On the heels of incredibly turbulent trading in key global markets, today 40-year veteran, Robert Fitzwilson, put together another extraordinary piece. Fitzwilson, who is founder of The Portola Group, warned that the world is about to see an event that will “shock the financial system,” and set the stage for a “New Financial World Order.” Below is Fitzwilson’s exclusive piece for KWN.
Fitzwilson: “1989 saw the release of a movie called “Field of Dreams” starring Kevin Costner. The film was nominated for three Academy Awards including Best Picture. In the movie, Kevin Costner is a farmer growing corn. While taking a stroll through his cornfield, he hears a voice that says “If you build it, he will come”. The “it” was a baseball diamond. While the movie revolves around baseball, the theme was really about regrets for events in the past and not following dreams….
“Policies followed by the Federal Reserve resemble “Field of Dreams”. Crafted from a lifetime of studying the failures of the 1930s, the two most recent office holders of the Chairman of the Federal Reserve and their colleagues have been building their own financial field of dreams driven by the whispers of history and the regrets of the men who preceded them during the 1930s. The most recent version has been called the wealth effect.
The idea behind the wealth effect is that when people feel wealthier, they are inclined to spend more freely. If spread across broad populations, that will create demand for goods and services resulting in strong economic growth. Two of those important traditional forms of wealth are stocks and real estate.
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