When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Friday, January 10, 2014

Thanks to the Fed, Without Bubbles There Is No Economic Growth

Fed (Federal Reserve) Policy over the last 25+ years has not only put us on the road to ruin for the US currency, but also our economy --

RealClearMarkets - Are Stocks Really That Great Over the Long Run?: " . . . without full five-year participation in the dot-com bubble and the last two years, stocks have been utterly atrocious. Not only does that more than suggest that managing risk is paramount, it points to perhaps systemic deficiencies where they were never expected. In a very serious way that turns the recent suggestion from Larry Summers, echoed by Paul Krugman (http://www.realclearmarkets.com/articles/2013/12/20/an_economy_wrecked_by_ivy_league_phds_100807.html), somewhat on its ear. Summers suggested that the economy may be operating with a negative natural interest rate, meaning that asset bubbles would be the natural economic and financial course from policy operating with that constraint. Krugman largely extrapolated further and assumed that there might be an economic component to that idea, where real growth in income and employment has been tied to the asset bubble "necessity." Without bubbles, extending this to its conclusion, there is no economic growth. . . ." (read more at the links above)

How to get out of this paradigm? I hate to be pessimistic, but I'm not sure the US will ever give up its addiction to bubbles, until it is too late. It's like a junkie or alcoholic who has to hit bottom.


The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects