Forever Blowing Bubbles

Are you familiar with the classic song, “Forever Blowing Bubbles?” Though the start of the first verse— I’m scheming schemes, I’m building castles— sounds optimistic, we later learn the fate of the singer’s dreams: “I’m forever blowing bubbles, Pretty bubbles in the air, They fly so high, Nearly reach the sky, Then like my dreams, They fade and die.” According to financial analyst Dawn J. Bennett, this classic just as well be the theme song for central bank-driven monetary policy and market manipulation. But, unlike the fading dreams, the asset bubbles won’t fade; they’ll explode with significant collateral damage.

Recently, many warning signs have emerged to support the idea that trouble looms ahead. And, many key players in the financial market agree. Billionaire hedge fund manager Mark Spitznagel told the Financial Times, “Markets don’t have a purpose anymore— they just reflect whatever central planners want them to.” He continued, “This is the greatest monetary experience in history. Why wouldn’t it lead to the biggest collapse?”

In the same article, Nassim Taleb, Universa advisor and best-selling author or Fooled by Randomness and The Black Swan, explained, “Being protected from fragility in the financial system is a necessity rather than an option.” And, Spitznagel and Taleb aren’t the only ones with this viewpoint.

According to Dawn J. Bennett, “The Bank of Japan, acknowledging the violence being done to the yen by years of quantitative easing, said recently that they are setting aside money to prepare for losses on their huge holdings of Japanese government bonds which were put together and purchased through their printing of fiat currency once they are finally forced to stop monetary easing.”

She continued, “Easing is a vortex that has sucked in the central banks over the last eight years, forcing them to continue blowing bubbles to follow bubbles to follow bubbles. Indeed, there have been calls even for our own Federal Reserve to go beyond QE to “helicopter money,” essentially going beyond interest rate manipulation and money printing by injecting “permanent” money directly into private sector. Could this be why China is establishing a yuan-denominated gold benchmark for trading, in order to start backing their currency with real assets instead of academic theories?”

Bennett notes that the U.S. is close to one of the largest bubbles— the U.S. derivatives market that is valued at over $1 quadrillion dollars by some accounts. This is 20 times more than the value of the entire world economy and the biggest bubble in history.

“It’s sheer gambling, including not just equities but physical commodities,” says Bennett. “The legality is questionable in many cases, but the problem is definitely real and indisputable.”




Dawn Bennett Debunks Yellen’s Notion that the Economy is on Solid Course

Dawn Bennett, CEO and founder of Bennett Financial Services and host of Financial Myth Busting with Dawn J. Bennett, recently wrote an article debunking Janet’s Yellen view that our economy is on solid ground. Titled “Yellen’s ‘Solid Ground’ and the War on Cash”, Bennett questions how Yellen and the Federal Reserve aren’t seeing the signs of financial instability, such as overvalued asset prices, high leverage and rapid credit growth, and are instead asserting that our economy is on a solid course.

According to Bennett, we are experiencing an all-out war on cash. She writes, “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.”

Even if we were to keep cash out of banks, it continues to get more and more discouraged by governments and financial institutions, according to Bennett. Central banks are setting inflation targets and restrictions on the use of cash and that’s yet another way they are taking away people’s savings, she says. We are continually told that gold isn’t currency, despite it being a reliable source of wealth. So, if gold isn’t money, then why is the Federal Reserve keeping physical gold as an asset on their accounting ledgers?

Bennett says, “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. It comes down to notion of individual liberty, really. With that liberty comes personal responsibility, and the expectation that we need to act to protect ourselves. Investors must examine all the options and choose carefully those that leave us less exposed to the whims of ‘too big to fail’ banks, government bureaucrats, and politicians. Precious metals are one way to do that.”

To learn more about the war on cash, view Dawn Bennett’s complete article here.


