Blowing Bubbles For Fun And Profit

Bubbles are fun, but they extract a price. There is no free lunch.

Examples:

2019: The Everything Bubble.

It hasn’t crashed yet, but there are many bubble piercing objects on the horizon. Prepare for the implosion; it’s coming.

2008: The Housing Bubble.

Real estate mortgages, collateralized debt, and other derivatives nearly crashed the global financial system. The official story claims emergency central banking measures saved it. But 8.7 million Americans lost their jobs, bankers foreclosed on 10 million American homes, and the DOJ prosecuted no bankers for fraud. Congress and The Fed saved Wall Street banks and bonuses…

The Fed showered $16 trillion (per the limited audit) in secret bailouts, loans, swaps, and giveaways onto Wall Street and foreign banks. Another report (Wall Street on Parade) claims the total was $29 trillion. Regardless, a huge bailout worked once, so we could see a larger bailout when “the everything” bubble crashes. Debt (leverage) is larger than in 2008, and more sectors of the economy are dangerously inflated. The debt and credit monsters have grown.

2000: Internet Stocks Bubble.

The high-flying NASDAQ 100 soared from under 400 in 1994 to over 4,800 in 2000. Then it collapsed more than 80%. How many retirements and portfolios were devastated by investors arriving late to the casino? Most people failed to exit before the crash.

Blowing bubbles is profitable for Wall Street and the stock market, which is primarily owned by the upper few percent of the financial and political elite. The lower 90% have benefited little. Wages are higher but the cost of living has increased even more. Flawed (understated) government inflation statistics show the average wage earner lost ground in the last several decades. Real statistics would show larger losses. However, wealth increased for the upper 1%.

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Blowing bubbles is fun for the participants and profitable for a few until the bubble crashes.

From Wall Street on Parade:

“Wall Street on Parade is not buying the narrative that the $3 trillion that the New York Fed has pumped out to the trading houses on Wall Street since September 17 is part of routine open market operations that the Fed is legally allowed to do.”

The United States should have allowed banks to fail in 2008. Perhaps the U.S. should allow banks to fail in 2019 instead of creating $3 trillion or $30 trillion (QE plus “not QE”) and devaluing existing dollars.

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Disclosure: None. 

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