35 year trade deficits can't be papered over with Fiscal and Monetary policy. Trade deficits equal debt. There's no such thing as *free* trade or a free lunch, something today's EconoDunces will learn the hard way. Keynes' biggest mistake was not predicting there would be so many idiots in the future...
Once the post-WWII dividend was spent by the late 1960s, the writing was on the wall - accept a lower standard of living for EVERYONE, or go off the gold standard and create a debt-based Ponzi scheme to the benefit of ever-fewer people. We know which path was taken...
Current account = capital account
U.S. Federal debt with balance of trade:
Post-2008, Monetary policy had no effect on the real economy, because the debt level was too high and therefore the velocity of money kept falling. All of the money went into the Dow casino
Fed balance sheet with velocity of money...
The Fed and global Central Banks encouraged speculation on a level that eclipsed Y2K and 2007, via tens of trillions in Monetary stimulus
Rydex asset allocation:
The Fed is attempting the impossible - to normalize interest rates while global risk is coming off and while there's no underlying economy to support current asset valuations...
1 Year Treasuries w/52 week range of average stock. Prior to now, the Fed has always been in liquidity expansion mode when stocks were this weak...
The Bank of Japan's latest attempts to reignite the animal spirits, are so far not working...except for Facebook...
Nasdaq 100 with JPY:
Global Risk is OFF, and gamblers are stranded...
As long as Facebook doesn't roll over, this will all be fine...