Dawn Bennett Interviews Brion McClanahan, Author and Historian

Dawn Bennett, CEO and Founder of Bennett Financial Services and Host of Financial Myth Busting, recently interviewed Brion McClanahan, PhD, acclaimed author and historian of U.S. presidents. McClanahan is best known for his famous works: 9 Presidents Who Screwed Up America: and Four Who Tried to Save Her, Forgotten Founders, The Politically Incorrect Guide to Real American Heroes, Forgotten Conservatives in American History, The Founding Father’s Correct Guide to the Constitution, and The Politically Incorrect Guide to the Founding Fathers. He has also written for a variety of news publications, appeared on a dozen of radio talk shows, and given many presentations about the founding fathers and the founding principles of the U.S.

In his interview with Dawn Bennett, McClanahan discussed his take on the upcoming presidential election—which he calls “an interesting election”—as well as  his latest book, 9 Presidents Who Screwed Up America: and Four Who Tried to Save Her. When asked, “Is there any kind of historical precedent for a populist like Donald Trump?” McClanahan replied:

“Well, I think certainly there is. Trump is unique, in that there’s not a whole lot of substance to Trump. I mean, I think what’s happening here is this anti-establishment wave has picked up Trump and they’re running with him. Now, there are some positive things I can say about that lack of substance for Trump, but I think he’s riding that wave right now. Now, in terms of past elections when we’ve had something like this, I think you can look at 1980 in that way. Reagan had more substance to him, of course, but he was also putting together this kind of coalition that Trump is, as well; you know, a lot of blue collar Democrats, very populist campaign. Even 1976, Jimmy Carter was anti-establishment. So Reagan and Carter were kind of on that path as well. And then you’d have to go back really to, say, someone like George Wallace, who did the same thing. And then going back even further into 19th Century, I know a lot of people have compared him to Jackson, kind of this anti-establishment wave. But, I mean, that’s what we’re looking at here. And certainly it is an interesting election, the most interesting election, I would say, since around 1980.”

Bennett and McClanahan also discussed his latest book, 9 Presidents Who Screwed Up America: and Four Who Tried to Save Her.  In McClanahan’s opinion, the nine presidents who screwed up America were Andrew Johnson, Abraham Lincoln, Theodore Roosevelt, Woodrow Wilson, Franklin D. Roosevelt, Harry S. Truman, Lyndon Baines Johnson, Richard M. Nixon and Barack Obama, while the four who tried to save her were Thomas Jefferson, John Tyler, Grover Cleveland, and Calvin Coolidge. In the interview, he explained how he came up with his interpretation of the presidents who screwed up, as well as those who succeeded.

He explained, “My rule is very simple; how did they uphold their oath to preserve, protect, and defend the Constitution? So FDR was awful because of his policies, but he was also awful because he ran over the constitution all the time. And so that’s really the way I was measuring these presidents. I could care less, at the end of the day, about the outcomes of the policies in this particular book, but I was looking at what they were doing, were they constitutional to begin with? And so the New Deal was completely unconstitutional, and Roosevelt was very open about that. He said, ‘Look, if congress won’t act, then I’ll do it myself.’ And he did it himself a lot of the time, which, if you look at the original constitution, the president never has any legislative authority. So that’s how I was measuring the presidents, and there are actually more than nine in the book, but they only let me put nine on the cover. I could’ve put even more in there, because when you look at the executive branch, really in the last hundred years, none of the presidents have followed the original constitution very well. And I made a statement when I was marketing my book before this, The Founding Fathers Guide to the Constitution, that nearly every president in the last hundred years should have been impeached. And people picked up on that, saying, ‘My gosh, how can you say that?’ Well, I wanted to write this book to explain what I meant when I said that. And it’s very clear that we have an executive branch that the founding generation would recognize, but they wouldn’t want. They’d recognize it, because George III had this kind of power too.”

