Something is becoming increasingly clear to me. The experimental easing efforts of central banks over the past 4 years that have been promoted by some as the salvation of the world economy will come to be seen as the next major policy mistake. I am reminded of the way that debt securitization was originally hailed as the holly grail of the housing boom and consumer credit economy from 2003-2007. In retrospect we now see that in fact that securitization was horribly expensive for the masses as it allowed a few key perpetrators to funnel profits out of the machine while leaving worthless IOU’s for the real economy. After that, Central Banks stepped in to buy up the worthless IOU’s and restore public “confidence” in the bad debts and bankrupt institutions. Some have hailed them as heroes. In reality, the bad debts are still bad, and one of these days, they will have to be acknowledged as worthless but now fully underwritten by taxpayers who are on the hook to bail out Central Bank balance sheet losses. Expensive detour complete, we will then be full circle back to the financial crisis of 2008 but this time with even more debt than ever before.
This presentation by Charles Hugh Smith based on his recent article “The Global End Game in Fourteen Points” sheds further light on the traditional Business Cycle, the Credit Cycle and the destructive version being perpetrated by Central Bankers Here is a direct link.
Coffee with friends
