The world economy is headed into a recession but “naïve money managers” and others seem to be oblivious about what’s happening, financial expert Bert Dohmen said Friday on Newsmax TV
's “America’s Forum.”
He also discussed the turmoil in the markets after the Dow’s Thursday drop of more than 300 points as well as the effect of the Ebola crisis on the global markets.
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"The global economy right now is led by China,” said Dohmen, president of Dohmen Capital Research Institute. "They're going into a recession. Europe is in a recession already.
"This is a recession accompanied by deflation
which is even more difficult," Dohmen said. "This is after these huge stimuli program of the central banks — they've pumped over $10 trillion of liquidity into the system and my question is, if we go now into a recession what will they do for an encore? Do they have any ammunition left?
"Yes, they can create another $10 trillion, but doesn't that raise the specter of hyperinflation some time down the road?"
“We have to pay for this, these excesses," he added. "The central banks of the world are financing the governments of the world, which are totally out of control everywhere. They cannot keep the deficits down, they spend and spend.
"Our Congress spends and spends and when they need more money they just call up the Federal Reserve and say print me up another trillion dollars."
The Ebola outbreak in West Africa will likely have a ripple effect on the worldwide economy
, according to Dohmen, who predicted it would come to the United States.
“People are going to stop going to places where they're in large crowds. They're going to stop traveling, they're going to stop going to hotels and this is how these things spread,” he said. “Maybe it won't turn into a big disaster they'll find a cure, etc.
"But right now we're in the phase where the psychology is turning negative and psychology is what moves the market and this is what the markets are responding to," Dohmen said.
“I had to laugh here the last several months when oil prices were going down. Our prediction has been for a long time that oil is going to go below $70 and possibly back down to $50, but suddenly all of the economists were saying, 'Oh this is wonderful, consumers are going to have so much more money to spend and this will make the economy stronger.'
"That's not how it works they forget why oil prices were going down. Oil prices were going down because the economies were going down."
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