I Have A Bad Feeling about This
The comments below are an edited and abridged synopsis of an article by Charles Hugh Smith
The US is at an interesting juncture. It insists that all is well, as the Fed has managed not just the hoped-for soft landing but a resurgence of growth, therefore no recession.
The list of good things is striking: Low unemployment, rising wages, the wealth effect from explosive increases in housing prices has fattened the home equity of households and the soaring stock market has stoked the economy.
Inflation has receded and everyone anticipates interest rates will soon follow inflation down to zero. China has hit a rough patch, but it won’t affect the US. And so on.
Despite all the good news, something is setting off alarms. Perhaps the root of the feeling that danger is closer than we think is the universal confidence that finance can fix any problems.
Whatever the problem, central banks can solve it by lowering interest rates and flooding the financial/banking system with liquidity, i.e., monetary easing, making it easier and cheaper for businesses and households to borrow more money.
On the government-spending side, the central state can fix all problems by borrowing and spending however many trillions are needed.
In other words, we don’t need to suffer any inconvenient sacrifices or systemic changes, we simply need to borrow more and spend more.
Everything in the real world can be fixed with monetary and fiscal easing and stimulus.
Up for discussion: Everything’s wonderful; more, more, more; perverse incentives; and the empire of debt and deception.