Europe is now ground zero for the war on cash.

Europe is perhaps the most centrally controlled political system in the world: a place in which political and economic policies range from socialist (the public sector accounts for 30% of “free market” German’s employment) to extremely socialist (the public sector accounts for 56% of France’s employment).

As such, Europe is where a Central Banker can implement the most insane policy and get away with it.

Remember, it was Europe that first implemented “bail-ins” in which deposits were STOLEN to bail out a bank.

It was also Europe that first implemented Negative Interest rate Policy or NIRP.

And it was Europe that banned using physical cash in numerous transactions: France and Spain have banned any transaction over €1,000 or €2,500, respectively, from using physical cash.

Despite having implementing both NIRP and QE, Europe’s economy is lurching back towards deflation. So now the ECB is looking into even more extreme measures to trash cash in an attempt to drive capital into risk assets.

At the top of the list?

Staggering charges on banks that are “hoarding cash.”

Euro zone central bank officials are considering options such as whether to stagger charges on banks hoarding cash or to buy more debt ahead of the next European Central Bank meeting, according to officials.

Little over a week before the meeting to set the ECB’s policy course, numerous alternatives are open, from snapping up the bonds of towns and regions to introducing a two-tier penalty charge on banks that park money with the ECB.

Officials, who spoke on condition of anonymity, said that even buying rebundled loans at risk of non-payment has been discussed in preparatory meetings, although such a radical step is highly unlikely for now. The ECB declined to comment.

Source: UK Reuters.

That’s correct. Sitting on cash is now an evil thing according to Central Bankers in Europe.

This is not the end of the war on cash. Ultimately it will culminate in efforts to impose a carry tax on physical cash if not ban cash outright.

Indeed, we’ve uncovered a secret document outlining how the Fed plans to incinerate savings to force investors away from cash and into riskier assets.

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Phoenix Capital Research

The Fed has set the stage for a stock market crash.

Ever since 2009, anytime the markets came close to a stock market crash, “someone” (read: the FED) has stepped in a propped the markets up.

In 2010, the S&P 500 staged a death cross, where its 50-DMA broke below its 126-DMA (the half year moving average). Stocks were in a perilous state with the 2008 Crash still in everyone’s short-term memory.

The Fed stepped in, hinting at, then all but promising, and then finally launching QE 2 in July, August, and then November, respectively.

This set off a rally in stocks that lasted until the EU Crisis erupted in full force in 2011. Once again stocks staged a death cross. And once again, the Fed stepped in with promises of action followed by the announcement of Operation Twist in September 2011. Stocks took off and we were back to the races.

Which brings us to 2012. Europe was really going down in flames. Greece, then Portugal, and even Spain were lining up for bailouts. And the bailouts were getting larger by the month with Spain requesting €100 billion in June 2012.

ECB President Mario Draghi promised to do “whatever it takes” to hold the EU together. But the carnage was spilling over even into US markets. So Bernanke’s Fed promised yet another QE program, though this new program would be “open-ended” in June.

Sure enough, Bernanke unveiled QE 3 in September 2012. He then upped the ante, unveiling QE 4 in November 2012.

Stocks took off again, launching one of the sharpest, strongest rallies in history.

This same madness continued despite the Fed ending its QE efforts. In October 2014, the markets took a nosedive to critical support. This time around rather than launching a new monetary policy, a Fed President stepped out and hinted that the Fed should consider postponing the end of QE (a mindless statement given the Fed had only $5 billion in QE left at the time.

Logic aside, the markets took the hint and erupted higher again.

We even got another round of this in August when the markets collapsed. Almost immediately various Fed Presidents began calling for Negative Interest Rate Policy (NIRP) or launching more QE.

In simple terms, the Fed has completely conditioned the markets to believe that NO MATTER WHAT stocks will be held up. The Fed is entirely market dependent in its actions and policies.

This has worked fine thus far… but eventually it will fail, just as all market props do. The Fed cannot end the business cycle nor can it push stocks up indefinitely. A stock market crash is coming.

Gauging when this will happen is impossible as we are now talking about crowd psychology, not market fundamentals or economic data (neither of which have mattered for over two years).

However, the fact remains that all bubbles burst. This bubble will be no different other than the fact that it was in fact been the Fed that created and perpetuated it long after it normally would have burst. The stock market crash will only be worse as a result.

Put another way, when the next crisis hits, the Fed will effectively be out of ammo as it will be a crisis of faith in the Fed. Whenever investors themselves begin to comprehend that the Fed is now more leveraged than many of the investment banks were when they went bust in 2008, the End Game will begin.

Smart investors are preparing now.

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

We are in a global economic collapse.

And it is going to trigger a stock market crash.

The Central Bank fueled “recovery” is officially over. Central Banks propped up the financial markets for six years. But the money was spent on financialization and accounting gimmicks (buybacks).

That is, it didn’t get into the global economy in a useful way: corporate capital expenditures, job hires, etc. As a result, the global economy never really hit “lift off.”

We can see this clearly in a number of economic images.

Consider Oil, possibly the most economically sensitive commodity in the world.

Oil isn’t just used to power cars and trucks, it’s present in lipstick, solar panels, polyester (stain resistant clothes), chewing gum, crayons, Aspirin, pantyhose, sneakers, detergent, CDs, plastics of any kind, food additives, fertilizers, pesticides and more.

When these industries are growing, demand for Oil increases. And this demand typically results in higher prices.

