Prepare for Stock Market Crash 2013

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Volatile market behavior has increased speculation over whether or not we're headed for "stock market crash 2013" – or even 2012.

With the Dow Jones down more than 200 points in the first 20 minutes of trading today (Monday), there's certainly reason to believe wild market moves are in our future.

Even without market plunges, we may just be due for an economic growth slowdown and a stock market pullback.

In a recent interview with NewsMax TV, legendary investor Jim Rogers stated that "Every four to six years since the beginning of the Republic, we've had economic slowdowns, we've had recessions. Always. It's coming again. You can add as well as I can – in 2013 or 2014, we're going to have another slowdown, whether it's caused by Europe or who knows what's going to cause it, but it's coming."

Individual investors are already fleeing the stock market on these predictions. Stock mutual funds lost $3.1 billion during the week ended July 3, according to the Investment Company Institute. Investors have now withdrawn money from the stock market for 19 of the past 20 weeks.

Eventually, enough investors will withdraw from stocks and trigger our next big market crash.

The Fed's Role in Stock Market Crash 2013

Contributing to the market mayhem are the monetary policies of the U.S. central bank.

Since 2007, U.S. Federal Reserve Chairman Ben Bernanke has greatly expanded his role and that of his institution.

That is evidenced by the increase in the amount of assets on the Fed's balance sheet, which rose from about $700 billion to around $3 trillion during the past five years.To purchase these assets, all of the needed funds were not appropriated by Congress. Instead the balance sheet was inflated by an accounting mechanism.

This cannot go on forever.

Traditionally, liquidity has always been the answer. But record liquidity, in the form of historically low interest rates, has not accomplished the most important objective of restoring economic health in the United States.

That's because low interest rates, like sub-prime mortgages and credit default swaps, are the proper financial instrument in very limited circumstances. Used too often, and disaster is inevitable.

This will happen with the U.S. Treasury bond market, as such low rates will attract fewer and fewer buyers. When the Treasury bubble eventually pops – as Warren Buffett and others have predicted – that's when the stock market will tank. Higher interest rates will have to be paid, which will lure investment capital away from stocks and into bonds.

In a recent interview with The Wall Street Journal, former Secretary of the Treasury and Secretary of State George Schultz noted that, "It's startling that in the last year, three-quarters of the debt that's been issued has been bought by the Fed and the balance has been bought by other countries, so U.S. citizens and institutions are not on net buying U.S. debt…The Fed doesn't have an unlimited capacity because when it buys the debt what it's doing is monetizing the debt. Sooner or later that has to get out into the economy. Can't be held forever."

That's why you need to prepare for a stock market crash in 2013.

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  1. Anthony Apostolides, Ph.D. | July 23, 2012

    The national debt (i.e. bonds) can be rolled over continuously as long as there are buyers of the bonds. When a group of bonds mature, the country can issue new bonds to replace them, so the debt is rolled over that way. So far, that is what has happened. Otherwise, we would have had very high rates of interest.

    • Bill | September 1, 2013

      I don't have anything close to a Ph.D. But my common sense and my gut feeling tells me this this is going up in flames. It it sound like a duck and walks like a duck then it's a duck.

  2. Bob | July 25, 2012

    Given the precarious fiscal situation and the Fed Reserve's balance sheet, how much longer can foreign buyers be expected to buy US Treasuries. Already China is slowly unwinding its position in them and using the funds for strategic purchases of natural resources worldwide even overpaying to do so. It may not be necessary to wait for the impending global recession of 2013 to crash the stock market. My guess is that the stock markets will crash worldwide in 2012, or if Bernanke does another one of his mindless interventions by the first quarter of 2013 at the very latest just on anticipation of a global recession.

  3. Bill | August 9, 2012

    With the Fed buying so much Treasury debt, it will be easier for the Treasury to announce that it does not intend to repay that debt. The bigger the Fed's balance sheet, the fewer Federal Reserve Notes one should hold. Invest abroad is the best alternative.

