{"id":27371,"date":"2017-10-28T09:13:11","date_gmt":"2017-10-28T14:13:11","guid":{"rendered":"http:\/\/olduvai.ca\/?p=27371"},"modified":"2017-10-28T09:13:11","modified_gmt":"2017-10-28T14:13:11","slug":"what-could-pop-the-everything-bubble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=27371","title":{"rendered":"What Could Pop The Everything Bubble?"},"content":{"rendered":"
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What Could Pop The Everything Bubble?<\/span><\/a><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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A crisis that can’t be solved by just printing more dollars<\/strong><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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I\u2019ve long held that if a problem can be solved by creating $1 trillion out of thin air and buying a raft of assets with that $1 trillion, then central banks will solve the problem by creating the $1 trillion out of thin air\u2014nothing could be easier.<\/p>\n

This is the lesson of the past eight years: if a problem can be solved by creating new money and buying assets, then central banks will solve that problem.<\/p>\n

Problem: <\/strong>stock market is declining. Solution: create new money and buy, buy, buy stock index funds. Problem solved! Market stops falling and quickly rebounds as \u201ccentral banks have our backs.\u201d<\/p>\n

Problem:<\/strong> interest rates are inhibiting lending and growth. Solution: create a few trillion units of currency and buy enough sovereign bonds to drop interest rates to near-zero.<\/p>\n

Problem:<\/strong> nobody\u2019s left who can afford to buy the new nosebleed-priced flats that underpin China\u2019s miracle-grow economy. Solution: create new currency, lend it to local government agencies who then buy the empty flats.<\/p>\n

Problem:<\/strong> stagnant employment and deflation. Solution: create a trillion in new currency, buy a trillion in new government bonds that then fund infrastructure projects, i.e. bridges to nowhere.<\/p>\n

And so on. Any problem that can be solved by creating a few trillion out of thin air and buying assets will be solved.\u00a0 The mechanism to solve these problems\u2014creating currency out of nothing\u2014is like a perpetual motion machine: there are no intrinsic limits on the amount of new money that can created at near-zero interest, as the interest payments can be funded by new money.<\/p>\n

Even better, the central bank (the Federal Reserve) buys Treasury bonds with the new currency that generate income, which is then returned to the Treasury: a perpetual-motion money machine!<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

What Could Pop The Everything Bubble? A crisis that can’t be solved by just printing more dollars I\u2019ve long held that if a problem can be solved by creating $1 trillion out of thin air and buying a raft of assets with that $1 trillion, then central banks will solve the problem by creating the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[39,1806,1799,111,124,127,130,951,195,305,2329,426,536,2218,661,662,7888,16745,16746,3570,869],"class_list":["post-27371","post","type-post","status-publish","format-standard","hentry","category-economics","tag-assets","tag-bubble","tag-bubbles","tag-capitalism","tag-central-banks","tag-charles-hugh-smith","tag-china","tag-currency","tag-debt","tag-federal-reserve","tag-income-inequality","tag-inflation","tag-money","tag-peak-prosperity","tag-qe","tag-quantitative-easing","tag-ray-dalio","tag-treasury-bond","tag-universal-basic-income","tag-wealth-gap","tag-wealth-inequality"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27371"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27371\/revisions"}],"predecessor-version":[{"id":27372,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/27371\/revisions\/27372"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}