Monday, November 9, 2015

"Time for the Crash."

"They can ignore the writing on the wall, but not the wall. That would be the one into which the global economy is smashing. Pixie dust has probably taken US equity markets about as far as they’re going to go. A crash that begins before Christmas will surprise only those who still believe in Santa Claus."


Sean said...

Great column. On spot, and on time. Too bad TPTB have their heads so far up their asses they can neither see, nor hear. Or if they can see and hear, then they are multiples of malicious.

Anonymous said...

Riding the tiger is not the tricky part.

Getting off the tiger and surviving is the tricky part.

From the founding the USA economy followed a pattern. Wartime deficit spending and the resultant inflation followed by peacetime surpluses being used to pay off the war debt and the resulting deflation. That ended following WWII. The US military was in the process of demobilizing after WWII but had to reverse course to fight in Korea. Then it was the Cold War. Essentially the USA has been on a wartime economic footing since late 1941. I believe I read an analysis that the US treasure had two real surplus years in that whole period, once under Reagan and once under Clinton. No surpluses, no paying down the debt, no deflation.

Then there's the other shoe. The Fed feels that deflation is a bad thing. Essentially they want 2% inflation into the forseeable future. Why might that be? I suspect because all of their tricks are for fine tuning an economy in an inflationary environment. They believe, probably correctly, that they would have no control over deflation. If they have no control, they have no reason to exist.