THE NOTION OF "FLOODING THE SYSTEM" IS AFOOT THESE DAZE IN CENTRAL BANKING CIRCLES...
BUT IS THAT REALLY THE "CURE" FOR THIS DEPRESSION...?
WE ARE IN A DEPRESSION THAT WAS CAUSED BY TOO MUCH LIQUIDITY LEFT IN THE SYSTEM FOR TOO LONG...
ASSETS OF EVERY KIND ROSE...INFLATED...HYPER-INFLATED EVEN...
IT WAS ALL DONE UNDER THE ASSUMPTION THAT IF CONSUMPTION WAS SPURRED... PRODUCTION AND PRODUCTIVE CAPACITY WOULD BE BUILT ...AND THUS, JOBS CREATED...
OK FINE BUT WHAT WENT WRONG...?
CLEARLY THE CONSUMPTION WAS DEBT BASED...AT LEAST FOR AMERICANS...
AMERICANS WERE NOT PRODUCING WHAT THEY CONSUMED...THEY WERE BORROWING FOR IT...
AND THIS LEAD TO A MASSIVE SECURITIZATION SCHEME... WHEREIN BAD DEBT "BUNDLED" AND WAS SOLD OFF TO GLOBAL FINANCIAL INSTITUTIONS....
SERIAL ASSET BUBBLES WERE CREATED IN THE US OVER MANY YEARS...TO MAKE UP FOR THE LACK OF PRODUCTIVE CAPACITY...
DEFICITS BECAME THE "NEW NORMAL" UNDER THE "MAGIC DOLLAR."
THEN THE ASSET BUBBLES WERE USED TO "PAY OFF" CONSUMPTION DEBT...USING THE FOREVER "MAGIC DOLLAR"....
AND THUS THE SYSTEM WAS CLOSED...OR SO WE THOUGHT UNTIL SEPTEMBER OF 2008...
AMERICANS MAKE ASSET BUBBLES...AND CHINA MAKES EVERYTHING ELSE...
IN A NUTSHELL THAT IS REALLY THE STORY...
SO WHY IS BERNANKE TRYING SO HARD TO "BRING THE BUBBLES BACK"....?
AND WILL PRODUCTION EVER RETURN TO THE US FROM CHINA...?
THIS SOUNDS LIKE A VERY VERY LONG TERM PROPOSITION...!
NOT A V-SHAPED RECOVERY... MORE LIKE A VERY VERY LONG..."L."
AND REMEMBER...FOR SOME PEOPLE AND SOME COUNTRIES...IT NEVER DOES COME BACK...
RIGHT NOW, WE ARE PASSING THAT OFF AS "THE NEW NORMAL"....
BUT IS A "SICK" OR "DEAD" ECONOMY.... ACCEPTABLE AS THE NEW NORMAL FOR THE AMERICAN PUBLIC...?
