A Stunning Admission From A BOE Central Banker: This Is What The Coming “Helicopter Money” Will Look Like
Back in early 2009, just around the time the Fed announced it would unleash QE1, we warned that any attempt to reflate the debt (a pathway which ultimately leads to hyperinflation as monetary paradrops are the only logical outcome as a result of the deflationary failure of the intermediate steps) would fail, and instead would saddle the world with even more debt, making monetary financing, i.e., paradropping money, the inevitable outcome.
We said that instead, the right move would be to liquidate the excess debt, and start anew – a step which, however, would wipe out trillions in (underwater) equity, something which the status quo would never agree to, as that is where the bulk of its wealth is contained.
7 years later, debt is well over $200 trillion, having risen by more than $60 trillion in the interim, and we are rapidly approaching the peak of the world’s debt capacity as we noted a month ago in “The World Hits Its Credit Limit, And The Debt Market Is Starting To Realize That.”
Today, we find that none other than Adair Turner, a member of the Bank of England’s Financial Policy Committee and a Chairman of the Financial Services Authority, wrote a long essay in Bloomberg which admits everything we have warned about.
To wit:
Advanced economies’ public debt on average increased by 34 percent of GDP between 2007 and 2014. More important, national incomes and living standards in many countries are 10 percent or more below where they could have been, and are likely to remain there in perpetuity.
The fundamental problem is that modern financial systems inevitably create debt in excessive quantities. The debt they create doesn’t finance new capital investment but the purchase of existing assets, and above all real estate. Debt drives booms and financial busts. And it is a debt overhang from the last boom that explains why recovery from the 2007–2008 crisis has been so anemic.
…click on the above link to access the rest of the article…