View Dawn Bennett’s full interview with Brion McClanahan here:



Dawn Bennett Writes Article, “The Central Bank Titanic,” Regarding the Current State of the World’s Central Banks

Dawn J Bennett, CEO and Founder of Bennett Financial Services and host of Financial Myth Busting, recently wrote an article titled, “The Central Bank Titanic,” in regards to the current state of the world’s central banks. January had a bleak beginning to 2016 for equities. The Dow was down 5.5 percent year-to-date, the Russell 2000 at negative 8.85 percent, the NASDAQ off 6.84 percent. Wall Street Journal’s Market Watch recently wrote that the Dow could lose a further 1000 to 5000 points and still not be “cheap” compared with long-term stock valuation measures. In fact, most stocks worldwide are down between 18 and 54 percent from the May 21, 2015 peak of the global equities markets.

So what was the rally in January really about?

“One reason could be month-end set dressing by hedge and mutual fund managers eager to have the appearance of a win after a particularly brutal start to the year,” said Dawn J Bennett. “Even more, though, was another round of “more of the same” central bank manipulation like we’ve seen for the last six years, as the Bank of Japan reversed a position announced a week earlier and moved to negative interest rates, joining Switzerland, Sweden, Denmark and the EU.”

The main role of central banks is to influence capital allocations and spending behavior by adjusting liquidity. Over the past seven years, they’ve gone overboard in this objective – attempting to influence consumers to purchase risky assets. Seeing Japan’s equities markets still faltering, Bank of Japan Governor Haruhiko Kuroda took interest rates into negative territory, hoping to chase investors into stocks and bonds in order to reach his inflation goals.

Dawn Bennett continued, “How is that working out? Not well. Japanese Government Bonds have moved to negative yields, and the Ministry of Finance is expected to announce a decision to call off the sale of 10-Year JGBs for the first time in history. Their stock market continues to fall. Amid these unintended consequences, Kuroda continues to say there is “no limit” to monetary easing, going so far as to say he would invent new tools if going farther negative doesn’t start movement toward his 2 percent inflation goal. The New York Times wrote that “moving to negative interest rates reflects a measure of desperation on the part of the central banks. Their traditional tools have been largely exhausted as most countries interest rates have been pushed to almost nothing.” In fact, that word, “desperation,” has been appearing a lot in this context.”

Could negative interest rates be coming to America? How far will Yellen go to keep money in risk assets?

Read more from Dawn J Bennett here:

If It Walks Like a Bear and Has Claws Like a Bear… A Look Into the Economic Market

Dawn J Bennett, CEO and Founder of Bennett Financial Services and host of Financial Myth Busting, recently wrote an article titled, “If It Walks Like a Bear and Has Claws Like a Bear…” regarding the current economic economy. According to the Nielsen agency, President Obama’s final State of the Union was watched by 31.3 million people, the lowest viewership since Nielsen began tracking the annual address in the 1990s. Obama claims the economy is doing great and enemies are being defeated… and the most serious issue we’re dealing with is global climate change. However, it’s important to look at the big picture and see it for what it really is.

  • Obama touts creating 14 million jobs in the last 70 months, ignoring the jobs that were lost or not created because of an increasingly anti-business philosophy that leads to draconian and random regulatory burdens in every industry.
  • He speaks of lowering deficits but ignores the $7.6 trillion dollar increase in our national debt since he took office, a 77% increase and nearly $600 thousand dollars for every one of those 14 million jobs.
  • He said in the State of the Union that anyone who disagrees with his rosy view of the economy is “peddling fiction.”

Let’s look at the facts. According to Dawn J Bennet, “Median household income is down over 7% from 2007 levels, meaning that American families are worse off, on the whole. The money-printing policies of the Federal Reserve have disguised the basic fundamentals that should be driving markets and economic decisions, and the chickens are finally coming home to roost, as we can see by what has happened in the equity markets since the beginning of 2016, the worst start to a year we’ve ever seen.”

