Let me start by asking a hypothetical. If you were playing poker, but didn't have to bet your own money, got to keep the winnings, and were replenished if you lost... what kind of game would you play?
What kind of bets would you make?
What kind of strategy would you use to crush your other players?
What if the other players also had the same benefits?
How soon would it be before the size of the pot reached the realm of absurdity?
This is somewhat analogous to our so-called response to the housing bubble and all the attendant failures of capitalism that they are still bailing out.
The financial community made enormous bets that were poorly conceived, had short-term bonus payouts at the expense of long-term consequences, relied upon knowingly false assumptions, and were blessed all the way up to the President, Chairman of the Federal Reserve Greenspan, and all their mandarin lackeys.
There have been numerous side effects to this that continue to hurt ordinary people today. These include complete lack of safe investments such as the traditional interest-bearing CD or money-market, which forces people that need security (such as pensioners, retired, etc) into riskier investments than is recommended. It has led to structurally high unemployment. Food and energy inflation.
And of course lack of accountability for the Yosemite Sam's who blazed their way into the annals of World Bubble History.
One of the metrics that shows the severity of the crisis is the rate of money creation, measured by the Federal Reserve as M2.
The below graph shows the total money stock over time, with the shaded areas representing recessions.
Note the two sharp upward trends in the past couple of years. The first corresponded to the 2008 response, cutely named by Ben Bernanke as "quantitative easing". Really, that just means another $500 billion in new money to give to the banks and their suitors.
Then another surge around 2011 that was the second round of quantitative easing, or "QE2".
All this money is electronic, of course. Recall that only a fraction of that exists in physical form..
Ten trillion is not some magic point of no return. But it does indicate the presence of a printing machine that has been the hallmark of the response put forward by the government, central bankers, and their string-pullers to keep a deflating balloon aloft.
The fact that money continues to be created at such a high rate means that the knock-on effects from all the bad bets are still floating around out there and are stinging the system. But I feel it has transitioned somewhat from legacy bad bets to a whole class of new ones.
This is because the market, the speculators, and the bettors now know that the government will blink. They have turned us all into the patsy in their high stakes poker game.
By simply crying wolf and pulling the Too-Big-To-Fail Emergency Cord, they can get more money chips on the table, allowing them to bet bigger and bigger with foolish strategies. They have some measure of insurance from the government, and thanks to tax cuts and flag-waving from the political class, essentially keep all the profits.
Oh, and want to visualize ten trillion dollars?
Imagine making a stack of hundred dollar bills the height of the Eiffel Tower, every three hours. For 11 years.
That's some serious printing.
What kind of bets would you make?
What kind of strategy would you use to crush your other players?
What if the other players also had the same benefits?
How soon would it be before the size of the pot reached the realm of absurdity?
This is somewhat analogous to our so-called response to the housing bubble and all the attendant failures of capitalism that they are still bailing out.
The financial community made enormous bets that were poorly conceived, had short-term bonus payouts at the expense of long-term consequences, relied upon knowingly false assumptions, and were blessed all the way up to the President, Chairman of the Federal Reserve Greenspan, and all their mandarin lackeys.
There have been numerous side effects to this that continue to hurt ordinary people today. These include complete lack of safe investments such as the traditional interest-bearing CD or money-market, which forces people that need security (such as pensioners, retired, etc) into riskier investments than is recommended. It has led to structurally high unemployment. Food and energy inflation.
And of course lack of accountability for the Yosemite Sam's who blazed their way into the annals of World Bubble History.
One of the metrics that shows the severity of the crisis is the rate of money creation, measured by the Federal Reserve as M2.
The below graph shows the total money stock over time, with the shaded areas representing recessions.
Note the two sharp upward trends in the past couple of years. The first corresponded to the 2008 response, cutely named by Ben Bernanke as "quantitative easing". Really, that just means another $500 billion in new money to give to the banks and their suitors.
Then another surge around 2011 that was the second round of quantitative easing, or "QE2".
All this money is electronic, of course. Recall that only a fraction of that exists in physical form..
Ten trillion is not some magic point of no return. But it does indicate the presence of a printing machine that has been the hallmark of the response put forward by the government, central bankers, and their string-pullers to keep a deflating balloon aloft.
The fact that money continues to be created at such a high rate means that the knock-on effects from all the bad bets are still floating around out there and are stinging the system. But I feel it has transitioned somewhat from legacy bad bets to a whole class of new ones.
This is because the market, the speculators, and the bettors now know that the government will blink. They have turned us all into the patsy in their high stakes poker game.
By simply crying wolf and pulling the Too-Big-To-Fail Emergency Cord, they can get more money chips on the table, allowing them to bet bigger and bigger with foolish strategies. They have some measure of insurance from the government, and thanks to tax cuts and flag-waving from the political class, essentially keep all the profits.
Oh, and want to visualize ten trillion dollars?
Imagine making a stack of hundred dollar bills the height of the Eiffel Tower, every three hours. For 11 years.
That's some serious printing.
