We need to clear the malinvestment that never got addressed during the GF
While at the New Orleans Investment Conference this past weekend, Chris and I had the great pleasure of sitting down with Grant Williams, publisher of the economic blog Things That Make You Go Hmmm and principal of Real Vision TV.
There will be no smooth transition back to sustained economic growth, he warns
Instead, the distortion of today’s excessive asset prices will require a systemic reset to fix. Either by a deflationary event that destroys the malinvestment, or by an inflationary event that destroys the currency.
Either way, a shock to the system awaits us:
When the 2008 crisis hit, we were “at the brink”. Guys like Jamie Dimon will tell you that we were *this* close to the banking system not functioning, people being unable to get cash out of the ATMs.
If you live in Cyprus, if you live in Greece, you’ve seen this movie play out in real-time over the last few years. You’ve had your savings confiscated by the government or a bail-in.
It may not happen here in the US until the very end, but to say “it couldn’t happen here” is clearly wrong. There’s nothing that says the United States is exempt from the laws of finance and thousands of years of historical precedent. Even though it happens to be in the ascendancy globally at the moment, those things change.
Ask Portugal who used to be the holders of the world’s reserve currency centuries ago. Today they’re just one part of the euro. These things ebb and flow. They rise and fall.
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