  4. D | August 28, 2012

    Strikes me that the best the US/West can hope for is what's happened in Japan. There citizens bought up the debt allowing them to be 200% levered to GDP. That however required a high savings rate, which is precisely our problem. Corporates may have to do it and balance sheets are robust, but all this would do is divert capital away from higher value add capex into govt spending. They're not known for the productivity of their spending.. So we can keep the show on the road, but it's going to be at a zombie's pace.

  5. Greg | September 20, 2012

    One answer to the debt crisis will be as old as time, start a gobal war and I see it, we are headed in that direction. The clues are all around us one just has to open their eyes.

    • zig | November 15, 2012

      Hi Greg,

      Unfortunately, you are correct. This is the sad reality of our world.

  6. bill m | October 7, 2012

    war probley conventional probley kill the young men and women , thin the heard ,money goes into munitions usa starts manufacturing than after we must rebuild thats why Germany and Japan are such super money powers we beet germany and japan now they r the 32ne and 3 bigest economys this is a 20 year cycle ( lets just destroy all yhe buildings and infastructor let people live and rebuild will al get rich

  7. Wat Tyler | October 16, 2012

    Nobody ever even speculates that the very fact we have a central bank pooled in private hands is the core of the problem. US is becoming a nation of blinded morans. So long as we have to buy the money we need, with interest the debt will just continue to pile up. We continue to work hard to pay the taxes that pay the interest payments on our money. Snake eating tail. What's the solution? Get rid of the central bank. That and nuke Europe until it glows. End a couple thousand years of enslavement. I don't think there is a pure evil however Europe and Europeans come close.

  8. didnt happen!!! maybe next year !! :P | October 26, 2012

    well if anyone really thinks the stock market will CRASH again they are stupid… plain stupid.. The feds around the world will never let it happen, they will hold up the "numbers" and keep the goldmans trading at any cost and try to extend the issue. then fed banks around the world just throw more money at the problems and when it gets to big either start a war or dissolve the debt. equaling.

    The best thing a government could do right now is KEEP SPENDING and build as much infrastructure as possible. Power, refineries, hydro damns, nuclear stations, update highways, sewage, garbage disposal, and other public ally needed things. Then it wont matter when they get rid of the debt , since that's governments entire country will be modernized and could "start again"

    If i gave you an UNLIMITED overdraft on your account but the bankers told you every month that you need to cut your borrowing (BUT THEY NEVER DID ANYTHING ABOUT STOPPING THE CASH FLOW) at some people you would start taking out More , and More money until you setup your life for the future and then you would setup your family and your friends and then their friends until the bank stopped you right??? that's whats going on now..

    The only way that things could really get ugly if IF and i mean this is a HUGE "IF" someone or company found 100% undeniable proof that the governments or large banks were artificially holding up the entire system.

    Then it only takes a few larger INDEPENDENT movers to bring it all down.. But they would need to be paid at the end of the day..

    How do you make breakfast when there;s no food in the fridge? (Meaning why would someone dump the market if they couldnt get paid at the end. Even if they "were" paid what would that moeny buy and with financial markets over things just…. STOP

    • Mike | October 30, 2012

      So "didnt happen!!! maybe next year," your an idiot. What happens when China and other countries stop loaning to us?? Then your precious little government doesn't have any money to SPEND! Spending is the last thing we need in an economy that is so fragile right now. The reason why the market crashed in 2008 is because the banks gave out loan bailouts. The government doesn't even put the money to the infrastructures as you said. They waste it on other unnecessary crap such as the millions of people on welfare in this country. First things first, is we need to get Obama out office and let Romney cut the deficit and create jobs. Your last four paragraphs make no sense what so ever. Why would you keep borrowing more and more money when you have to be constantly paying back? One day, after we keep borrowing and borrowing, countries are going to say no and then that's when were screwed and they have nothing to spend. The last thing the U.S. needs is to allow the government to have control…they will only make things worse in the future

      • Devon | November 3, 2012

        Didn't happen. I think you need to remember one basic rule in economics, the value of fiat currency is dependent upon the printer. I'm not sure you know this,but the money the fed puts in the market buying up bonds, is printed meaning that there is a greater number of dollars in the world. The end result is a devaluation in the dollar, because there is a greater supply. How does this affect us? It means your dollar cannot buy what it could before. This means your personal bank account has fallen in value. This results in the rise of price in commodities(inflation).
        In short your idea doesn't add up, and would lead to the economic destruction of the US.