“As recently as a few months ago, so many investors, and even professional money managers, were still bullish on the markets,” said Dawn Bennett. “More and more are coming around to the old adage: If it walks like a bear and has claws like a bear, then it probably is a bear market. And you don’t sit and wait to be attacked in that case… you back away quietly before running like hell. Some of the most iconic market callers around have started talking about this. George Soros, speaking at an economic forum in Sri Lanka last Thursday, addressed global markets including the United States, and said that investors needed to be cautious, concluding that ‘I would say it amounts to a crisis which reminds me of 2008.'”

She continued, “President Obama, Congress, the Federal Reserve, and all of their media mouthpieces continue trying to sell us a view of the economy that is provably false. We can see that our lives are not getting better, so why do they keep trying to convince us that they are? And now, the markets are finally coming to the same conclusion, so we need to be ready for the bear.”

Read the full article from Dawn Bennett here:

Dawn Bennett Writes Article, “The Year Ahead,” Regarding the Economic Year Ahead

Dawn J Bennett, CEO and Founder of Bennett Financial Services and host of Financial Myth Busting, recently published an article titled “The Year Ahead,” regarding the economic year ahead and her financial predictions for 2016.

“I’ve been saying for over a year that 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,” said Dawn Bennett. “Real Americans just aren’t seeing the supposed benefits. A good example of this is this year’s holiday retail numbers. Consumer spending is especially important to the United States, because it makes up 70 percent of our GDP, and holiday retail sales have been disappointing if not depressing.”

“Looking at the numbers from credit card companies, Black Friday sales were down by nearly $1.2 billion, which is good neither for the retail sector nor the economy as a whole. Why? Well, aside from the obvious facts that we simply don’t have the money or the job security to spend-spend-spend, there may be other reasons. AlixPartners, a consulting and research firm, took a look at consumer spending trends over the last year. They reached the conclusion that weak holiday retail numbers are partially a result of upper-middle class shoppers being scared by a fluctuating stock market and waiting until the last minute to shop. And with 300 point drop in the Dow last Friday, it seems like that volatility will remain a factor for even last-minute shopping. Reuters reported that sales growth for the holiday season is expected to be half what it was last year at this time. It seems like high income and low income families alike will be spending less on the holidays this year.”

Below are Dawn Bennett’s predictions for 2016:

  • Prediction 1: The Fed will continue tightening monetary policy (not a one-and-done rate hike) until our fragile economy rolls over even more.
  • Prediction 2: The junk bond asset class is going to continue to liquidate. This started in August and September of this year, but really became apparent in the last several weeks. The media hasn’t given it much focus, but they should, since every major crash traditionally starts with a single asset class the first domino to fall.
  • Prediction 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.
  • Prediction 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 and illiquid system.
  • Prediction 5: Greece’s problems will become exponentially worse and Europe’s along with them.
  • Prediction 6: Gold and silver have a strong potential to rise 25 to 50%.

Read more from Dawn J Bennett here:


3 Big Reasons to Plan Ahead for Retirement

If you are young now, you’ve probably heard financial analysts like Dawn Bennett talking about the many reasons to plan ahead for retirement. The realities are scary: a great deal of new growth is in low-paying jobs like retail, and many of those employers don’t offer full time or benefits to most employees, forcing them to work multiple jobs to make ends meet. Because of this, and the increasing cost of living, many twenty-somethings are still living with their parents as a matter of practicality. These facts are unattractive at least, and frightening at most. Here are some of the factors that make planning ahead for retirement an absolute necessity in today’s economic climate:

time to retire stopwatch

Interest Rates Aren’t Rising

We have a lot of debt as a country, something that most people are aware of. Increasing the amount we owe by raising interest rates seems like a bad idea in that context; however, it may be necessary to combat our increasing debt levels. Essentially, we have to pay off the money at some point, but since we have made very few inroads in that regard and simply keep raising the debt ceiling, Americans will continue to see higher costs of living. With most jobs unwilling or unable to provide the kinds of wages that will support people in this climate, the middle class will continue to disappear and the poor will get poorer. Every penny that you can put aside for retirement now is an investment in your future comfort.

