A gentlemen by the name of Chris Puplava, that I highly respect and follow, recently wrote in his weekly newsletter:
All in all, the above factors suggest that the US economy is either in or slipping into another recession. Our firm’s own recessionary probability model is nearing the key 20% threshold mark in which a recession has occurred every time the 20% level is exceeded. Given we were at 19.5 for August, it appears a reading north of 20% is a given for September or October, which appears to be the month that the next recession will begin in the US.
That quote takes us to todays chart of the day above. Basic cycle shows us that we are now somewhere between market sell off and potential early stages of central bank reflation. On the other hand, I know a lot of smart super bears out there think that the next recession will be so huge that equity and commodity markets will crash to about 80% lower than we are currently.
The stage between bear market, global recession and reflation in 2008 took a long time, but my opinion is that central bankers and governments have learned their lesson since than. What might push the central bankers like Bernanke over the edge into expending their monetary base - in other words printing more money, as opposed to just twisting it from short term to long term bonds - is just one negative quarter of GDP growth in both Eurozone and the US.
At that point, the money printer will be back to his usual tricks - deforestation the Amazon. Remember... history has always showed us that money printing never leads to prosperity, but just higher commodity prices, especially agriculture and precious metals!