Booms and Busts

Harry Dent believes that a major crash is coming, which will probably begin this year.

Central banks have done nothing to end the boom-and-bust cycle. Instead, their unscrupulous interventions in credit markets just prolong the boom. But it's a huge mistake to assume that bringing market interest rates to zero will create a perpetual boom.

It is not money that funds economic activity, but the saved pool of consumer goods. The existence of money only facilitates the flow of savings. Any attempt to replace savings with money ends in economic disaster.

Our flawed economic measure called GDP leads to a flawed and skewed view of the economy in which consumer spending is the most important metric.

In order to remove the threat of secular stagnation what is required is to shrink government outlays and to close all the loopholes for the creation of money out of thin air.

Many mortgages have not just been modified once, but twice, and sometimes more. Loan servicers are holding higher-end mortgages rather than foreclosing a decade after the crash. Thus, there is plenty of shadow inventory lurking, waiting for the next crash.

After lying dormant for several years in the aftermath of the Great Recession, the subprime market has returned with a vengeance. Subprime has become prevalent in every facet of the credit industry, and we should be terrified.

Even if the central bank policymakers could implement policies without error, Milton Friedman’s and Robert Lucas’s monetary schemes could not secure stable economic growth.

The mainstream National Bureau of Economic Research definition of recessions is of little value. Real saving, not consumer demand, is the real driver behind economic growth.

As money loses its purchasing power, income and wealth are stealthily redistributed. Some individuals and groups of people are enriched at the expense of others.