The Feds Creation of Bubbles Is Epic

This might not be a valid conclusion to draw if this was just an American phenomenon, but it is far from that. It is global in nature. Every central bank is monetizing, which essentially means that every central bank is destroying the value of its respective currency. It is a classic race to the bottom. And chaos has been the result and will continue to be. Granted, if you don’t pay attention to what is going on, you might be saying ‘what chaos?’ People can still go do pretty much everything they want. More and more of it is reliant on debt, but the stigma associated with debt has been largely removed since the late 1980s. I could point at the European catastrophe, but those of you paying attention already know all about it. The failure of easy money, lazy-is-fair (not laissez-faire), socialism-lite is obvious. The Keynesian justification has been exposed as a sham. Europe, save Germany, is toast. The props maintaining even a semblance of order are enormous. This is not just a failure of socialism and Keynesianism, but of the idea of a centrally control monetary system as well.

Global Monetization

The central bank model is nothing more than an albatross. We’d be much better off without it.  The framers of the Constitution knew this and allocated the responsibility of stewardship of the nation’s money to Congress. But the Congress is full of imbeciles you might say; we need professional bankers and ‘economists’ to manage such important affairs, right? I dare say even the most incompetent Congress couldn’t do any worse than a malfeasant group of central bankers have accomplished through the most putrid of intentions.

I’ll readily admit there is no perfect system because there are no perfect individuals, however, we could certainly do a lot better than a 96% haircut over the last century. That’s a worse deal than the people of Cyprus got back in April and, for the most part, we don’t even realize it. We’ll hold lifelong grudges against family members or friends, but when it comes to the biggest con job in recorded history we display the memory of the average houseplant.

You can bet your last penny that the monetary chaos will continue, resulting in larger and more spectacular swings in markets across the spectrum. There will be another 2008. The recklessness and leveraging that guaranteed the fall of 2008 are back in full force and then some. The outcome is no longer in doubt. And guess what? Just like last time, nobody really cares. The people are complacent, the government is in full distraction mode, and the banksters rest secure in the knowledge that they’ll be made whole.

There is a nasty twist though this time around. When your smiling neighborhood banker stands on the gas and drives his institution headlong into the brick wall, it is your bank account he’ll be coming for first. When that isn’t enough (and it won’t be) he’ll run to Congress and use Jack Lew or whoever the Treasury Secy happens to be to pull a Hank Paulson and politic, sneak, and threaten until another taxpayer bailout is given. Or maybe the retirement system will need to be ‘nationalized’ to save America from another financial ‘emergency’.

Are these really the sort of people you want in charge of determining the direction of interest rates, our economy, and worst of all, holding our debt? These folks have no answers now, other than more of the same policies that got us into the mess to begin with. However, when the balloon goes up, they’ll undoubtedly have all the answers when it comes to restoring order and none of their ‘solutions’ will be palatable for the average American, or citizen of the world for that matter.

Ordo ab chao (out of chaos comes order). Welcome to Club Fed.

This article is brought to you courtesy of Andy Sutton from Sutton & Associates.

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