  9. Jobe | November 2, 2012

    As long as there is beer I will be happy

  10. Kevin | November 4, 2012

    Calling individuals idiots is a waste of time, pointless, and reveals ones own level of intelligence (lack thereof). There's just no need.

    Reference history, science, statistics, economics, whatever you want. Put our your message and let the chips fall where they may.

    On the top of the debt. It's insane to keep printing money and expect it to be worth anything at the end of the day. They are playing a game for the wealthy to become more wealthy. So, suggesting that someone like Romney would help Americans when he has spent much of his wealth putting them out of work is somewhat dubious. I think you can only judge someone on their behavior and his hasn't shown that he's worthy of trust by any Americans.

    So, what's left? Obama ain't going to stop this train. The best we can do is seek out means of protection from the day that the paper isn't worth anything and no one will lend us much.

    Historically, the US has been the land of political stability. Look to crisis and that illusion will be blown away.

    On the good news front the US is awash with natural gas! It has been said that the US is the Saudi Arabia of natural gas. We will be the provider of energy to the world in 5-10 years. But, it isn't the 5 years that I'm concerned about it's getting through the next 2-3 years.

    Buy your gold and silver and hang onto your pants. We are all in for a ride.

  11. Alec Riz | November 5, 2012

    'What the US two-party-system basically does is impose one sole mainstream ideological road that’s been previously surveyed and approved as “politically correct” for Global Power Master interests and objectives.

    Then, they put a face to each party: your Obamas, Romneys, Bushes, McCains, Clintons… Then, they let voters play around making believe they have an absolutely free and democratic choice to decide whether they will drive on the left side or right side of that one sole road'

    Adrian Salbuchi on Johnson/Stein debate.

  12. Alec Riz | November 5, 2012

    @Wat Tyler – You should understand that it is not Europeans you are enslaved by, it is the global power elite. Here in Europe we are in the same position as you in the US. Our money is controlled by private banks owned by the Rothschilds, Rockafellas etc. Just like the Federal Reserve.

    You are 100% right the answer is to sack the Federal Reserve and print your own money based on your own natural resources.. but the last president who tried to push this through was.. you guessed it JFK,and that didn't work out too well for him. All the main figureheads of politics in the US and Europe are all puppets of the same global elite so it will be very difficult to get rid of the Federal Reserve.

    Mankind is very resourceful and creative though, and with some combined (non-aggressive) power wielding we can change the world.. and we DO have the power in our hands. The entire system is a "house of cards" and it is us at the bottom holding the whole thing up!

  13. SuperDomains | November 9, 2012

    The market will crash in late 2012 due to the fiscal cliff. We'll kick the can down the road maybe a few months past year end, but it will sooner or later catch up to us.

    And so, late 2012 or early 2013, brace yourself for a huge market downfall.

  14. marcie | November 11, 2012

    Amercia made their choice inspite of all the warnings. The American people already knew what the last for years have brought us. Obama sold nothing and the people bought nothing. At least some of us tried to do something about it. Don't complain when you get what you pay for.

  15. Adam Burkhardt | November 12, 2012

    I am buying silver and gold but I can't help but think that when or if the big crash happens that Gold and Silver will tank as well….atleast for awhile. That is what happened in 2008…why will it be different this time around?…I'm confused. In 2008/09 silver went all the way down to 12/13 ounce. Can't that happen again?