Retirement Age is Rising

Since people aren’t able to save as much early on and pensions are being cut, many seniors are working well past the traditional retirement age so that they can afford to live. While there are still some who can retire at 65, for most people that just isn’t the reality anymore. In addition, the technical age at which you can receive full social security benefits is rising to 67 for people born after 1960. And there have been predictions that it will rise even higher for newer generations. This is a disturbing idea, especially for younger people, so it’s important to start putting away money now and making investments to ensure that you have something to fall back on when you are older.

Social Security is a Safety Net – and It’s Being Threatened

There are several politicians out there who would like nothing better than to get rid of social security entirely. Why? Well, it depends on who you are talking about but, in many cases, the argument is that the money could be used to help pay off our debt and bolster other areas of government spending. The problem with this notion is that social security isn’t really big enough to make a dent in our national debt. But it would look good to some people – until they retired, that is. While it’s unlikely that the system would or could be taken out of commission entirely (as doing so would put a lot of people on the street), it’s not a bad idea to have a contingency plan in case the program sees drastic cuts.

Can the U.S. Realistically Be Like Denmark?

Those who have been following the Democratic side of the presidential race will notice that Bernie Sanders has been directing a great deal of the discourse, whether he has been leading in the polls or not. Clearly, people want change and many of them are looking to the person advocating the most radical moves. Sanders’ staunch cries for more government-funded programs, education, and healthcare, have struck a chord with citizens and have influenced even middle-of-the-road Hillary Clinton to start talking about how she would handle these issues.

Denmark map

Specifically, Sanders has compared our system with that of several Nordic countries like Denmark, which all share a rather more social system than exists in the U.S. These nations are well-known for their embrace of socialized healthcare and higher education, as well as their high quality of life, notable lack of crime, and the general contentedness of their populace. Despite Denmark’s record of success, however, many Americans and financial analysts like Dawn Bennett wonder whether the same principles could be applied to the United States effectively. After all, we have some very unique conditions and demographics that many believe would foil such a system.

For instance, while Denmark’s population tops out at 5.6 million people over 16,639 square miles, America has 321.7 million people spread over 3.8 million square miles. Not only are the people more spread out, but the types of people in the country are much more diverse as well. Denmark has had a very stringent immigration policy in place for years, which doesn’t allow for the entry of as many low-income workers and also doesn’t welcome as many people of different racial backgrounds. This obviously doesn’t mean that we should be pursuing a no-inclusion policy for people of foreign origins, but it does mean that we have some complications to work out that Denmark never really has to face.

On top of all that, there is the inevitable burden of higher taxes that would accompany any move towards socialized healthcare and education. Those living in these Nordic countries pay what would be considered insane amounts of taxes when compared to those we face (about 40% of income for a single person in Denmark). The tradeoff is that when it comes time to go to college or send a child there, neither parents nor students will have to pay. That $100,000 that has become a common expenditure for college-goers here would be completely covered – as would any emergency care or regular healthcare checkups, maternity leave, dental, etc.

While these services sound good, the question of whether or not our already fragile middle- and lower-classes could handle a higher tax burden is one that cannot be lightly dismissed. Bernie Sanders has laudable ideals and some interesting notions, but finding out whether his plans are practical would involve some risk-taking that the country may not be prepared for.

