The Pin to Pop This Mother of all Bubbles?
The comments above & below is an edited and abridged synopsis of an article by Chris Martenson
Global macro economic data has been weak for years, but there’s now the chance of a worldwide recession. Why? A dramatic and worsening shortfall in new credit creation.
Central banks have done the world an enormous disservice. Instead of admitting that issuing debt at more than twice the rate of underlying economic growth was a bad idea, they created an even larger debt monster.
The resulting global asset price bubble—or, more accurately, set of nested and intertwined bubbles—can collectively be called the Mother Of All Bubbles (MOAB). Central bankers have tried, again and again, to print prosperity.
But prosperity cannot be printed out of thin air. All that can be accomplished by central bank sleight of hand is a transfer of wealth. Central banks steal from the many to give to the few. They also encourage everyone to steal from the future (excessive borrowing).
Perhaps the central banks actually believed their own hype, but we are nine years into emergency measures, and nothing remotely close to healthy economic growth has emerged. Nine years says that the Fed isn’t in this for the reasons they state. Instead, they are orchestrating the largest wealth transfer in all of history, from the many to the few.
We have the widest wealth and income gaps in all of history. The big banks have complete control of the political and financial machinery of every country in the world. The media cheerleads the whole thing, convincing most people it’s all been for their own good.
An important risk factor to the over-leveraged global economy is declining credit impulse. Unfamiliar with the term? You won’t be for long. It will be the pin to pop this MOAB.
Defined as net new credit to GDP, credit impulse is one of the best statistical predictors of recession. As of today, credit impulse has gone negative across the world for the first time since the start of the Great Recession.