The path to successful investments is to follow the money… drown out the noise… and remain disciplined.
This is something I learned throughout my career on Wall Street and as an international banker.
And today, it has huge implications for your wealth.
No Going Back to How Things Were
I started out on Wall Street when I was just 19 years old. My first job was an analyst at the Chase Manhattan Bank. Over the next five years, I quickly moved up the ranks there.
I became a senior strategist at Lehman Brothers… a Senior Managing Director at Bear Stearns in London, where I ran a specialized 30-person research department… and a Managing Director at Goldman Sachs in New York, where I ran two departments.
During my time on Wall Street, I learned an important lesson: to never take the markets for granted.
You see, money has no allegiance to political parties. It doesn’t care what type of person you are, or which sector you’re invested in.
But money does have power.
Unfortunately, that power isn’t always used in a positive way.
When I left Wall Street for good, it was out of disgust for how the industry used its power to manipulate markets. It did this at the expense of regular people.
That hasn’t changed.
That’s why I made it my mission to keep an ear to the ground of the big players of Wall Street that I used to work for… and to help regular people profit from where the big money is flowing.
And today, that mission is more important to me than ever.
That’s because the behavior of the markets has become permanently distorted from the real economy. There’s no going back to how things were.
Those who understand this disconnect will have the chance at life-changing profits. But those who don’t will fall behind.
Where Distortion and Cheap Money Collide
There are two main reasons for this epic distortion.
First, there’s the record volume of cheap money that major central banks have crafted in the past 15 years. That includes the Federal Reserve.
Second, there’s the influence central banks have over how Wall Street and giant companies use that cheap money.
The 2008 financial crisis catapulted the power of these central bankers. Then, the Covid-19 pandemic came along and turbo-boosted it.
These two crises gave central banks more power over the markets, governments, and the economy than ever before.
No matter who took the helm, central bankers’ use of “emergency” monetary “tools” was pretty much the same.
The world’s four largest central banks pushed average global interest rates lower than they’ve ever been before. (I’m talking about the Federal Reserve, the European Central Bank, the Bank of Japan, and the People’s Bank of China.)
They went on an asset buying spree (formally known as “quantitative easing”) purchasing trillions of dollars of mostly bonds and some stocks.
This money manufacturing grew to produce what is now a nearly $32 trillion cushion for mega private banks and the markets.
Now, central bankers claim they did this to help the economy. But if you’re reading this, chances are you know that’s a big fat lie.
Instead, for the world’s largest central banks, a lot of that money ended up on their balance sheets.
The Fed’s balance sheet is at nearly $9 trillion today. That’s more than double what it was before the pandemic started.
You can see this in the first chart below…
And it’s also larger than the GDP of almost every single country on the planet. The only exceptions are the U.S. and China. The next chart shows this…
Most of that money gushed into financial assets and the coffers of large corporate players.
These players used it to push corporate debt levels up to record amounts… and to buy each other (or buy smaller companies).
If this abundant supply of cheap money had stopped flowing, it would have crushed the big players. The banking industry, the markets, and the public financial systems all depend on it.
Meanwhile, people and economies only received some crumbs around the edges.
This set the stage for a monumental imbalance between how much money central banks created… and where that money flowed.
And it has set us up for even greater disorder and market volatility.
New Money Paradigm
Some central banks will rein in their loose money-creation policies, while others will keep toeing the cheap-money line.
Either way, this situation won’t change. What started as an “emergency” response to a crisis is now a bottomless pit of fiat (government-issued paper) money. The distortion is here to stay.
But there’s good news for you: This situation has also opened the doors to a new money paradigm… and a grand transformation.
Specifically, it’s going to touch five key themes in 2022. They are:
If you haven’t yet, catch up on those here. These five themes can help you turn the distortion into a profit opportunity.
Happy investing, and I’ll be in touch again soon.
Editor, Inside Wall Street with Nomi Prins
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