Nothing more adequately exemplifies the bankruptcy of our fiscal and monetary policies- and dare I say moral?- than the effort by the Federal Reserve and politicians to continue to pump more useless money into our system.
What has this money bought us?
Just debt financing for the political class that needs more and more of it to keep their con going.
And that’s why it’s harder to get real, honest money to make real, honest returns.
“Today, at $56 trillion and counting,” says the world’s largest money manager PIMCO’s Bill Gross, regarding American credit markets, “it is a monster that requires perpetually increasing amounts of fuel, a supernova star that expands and expands, yet, in the process begins to consume itself. Each additional dollar of credit seems to create less and less heat. In the 1980s, it took four dollars of new credit to generate $1 of real GDP. Over the last decade, it has taken $10, and since 2006, $20 to produce the same result.”
It’s hard to argue with that.
If government spending was the answer to our problems we would have entered a golden age long ago. As it is, our spending binge has only helped gold replace the dollar as a place of safety in the world.
During the Cold War, when two monolithic civilizations stared each other down over the tips of warheads that contained enough energy to destroy civilization many times over, investors looked to the dollar for the safety and freedom it provided.
Who knew back then that the only thing we had to fear was in not fearing ourselves enough?
Generations before us thought they fought for our freedoms.
The only free thing we care about now is “free” money. And that’s a freedom we can’t afford.
Hussman's Open Letter to the Fed; The Problem with Bubbles; Textbook Pre-Crash Bubble; Reflections on Not Chasing Bubbles; Integrity vs. Respect | Mike Shedlock