2018.”