  16. Bigchief | November 12, 2012

    We are steering toward the day when even gold and silver will not buy a loaf of bread, much less stocks, bonds or other financial insturments. Never have so few worked so hard to have so much given to so many who do so little. With a government bent on enslaving all of us, I can see a great revolution on the horizon. Rise up.

  17. regmcdan | November 14, 2012

    Ineptocracy: A system of government where the least capable to lead are elected by the least capable of producing, and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

    The blue states re-elected santa claus. And those of us that pay taxes will continue with the pesent people in power. Do not believe we have or ever have had much voting power.

    regmcdan

  18. amp7 | November 17, 2012

    Many point to gold as a place to store one’s wealth. The thing is, why would governments allow gold to compete with their FIAT currency? Why would G20 countries not get together and simply confiscate gold simultaneously in a move similar to what the US did in 1933?

    Today is not 1920's Germany where one could take a bag of gold and move to another country that is more stable economically. Countries are no longer on the gold standard and all counties have significantly increased debt burdens.

  19. Ben | January 3, 2013

    Too many people are talking about the bonds market crash and stock market crash. I'm confused. If NOBODY wants to buy any more U.S bonds couldn't the U.S Fed buy up the whole lot (100%)? So what does it matter if China and/or other foreign entities stopped buying U.S bonds? I know the Fed printing more USD means each dollar will be worth just a fraction. But then there'll be 'defenders' who would artificially prop up the USD for their own benefits would there not? Those who hold a lot of USD wouldn't really want to see their holding become worthless? And those who do not hold USD and USD bonds do they have sufficient power cause the USD collapse and how does it benefit them? Do the Fed have any tool(s) to prop up the USD? Also, every time there's a market crash we see the 'flight to safety' flow of capital into the USD. Now, if the USD bonds collapsed where would the capital flow to? And if there is hyperinflation like some are predicting, then you probably won't be able to buy anything with money any more. You'll probably have to buy your bread and milk with gold, so you're gold aren't going worth more.

  20. Peter | April 18, 2013

    Lets go back to when this blog started and ask ourselves where are we now? Will 2013 be a year of boom or bust?

    Have we seen further economic losses or have we seen economic growth or have we seen some stability? Who really knows in these times and what do we believe.

    My slant on this blog is that the poorest countries in wealth have the richest people in their communities. They may be cash POOR but are community RICH. Isn't this what man needs to stabilise?

    Firstly I am not a free love unaccountable hippie living in fairy land and I do not profess to know economics as the learned person who has devoted their life to this complex subject but if you can accept the view of an educated self employed principal of small estate agency who is fortunate to live in a (perceived) first world country and my history is that I am from successful parents in (money and value) who left their motherland to seek opportunity and have instilled values in their children like family and neighbourhood caring, saving for a rainy day, don't spend more than you earn, appreciate the little things, fight for your rights, diversify, keep away from the herd mentality then read on.

    If we can accept that you can only eat 1 lunch a day then why buy 2 lunches? The smart people in this world need to work out how much do they really need to survive and how many glossy new consumables they have to have. If they get caught up with marketing (like I have been guilty of) and believe they need a new car every 2 years then buy another car if you CAN AFFORD it. Here lies the problem, we all want more and more and more.

    Lets get back to community and values. This will solve allot of the $$ value and it will hurt for a while but the community will pull you through if you are sincere enough.

    No values then you have No REAL economy. Small business gauges the economics and as we head for 2020 then we need a 20-20 vision.

    A world vision of accountability to the monetary powers to actually TRY and care. If they don't want to play fair (values) then shut them out.

    Not sure of this but I do know that the beautiful country of Australia offers a wonderful lifestyle and today Australia has had a massive drop in the markets and this is a sign. Not a good one either.

    By the way the person from 13th October "CC". Don't be so tough on a person who cant spell. My father cant spell either and he is a "MULTI" in cash and still is respected in the community. The dollars didn't sour him only made him more of a REAL man.

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