In a recent article, Yale scholar Stephen Roach points out that between 2008 and 2017 the combined balance sheets of the central banks of the U.S., Japan, and the eurozone expanded by $8.3 trillion, while nominal GDP in those same economies expanded $2.1 trillion.
What happens when you print $8.3 trillion in money and only get $2.1 trillion of growth? What happened to the extra $6.2 trillion of printed money?
The ‘inflation’ hasn’t been in consumer prices; it’s in asset prices. The impact of money supply reduction and higher rates will be falling asset prices in stocks, bonds, and real estate—the asset bubble in reverse.
Rickards went on to note:
Asset prices are prone to bubbles on the upside and panics on the downside. Small moves can cascade out of control (the technical name for this is ‘hypersynchronous’) and lead to a global liquidity crisis worse than 2008.
This will not be a soft landing (he said). Bernanke and Yellen did not get a residential real estate bubble. Instead, they got an “everything bubble.” In the fullness of time, this will be viewed as the greatest blunder in the history of central banking.
The breakdown of our economy has been building for a long time. Fortunately, this will happen under President Trump’s watch. He will be the individual to untangle the mess that Progressive Democrats made. He will need help from Congress to right the economy. He can be assisted by Mike Braun, Dr. Richard Moss, Diego Morales, Stephen MacKenzie, Rep. Jim Banks, and Trey Hollingsworth who are running for Congress.
These Conservatives can help reform the Federal Reserve and other institutions that are messing up our entrepreneurial competitive free market system. With President Trump they can provide different, saner mandates and rule-making powers for the Federal Reserve. They can repeal job killing regulations that impede economic growth. To right the ship of state and the economy you have to vote out the bad guys, and elect these people who wear the white hats.