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We’re in the midst of a record-setting quarter of stock market gains, and in the late stages of a decade-long bull market that doesn’t at all reflect economic reality, domestically. Many who have forgotten the lessons of 2008 are now tempted to join the bull camp under the assumption that the “everything bubble” will continue forever. They believe that America can just spend its way to prosperity.

The problem is that, despite the market rally, there are far too many holes in this theory. It’s impossible to justify a bull market that’s had such narrow participation, with literally 10 stocks out of 500 accounting for nearly 25% of the S&P’s ascent since it bottomed out in March of 2009. This isn’t a typo.

It is a clear sign of a lack in market breadth: just one company, Apple, has single-handedly accounted for 20% of the S&P 500’s total return in the past decade. Much like the dot-com bubble of the early 2000’s, it’s all about the tech high flyers, with information technology (IT) contributing 22% of the S&P’s returns throughout the past decade.

Retail investors are still buying into the “Everything Bubble” thesis, but foreign investors are keeping clear. They’ve had enough of America’s relentless deficit spending, as you can see by the trend of liquidation of U.S. Treasuries.

Courtesy: FRB, Haver Analytics, DB Global Research,

Nations around the world are tired of funding the U.S. government’s wasteful spending habits, and they’re dumping American debt in record numbers. With an accelerating debt load of $22 trillion and no chance of every repaying it, foreign nations are refusing to play the part of the enabler any longer.

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China, the U.S.’s biggest creditor, is effectively leading the global boycott of American debt. Their actions speak volumes, as their purchasing of American assets has been declining over the past four years:

Courtesy: Treasury, Haver Analytics, DB Global Research,

Of course, the American taxpayers are the only ones left to prop up this bubble – the biggest in history. They’ve been footing the bill for decades and will continue to do so, except now the middle class will be squeezed harder than ever because the foreign money won’t be coming in.

This is disturbing; it’s now gotten to the point where some people no longer even view deficit spending as a bad thing. The theory is that the government can just keep printing dollars forever to cover its debt obligations. Besides, King Dollar is the world’s reserve currency, so its value will always be respected, right? What a shameful strategy.

This line of distorted thinking has actually gained a measure of social traction, and even has a legitimate-sounding name now: “Modern Monetary Theory,” or MMT. It was Ignored for years, but today MMT is starting to gain mainstream acceptance, though few respectable analysts have anything positive to say about it.

Global Cannabis Wealth certainly doesn’t see anything modern about it – It’s nothing more than an ancient Ponzi scheme.

Japan has taken this experiment to a whole new level, with their public debt now at 2.5 times the size of their economy.

MMT advocates might even consider Japan’s deficit spending to be perfectly acceptable, or even a model for America to emulate. It’s simply insane. Still, if a few fringe analysts are buying into the idea that spending more than we produce is a sustainable solution, they’ll be in for a rude awakening soon enough.

There are highly respected economists willing to speak out against MMT, including Nobel laureate Paul Krugman; former International Monetary Fund chief economist Olivier Blanchard; and Harvard’s Larry Summers, who called MMT “fallacious at multiple levels.”

You can’t cheat your way to prosperity. You can’t borrow your way, either. You have to work at it; increase your craft and become valuable.

Don’t use shortcuts – continue building wealth, honestly and relentlessly.

Best Regards,

Thomas Hugh

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