This week Doug Noland joins the podcast to discuss what he refers to as the “granddaddy of all bubbles”.
Noland, a 30-year market analyst and specialist in credit cycles, currently works at McAlvany Wealth Management and is well known for his prior 16-year stint helping manage the Prudent Bear Fund.
He certainly shares our views that prices in nearly every financial asset class have become remarkably distorted due to central bank intervention, first with Greenspan’s actions to backstop the markets in the late-1980’s, and more recently (and more egregiously) with the combined central banking cartel’s massive and sustained liquidity injections in the years following the Great Financial Crisis.
All of which has blown the biggest inter-connected set of asset price bubbles the world has ever seen.
Noland foresees tremendous losses as inevitable, as the central banks lose control of the monstrosity they have created:
This is the granddaddy of all bubbles. We are at the end a long cycle where the bubble has reached the heart of money and credit.
There will be no way out. We’re not going to get enough private credit growth to reflate things when this bubble bursts. It’s going to have to come from central bank credit; it’s going to have to come from sovereign debt.
When this bubble bursts, it will shock people how far the central banks will have to expand their balance sheet just to accommodate the deleveraging in the system. And they won’t really be able to add new liquidity to the market; they’re just going to allow the transfer of leveraged positions from the leveraged players onto the central bank balance sheets.
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