Booms and Busts

The coronavirus crisis has unleashed two types of bankruptcies that are very different, have different causes, and should require different solutions.

The Fed's portfolio is now 35 percent larger from the time the Fed promised to "taper" back its portfolio and "normalize." It is increasingly clear that there will not be any normalization. Ever.

This year, as in 2006, the real estate industry is in denial about the state of the economy.

Contrary to Fed assumptions, we are not presently facing a problem of liquidity vis-à-vis Great Recession; we are confronted, instead, with a serious shortage of quality collateral.

With each passing recession, the Fed finds it harder to refuel the last bubble, but the market moves on to the new bubble as the Fed keeps interest rates artificially low.

Central banks have created a brittle economy without real savings and without much room to maneuver. Central banks now want more of the same in a bid to fix what they broke.

Every crisis caused by the unbacked paper money system expands the power of the states over economic and social life, and unfortunately, once the state has expanded its power, it is unlikely the trend will be reversed.

These famed "tools" of the central bank are nothing but cunning and arcane techniques for conjuring additional trillions of dollars out of thin air and pumping them into the global economy.

Although shocks can disrupt the pace of economic activity, they have nothing to do with the phenomenon of recurrent boom-bust cycles. The cycle requires something more. A central bank, for instance.

Lower interest rates won't make an economy grow. What matters is real savings.