Our Mission, Our Vision, How We See Things

At Ernharth Group we believe it is our duty to our clients, and our Mission – to think for ourselves. And thus quite literally, our Vision is based upon a reliance on our own perception, judgment, and opinions – and not those of others.

In other words, the “conventional view” does not autopilot our ship.

In 2008 many of the largest investment banks were so misinformed about the true nature of the economy that they were blindsided, requiring $trillions in bailouts (the largest in history) to rescue them.

The Federal Reserve itself (which had to create $trillions to bail out the financial system, including said large banks) and many mainstream financial “experts,” were also caught completely unaware by the 2008 financial crisis.

Since 2008, the Federal Reserve has created an out-of-thin-air $3.57 trillion[1] it has used to purchase longer-term United States Treasury securities (debt) and agency mortgage-backed securities (also debt) to artificially suppress interest rates (along with the borrowing costs of the United States), and to artificially stimulate (prop up) the increasingly low interest rate-dependent economy, equity markets, and bond markets.[2][3][4][5][6]

Collective world central bank balance sheets have grown from $2.1 trillion in 1995, to $8 trillion in 2008, to $21 trillion today – all via previously non-existent, newly created currency by said central banks.[7][8]

As we see it, since 2008 the stock and bond markets, as well as housing, automotive, and the rest of the cheap credit-dependent economy have been resuscitated and driven predominantly by the Federal Reserve’s artificially low interest rate policies. We believe the markets and the economy have become addicted to these historically low interest rates. Low interest rates that we believe are unnatural, and unsustainable. 

It is our opinion that in 2016 there remain extremely large levels of systemic and interconnected risk among the “too big to fail” banks that nearly collapsed the financial system in 2008. 

In 2016, the latest less-than-stellar economic data indicates to us that despite the Federal Reserve’s unprecedented multi-$trillion currency injection into the financial system over the past eight years, the economy is once again in danger of rolling over as it did in 2008.

With $19.2 trillion in debt[9] and a fiscal gap of $210 trillion,[10] we believe the United States no longer has the luxury of considering its increasingly untenable fiscal scenario an abstraction. Yet Congress abysmally exhibits ZERO political will to address the United States' skyrocketing indebtedness (and growing insolvency). 

And thus we believe it is becoming increasingly likely that in an attempt to once again prop up the financial system, and to monetize/inflate away the United States’ massive debt - the Federal Reserve (along with other world central banks) will be forced to initiate another even larger round of Quantitative Easing (QE) via newly created record $trillions in currency-debasing dollars.

The same dollars investors’ hard-earned savings are denominated in.

And thus, we continue to help our clients plan accordingly.

[1] http://research.stlouisfed.org/fred2/series/WALCL
[2] http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm
[3] http://www.heritage.org/research/reports/2014/08/quantitative-easing-the-feds-balance-sheet-and-central-bank-insolvency
[4] https://www.youtube.com/watch?v=7nuzT3rchPU&feature=player_embedded
[5] http://video.cnbc.com/gallery/?video=3000474362
[6] https://www.youtube.com/watch?v=ecFyOZ-nwXM&feature=youtu.be
[7] http://www.zerohedge.com/news/2015-12-26/everything-central-banks-have-tried-has-failed-according-citis-buiter-just-one-thing
[8] http://davidstockmanscontracorner.com/weve-seen-this-picture-before-global-markets-down-13-trillion-already/ 
[9] http://treasurydirect.gov/NP/debt/current
[10] http://www.kotlikoff.net/sites/default/files/Kotlikoffbudgetcom2-25-2015.pdf


The opinions voiced are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by NPC.

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