Since 2009, an ocean of
easy money saved American, EU, and Japanese economies from collapse.
Never before historically did the world's largest central banks abandon
reason and go "absolutely berserk," according to financial expert Martin
Weiss. Earlier ones alone did it.
Four is unprecedented and dangerously reckless. So far they're swimming
above water together. Eventually they'll sink when "the money drug stops
working." Diminishing returns eventually follow, then perhaps crashes
when things spin out of control.
Economic growth already is faltering. Lower or declining growth despite
larger money infusions shows trouble gets closer to erupting. As long
as printing presses roll, day of reckoning's postponed, but that game
only works for so long.
Drug addicts need regular fixes, then bigger ones. They lead to overdoses
and death. Economies are similar. What can't go on forever, won't. Trouble
awaits excess down the road. The more extreme, the greater the bang.
It's coming and will rock the world.
For over two decades, the Bank of Japan (BOJ) printed money "like crazy."
In 2008, when crisis erupted, BOJ's balance sheet already was bloated.
It totaled 20% of Japan's economy. Now it's about 30%.
Germany's 1920s hyperinflation resulted from similar monetary madness.
Easy money in America under Greenspan was bad enough. Bernanke made
him look tame. Since 2008, he more than tripled the Fed's balance sheet
from about 6% of GDP to 20%, and hasn't quit yet.
The Bank of England (BOE) matched the Fed. Perhaps it feels what's good
for the goose is good for the gander. Good for what must be asked? Bankers
and corporate giants had a party. Ordinary households were entirely
left out. Potentially an unprecedented train wreck approaches.
Since 2011, the European Central Bank (ECB) led the money printing global
race. Its balance sheet expanded to almost 30% of GDP for 17 member
countries. Each dissimilar from the others, they're paying a collective
PIMCO's Mohamed El-Erian sounded an alarm asking what happens if central
banks fail? They flooded Western economies and Japan with money irresponsibly.
El-Erian believes they "no longer" should keep doing it. Their policies
are losing effectiveness. Greater "collateral damage and unintended
circumstances" are increasing.
While short-term liquidity infusion effects are clear, longer-term ones
raise concerns. Bottom line, says El-Erian, is that "central banks can
no longer - indeed, should no longer - carry the bulk of the policy
"Rather, it is a recognition of the declining effectiveness of central
bank tools in countering deleveraging forces amid impediments to growth
that dominate the outlook." It's also about growing risks too great
too ignore. "(S)afe deleveraging" must replace years of monetary madness.
The global system's "Western core" weakened and "multilaterism is challenged."
Central banks may have built "expensive bridges to nowhere." Ripple
effects from are felt globally. Their "ballooned" balance sheets are
Debt crises persist. Economies are bailout dependent. Policies so far
avoided crashes. At issue is for how long? Europe is especially troubled.
Zombie Greece awaits its obituary to be written. Portugal's on the verge
of cratering. Spain and Italy aren't far behind. France and Britain
are weak. Germany, the continent's underpining, shows disturbing signs.
Rising bond yields signal trouble. Some financial analysts suggest euro
crisis round two arrived or at the least draws near. AFinancial Times/Brookings
Institution report said the world economy "remains on life support."
It's levitating on an ocean of money. According to Brookings' Eswar
"The global economic recovery is still spluttering due to a lack of
robust demand, policy tools that are stretched to their limits and unable
to muster much traction, and enormous risks posed by weak financial
systems and political uncertainty."
A worried Wall Street Journal article headlined, "Sowing Seeds of the
Next Major Crisis," saying:
In America and Europe, private sector "dependence on government support"
produces "excessive risk-taking, distortions in capital markets, and"
greater inflationary pressures. The foundation for the next crisis looms.
What worked last time won't next time around. Unpalatable consequences
await. When risk stops being a dirty word, today's "unwitting experiment
in state-influenced capital markets may be sowing the seeds of the next
Fragility threatens greater crisis with few effective tools left. Global
slowdowns and declines are increasing. Troubled Greece is a corpse awaiting
burial. Spain's pain contaminates the continent.
What's a central banker to do? There's "little they can do on their
own," says El-Erian. Avoiding global depression conditions may have
only delayed them. Main Street America and Europe already experience
Monetary madness put central banks in a box. They made their bed and
have to sleep in it. So do ordinary households victimized by their policies.
Western banks, other corporate giants, and rich elites got the benefits.
They got the pain. It's not getting better. It's getting worse.
The mother of all walls approaches. Rising inflation may signal it.
Housing's continued crisis prevents recovery. Financing remains totally
dependent on government support.
Risky liar loans keep being made. It proved past mistakes taught nothing.
Weiss notes worrisome "deadly cancers." Wall Street central bankers
run things. Elected leaders were shoved aside.
Instead of financing growth through savings and investments, debtor
economies are financed with fiat currencies. Instead of prudent investing,
speculative excess dominates financial markets.
Bad endings are preordained. How bad depends on how long imprudence
prevails. It shows no sign of ebbing. The longer it's sustained, the
worse the outcome.
Former bank regulator/financial fraud expert Bill Black believes today's
crisis is 70 times larger than the collapse of the S&L industry
in the late 1980s.
"(G)enius technocrats" aren't in the wings with solutions. Forgotten
past mistakes are repeated. Consequences are far more grave. Unprecedented
fraud produces today's profits.
Later on watch out. Catastrophe awaits to arrive. It'll choose its own
time, place, and severity, but promises harder times perhaps than anyone
can imagine. Postmortems will tell all. Don't they always when it's
too late to matter?
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge
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