Friday, April 29, 2016

Monetary stupidity and the financial system's unwillingness to make healthy reforms.

In other words, central banks and planners have generated enormous bubbles in debt, housing and stocks to maintain the illusion that doing more of what failed spectacularly will actually fix what's broken. This is crazy, because these policies are what's broken. All these massive interventions and manipulations are driving the system off the cliff.

* * * *

Here is the craziness: nothing has actually been fixed in the past 7 years. Rather, everything that was broken in 2008 has been ramped up to an even higher levels of craziness. The crazy solution to bursting housing bubbles is even bigger housing bubbles (see Sweden, China and the U.S.).[1]

Mr. Smith points out that the "Swiss central bank admitted to spending $470 billion on currency market manipulation since 2010." That's an enormous amount of money for a very small country to spend. That has to be an expenditure coming under the heading of desperation measures and something far removed from any kind of long-term productive purpose.

Notes
[1] "Is the World Getting Crazier, But We No Longer Notice?" By Charles Hugh Smith, Of Two Minds, 4/29/16.

No comments:

Post a Comment

Comments are moderated. I am entirely arbitrary about what I allow to appear here. Toss me a bomb and I might just toss it back with interest. You have been warned.