Dawn J Bennett Interviews Tres Knippa, Member of the Chicago Mercantile Exchange

Just recently, Dawn J Bennett of Financial Myth Busting interviewed Tres Knippa who has been trading futures in currency markets for 17 years, and became a member of the Chicago Mercantile Exchange in 1996. Bennett believes there is a currency war going on that most have no even recognized, much less understand. Bennett stated, ” I believe most economists and analysts and investors out there believe that the currency war that we are in refers only to the competitive devaluations that nations engage in to boost their economies. At this time, I’m beginning to see that it’s much more profound than I think people are giving it credit for. I believe there are differing agendas out there that revolve around one goal, which is the demise of the US dollar as the international reserve currency of choice.”money3

Knippa responded with the fact that the Chinese devalued the yuan in August, an offensive move – they’re trying to spur exports. “But weakness in other currencies can be a side-effect of a government that is mired in debt,” said Knippa. “Now, clearly that will dovetail into the U.S. dollar discussion, but in a situation like Japan, the Japanese are not devaluing the yen because they’re trying to make something positive happen. The Yen is devaluing because they have so much debt that the market does not want their bonds. And here, if you start with politicians, you and I can probably agree that there is a massive disincentive for politicians to cut spending. So it’s not going to happen; we can forget that. The politicians are not going to cut spending, ergo more debt will be on the balance sheet. They’re going to issue more debt to pay for that spending, right?”

Now the savior is the central banks.

Bennett asked Knippa if he believes that a currency should be policy neutral without any regard to any party to it, so that it can be a true medium of exchange and whether or not that is what is currently going on in the United States.

Knippa replied, “Well, like I said, currency movements tend to be side effects of those decisions, you know. But by the same token, they can also be policy tools. Governments can say, ‘Oh, I don’t want to cut spending, so I will go this other route,’ and, ‘A devaluation of your currency, why is that any different to a tax?’ Things like that. This will clearly dovetail into a discussion about inflation. So if we want to talk about policy decisions, how odd do we think it is, from a policy standpoint, that Janet Yellen and other central bankers continue to target inflation as a specific policy goal? I find that a little weird. Inflation is a negative side effect. Now, it can be a positive side effect of growth, but in this case, just targeting inflation seems rather odd; why wouldn’t you want to target growth?”

Read the full interview between Dawn J Bennett and Tres Knippa here:

Comparing the Current Financial Economy to Death Spirals and Skinned Knees

Last month was eventful. Puerto Rico defaulted on debt payments for the first time while US wage growth and earnings reports relented more disappointment. Canada reported that for the past four months, economic growth continued to shrink and the Federal Open Market Committee once again issues a statement hinting at interest hikes coming soon. Feds continued to try and reassure investors that they would never fall down and no skinned knees would be involved but the current events prove differently. To break it up simply:

  • “America’s Greece,” Puerto Rico, defaulted for the first time on debt payments, missing payment on $58 million of their $72 billion dollars of debt. Residents continue to flee, making things even worse as the tax base shrinks and President Obama has said that there will be no bailout from the Executive Branch. Even if some havoc results in the markets, it is time for us to start standing on our own two feet, taking the skinned knees that come with the uncertainty of life, markets and economies. China, Brazil, Canada, and Greece also are suffering.
  • Wage growth and earnings reports continued to disappoint. The United States is on the edge of a recession and it may even be the inside edge.
  • The Federal Open Market Committee issued a nearly unchanged statement that hints at interest rate hikes in the near future.

Early in the summer, Garcia Padilla, the governor of Puerto Rico, compared the territory’s debt situation to Greece, starting it was a “vicious death spiral” – the debt was simply unpayable. He continued, “This is not politics, this is simply math.”

Despite persistent and pervasive central bank manipulation of economies, the news from the world is so consistently disappointing that we all need to own up that it’s time to stop adjusting the markets and let them find their own free-market price discovery levels. The job growth in the headline numbers is a surge in low-paying jobs, while high-paying manufacturing jobs are being crushed.

Dawn J Bennett, founder and CEO of Bennett Group Financial Services and host of the radio show Financial Myth Busting with Dawn Bennett discusses in further depth the financial crises, using euphemisms like “death spirals” and “skinned knees.” Read the full article here.

Bennett Group Financial Services, LLC