Is This Can Too Big For Fed & ECB To Kick?

There are lies, damned lies, and economists. Whether these economists work for the government or a bank, they spend all their time on the computer extrapolating current trends with minor adjustments.

If you want to understand the future, don’t spend your life preparing and constantly revising an Excel sheet with masses of economic data. Collective human behavior is extremely predictable. But not by spreadsheet analysis but by studying history.

HISTORY IS A BETTER FORECASTER THAN ECONOMISTS

There just is nothing new under the sun. So why is there so much time and money wasted around the world to make economic forecasts that are no better than a random job by a few chimps?

Instead, give some lateral thinkers a few history books and let them study the rise and decline of the major empires in history. That will tell them more about long term economic forecasts than any spreadsheet.

After a 50 year decline of the US economy and the dollar, we still hear about the V-shaped recovery being imminent.

On what planet do these people live who believe that a world on the cusp of an economic and social collapse is going to see a miraculous recovery out of the blue?

This is the problem with a system that is totally fake and dependent on a constant flow of stimulus even though it has zero value. Most people are fooled and believe it is for real.

ALL EMPIRES END WITH COLLAPSING CURRENCY AND SURGING DEBTS

We are now in the final stages of the end game. The end of the end could be extended affairs or they could be extremely quick. Most declines of major cycles are drawn out and this one has lasted half a century. During that time the dollar is down 50% against the DM/Euro and 78% vs the Swiss franc. And US debt has gone up 65x since 1971 from $400B to $26T. A collapsing currency and surging debts are how all empires end.

But the end of the end has also been drawn out and started in 2006 with the Great Financial Crisis. The financial system was on the verge of collapse in 2008 but was miraculously rescued with tens of trillions of dollars in printed money and guarantees.

Central banks have since then frenetically kept the party going by manufacturing worthless paper money. The music should have stopped in 2008 but the participants are still dancing on the grave of a system that is about to succumb.

The degree of the coming disintegration of the world economy will only be known with certainty by future historians. What is clear though is that we are seeing the end of a major cycle. What we will experience next is not just the fall of one nation but of most nations on earth, both advanced and developing countries. Debt is a global problem that virtually every country is seriously affected by. When the financial system crumbles so will world trade.

WHAT WILL HAPPEN NEXT?

Asset Bubbles can only end in one of two ways: Either they Implode or they Explode

The principal bubbles we are here talking about is the financial system, stock markets, bond markets, and property. So in principle, we are looking at two options for this era to end.

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Comments

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Joseph Cox 1 month ago Contributor's comment

I think governments could offer to convert debts to % of GDP commitments (like Shiller's Trills) and thus very effectively reduce the dangers of economic contagion. Tax policies that discourage debt would help to do the same. Debt can fuel a boom, but it can also spark a catastrophe.

William K. 1 month ago Member's comment

Indeed, the present plague is an easy to blame contributor, but the slope was well greased before that happened. The fact that the central banks were trying to save their buddies and the fortunes was and still is not what would be the solution.

The really bad news is that it s entirely possible to pass a a point of no return. And also rather unfortunate.

So those folks pushing the fear of an atomic war ending things seem to be wrong, it was the bankers who spread the poison, not the generals.

Barry Hochhauser 1 month ago Member's comment

I was just thinking the same thing.

Matthew Hoenig 1 month ago Member's comment

I really enjoyed reading your article, especially the parts about economists modeling and the impact of Covid on the economy. Specifically, I agree that while CV has made matters worse, it is not the sole cause of this economic downturn. Its easy to blame our problems on a prevalent issue, but CV is not the only problem.

Chee Hin Teh 1 month ago Member's comment

Well said. Many thanks for your enlightening..