However, the price of Oil has collapsed, ending a 16-year bull market, and falling to levels not seen since 2004.

Oil is the most striking example of economic collapse from the commodity space. However, ALL commodities across the board are showing economic collapse.

Here is the Commodity Index. It is made up of Oil, Copper, Tin, Wheat, and every other commodity you can think of.

It too has ended a 16-year bull market. Based on the lack of economic demand, prices for Commodities are back where they were in 1999. It’s as though the last 16 years of “growth” has been erased as far as demand is concerned.

This is the REAL picture of the global economy. It isn’t what CNBC and the talking heads tell you. It is economic collapse.

And it is going to trigger a stock market Crash.

Stocks trade based on the profits they earn. With few exceptions, investors do not pay for a company that is not making any money.

Profits are derived from sales. Sales is the money coming “in the door.” Profit is what’s left after costs.

Sales growth for the S&P 500 has collapsed since 2012. Today it is barely positive, registering a level not seen since the 2008 collapse.

You’ll note that the years in which sales collapsed coincided with market Crashes (2000-2002 & 2008-2009).

Another Crash is coming, driven by the economic collapse.

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Graham Summers

Chief Market Strategist

Phoenix Capital Research

Central Bankers are flummoxed.

Having cut interest rates over 600 times since 2009 (and printed over $15 trillion), they’ve yet to generate the expected economic growth.

This failure hasn’t produced any change in their chosen course of action. The Bank of Japan (BoJ) and the European Central Bank (ECB) are both currently engaged in QE programs. The US Federal Reserve is the only major bank not to be employed QE, though it does continue to expand its balance sheet every month during Options Expiration weeks.

Regarding interest rates, the ECB has already moved to employ Negative Interest Rate Policy (NIRP). The BoJ and the Fed are still at ZIRP, though the latter has several officials who have begun calling for NIRP.

Why, after six years, are we still seeing such aggressive policies?

Because deflation, the bad kind, is once again lurking around the corner.

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Anyone with a functioning brain knows that deflation is a good thing. No one complains when they are able to buy something at a lower price, whether it is a home, gasoline, or computer.

However, debt deflation is a different story. Debt deflation means that future debt payments are becoming more expensive. This means that debt servicing will become more difficult, eventually leading to default and debt restructuring.

It is debt deflation that remains the primary focus for the global Central banks. Indeed, if you consider the threat of debt deflation, every Central Bank move makes sense. ZIRP, NIRP, and QE all have the same goal in mind: to lower interest rates and push bonds higher (thereby making sovereign debt loads more serviceable).

With this in mind, even a whiff of debt deflation is enough to give Central Bankers nightmares. It’s also why they are so fond of inflation via currency devaluation, as it permits them to render massive debt loads more serviceable.

Unfortunately, the great “reflation experiment” is failing. Indeed, as Societe General has noted, it appears the developed world may be “turning Japanese” i.e. moving into a long-term deflationary cycle similar to that which has plagued Japan for the last 20 years.

This will eventually result in a stock market crash, very likely within the next 12 months… and smart investors would do well to prepare now before it hits.

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Phoenix Capital Research

For six years, the world has operated under a complete delusion that Central Banks somehow fixed the 2008 Crisis.

All of the arguments claiming this defied common sense. A 5^th grader would tell you that you cannot solve a debt problem by issuing more debt. If the below chart was a problem BEFORE 2008… there is no way that things are better now. After all, we’ve just added another $10 trillion in debt to the US system.

Similarly, anyone with a functioning brain could tell you that a bunch of academics with no real-world experience, none of whom have ever started a business or created a single job can’t “save” the economy.

However, there is an AWFUL lot of money at stake in believing these lies. So the media and the banks and the politicians were happy to promote them. Indeed, one could very easily argue that nearly all of the wealth and power held by those at the top of the economy stem from this fiction.

So it’s little surprise that no one would admit the facts: that the Fed and other Central Banks not only don’t have a clue how to fix the problem, but that they actually have almost no incentive to do so.

So here are the facts:

• The REAL problem for the financial system is the bond bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown to over $100 trillion.

• The derivatives market that uses this bond bubble as collateral is over $555 trillion in size.

• Many of the large multinational corporations, sovereign governments, and even municipalities have used derivatives to fake earnings and hide debt. NO ONE knows to what degree this has been the case, but given that 20% of corporate CFOs have admitted to faking earnings in the past, it’s likely a significant amount.

• Corporations today are more leveraged than they were in 2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were $3.5 trillion… today they are $7 trillion: an amount equal to nearly 50% of US GDP.

• The Central Banks are now all leveraged at levels greater than or equal to where Lehman Brothers was when it imploded. The Fed is leveraged at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was leveraged at 30 to 1.

• The Central Banks have no idea how to exit their strategies. Fed minutes released from 2009 show Janet Yellen was worried about how to exit when the Fed’s balance sheet was $1.3 trillion (back in 2009). Today it’s over $4.5 trillion.

We are heading for a crisis that will be exponentially worse than 2008. The global Central Banks have literally bet the financial system that their theories will work. They haven’t. All they’ve done is set the stage for an even worse crisis in which entire countries will go bankrupt.

The situation is clear: the 2008 Crisis was the warm up. The next Crisis will be THE REAL Crisis. The Crisis in which Central Banking itself will fail.

If you’ve yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis “Round Two” Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

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Best Regards

Phoenix Capital Research