Why The Markets Are Overdue for a Gigantic Bust
The comments above & below is an edited and abridged synopsis of an article by Chris Martenson
It’s just not possible to print our way to prosperity. Printing money out of thin air can engineer lots of things (asset price bubbles and the redistribution of wealth from the masses to the elites, for starters). But it cannot print real prosperity. What goes up must also come down.
As a chart of GDP ominously shows, the damage done by the bursting of each market bubble blown by the Fed has been worse than the ones that preceded it. The bubble we are currently experiencing will be the largest of them all, and will be enormously destructive.
Things became serious in early 2016, when emerging markets were in disarray and the dollar was shooting higher, ruining the economies of many developing nations. The western stock markets started rolling over and appeared ready to suffer a serious decline, so the central banks took action; they have poured a whopping $1.5 trillion of thin-air money into the markets since January 2017, a record-breaking amount.
The banks are looking for growth, and that’s a problem. If you boost financial assets higher using central bank stimulus but the economy remains stagnant, there’s a gap. Global economic growth is weak, has been weak, and will continue to be weak for many reasons, not least of which are the piles of accumulated debt across the global economy, which are very growth unfriendly.
As long as you can grow your debts at a faster pace than your income—forever—you’ll never have to experience another economic downturn.
That statement lays bare the ridiculousness of everything the central banks have, and are currently trying to engineer. Eventually, reality catches up, and there are clear signs that it is arriving.