{"id":50385,"date":"2020-01-02T14:46:35","date_gmt":"2020-01-02T19:46:35","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50385"},"modified":"2020-01-02T14:47:09","modified_gmt":"2020-01-02T19:47:09","slug":"prelude-to-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50385","title":{"rendered":"Prelude to Crisis"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/prelude-to-crisis\">Prelude to Crisis<\/a><\/h3>\n\n\n\n<p><a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/prelude-to-crisis#simple\">Simple Conceit<\/a><br><a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/prelude-to-crisis#radical\">Radical Actions<\/a><br><a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/prelude-to-crisis#ballooning\">Ballooning Balance Sheet<\/a><br><a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/prelude-to-crisis#merry\">Merry Christmas and the Happiest New Year<\/a><\/p>\n\n\n\n<p>Ignoring problems rarely solves them. You need to deal with them\u2014not just the effects, but the underlying causes, or else they usually get worse. The older you get, the more you know that is true in almost every area of life.<\/p>\n\n\n\n<p>In the developed world and especially the US, and even in China, our economic challenges are rapidly approaching that point. Things that would have been easily fixed a decade ago, or even five years ago, will soon be unsolvable by conventional means.<\/p>\n\n\n\n<p>There is almost no willingness to face our top problems, specifically our rising debt. The economic challenges we face can\u2019t continue, which is why I expect the Great Reset, a kind of worldwide do-over. It\u2019s not the best choice but we are slowly ruling out all others.<\/p>\n\n\n\n<p>Last week I talked about&nbsp;<a href=\"https:\/\/www.mauldineconomics.com\/frontlinethoughts\/time-to-do-the-hard-thing\" target=\"_blank\" rel=\"noreferrer noopener\">the political side of this<\/a>. Our embrace of either crony capitalism or welfare statism is going to end very badly. Ideological positions have hardened to the point that compromise seems impossible.<\/p>\n\n\n\n<p>Central bankers are politicians, in a sense, and in some ways far more powerful and dangerous than the elected ones. Some recent events provide a glimpse of where they\u2019re taking us.<\/p>\n\n\n\n<p>Hint: It\u2019s nowhere good. And when you combine it with the fiscal shenanigans, it\u2019s far worse.<\/p>\n\n\n\n<p><strong>Simple Conceit<\/strong><\/p>\n\n\n\n<p>Central banks weren\u2019t always as responsibly irresponsible, as my friend Paul McCulley would say, as they are today. Walter Bagehot, one of the early editors of\u00a0<em>The Economist<\/em>, wrote what came to be called\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/en.m.wikipedia.org\/wiki\/Lombard_Street:_A_Description_of_the_Money_Market\" target=\"_blank\">Bagehot\u2019s Dictum<\/a>\u00a0for central banks: As the lender of last resort, during a financial or liquidity crisis, the central bank should lend freely, at a high interest rate, on good securities.<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Prelude to Crisis Simple ConceitRadical ActionsBallooning Balance SheetMerry Christmas and the Happiest New Year Ignoring problems rarely solves them. You need to deal with them\u2014not just the effects, but the underlying causes, or else they usually get worse. The older you get, the more you know that is true in almost every area of life. [&hellip;]<\/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":[124,181,195,8226,487,7758],"class_list":["post-50385","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-crisis","tag-debt","tag-john-mauldin","tag-liquidity","tag-mauldin-economics"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50385","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=50385"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50385\/revisions"}],"predecessor-version":[{"id":50386,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50385\/revisions\/50386"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}