Zero Hedge: In his latest note today, Albert Edwards picks up on this theme to write “Theft redux: the citizens will soon turn their rage towards Central Bankers.” The core of his argument is familiar:
While politics in the West reels from a decade of economic crisis and stagnation, asset prices continue to surge on the back of continued rapid growth in G3 QE.
In an age of “radical uncertainty” how long will it be before angry citizens tire of blaming an impotent political system for their ills and turn on the main culprits for their poverty – unelected and virtually unaccountable central bankers? I expect central bank independence will be (and should be) the next casualty of the current political turmoil.
That’s just the beginning from Edwards, who appears to be getting increasingly angrier and more frustrated with a market that makes increasingly less sense: his fiery sermon continue with the following preview of the “inevitable catastrophe that lies ahead.” more …
Opinion: Albert Edwards is a financial strategist with the New York Times.
Quantitative Easing (QE) began in March 2008 as a remedy for the deep recession caused by the housing crisis. While the Federal Reserve chief Ben Bernanke was the brain child of QE, he was not the one who started the problem.
In 1975, Jimmy Carter signed into law the Community Reinvestment Act that was intended to provide loans for inner city families to purchase homes. The law got turbo-charged in 1995 under Bill Clinton when the government pressured banks to make loans on almost any type of income, i.e. alimony, child support, etc.
As mortgage bonds got packaged with both good loans and toxic loans, banks purchased large quantities of these government agency AAA bonds with a 5-6% return. In 2007, the bonds began to fail as millions of families who couldn’t afford the homes defaulted.
QE provided newly printed money to buy the housing bonds from failing banks. It was supposed to stimulate the economy by giving banks fresh capital to lend.
It didn’t work. But it did make stock prices skyrocket and bond yields plummet creating an ever expanding gap between rich and poor.
When QE1 failed, QE2 and QE3 followed. By that time $4.5 trillion counterfeit money had been created that is still on the Fed’s balance sheet today.
In 2013, the government deceptively changed how it calculated GDP in order to show that the economy was improving, but the deception failed. After 8 years of the Obama administration, the government borrowed and spent an additional $10 trillion but never had even one year of 3% growth.
Picture a gigantic ship’s anchor on a rowboat.
Enter Donald Trump with some Reaganesque pro-business, low tax ideas. But since Mr. Trump built his fortune on debt, don’t expect the borrowing and spending to stop.
No one knows how long the charade will last, but when it ends, it will be prophetic (Rev. 6:5-6).