Saturday, December 5, 2015

Macroeconomic Failure: The Hardest Landing

Today's thought dealers bailed out lenders by giving borrowers more money. They took the extreme poverty thrown off by 2008 and used it to subsidize even greater debt accumulation at 0%. Now those debts are weighing on the economy like a ton of bricks. 

Had today's billunaire lackeys in government allowed the deleveraging process to take place as it naturally would have, then they would still have dry powder to alleviate economic poverty. But instead, by propping up the casino for seven years straight, they squandered their resources...

We are witnessing the real-time implosion of modern economic theory with no Plan 'B' when it fails. At best, Fiscal and Monetary policy were intended to be counter-cyclical. Not used as a permanent prop while corporations outsourced the fucking economy for special dividends. Whether one considers themselves a "Keynesian", "Anti-Keynesian", "Neo-Keynesian" or aghast bystander, the ever-greater use and abuse of Fiscal and Monetary policy for 35 years straight, while the output gap grew in broad daylight, can only be viewed as full asinine, starting a long time ago.

“As gamblers know, there isn’t an endless stream of Martingale chips—even for central bankers acting in unison. One day the negative feedback loop on the real economy will halt the ascent of stock and bond prices, and investors will look around like Wile E. Coyote wondering how far is down,”

And here we are, after seven years of fiddle fucking around with the casino, Central Banks have yet to normalize Monetary policy, and governments have yet to normalize their budgets. 

Holy fuck.

Liquidity trap visualized:
Fed balance sheet with velocity of money

The casino's chips are heading for zero value: