https://www.linkedin.com/posts/matthew-krupczak_i-fear-the-dreaded-liquidity-trap-has-arrived-activity-6646234016846528512-OyVo
Isn’t it awful when you see a slow-moving trainwreck unfolding before your very eyes?
Like two trains on a collision course, the speed may not be too great but the inevitability and magnitude of the crash can’t be doubted.
If only this could have been predicted or avoided somehow…
I don’t know, maybe with central banks following rules-based interest rates such as the “Taylor rule” (???) instead of breeding an environment the past 10 years of low interest rate loans to anyone with a business plan and a pulse?
Could that have helped?
Interesting times lie ahead, for sure.
https://en.wikipedia.org/wiki/Lost_Decade_(Japan)#Interpretation
Oof. Ouch. Owie. This is bad.
“Those who do not learn from history are doomed to repeat it”
The last 10 years of a roaring economy were pretty sweet weren’t they? Welp, fun’s over.
Japan’s asset bubble pop in 1989/90 showed us even a strong economy can be subject to mismanagement. In their (and now our) case, this takes the form perpetually of low interest rates and too easy loans in a roaring economy.
These low rates leave a mess in the making for when a recession actually *does* hit and rates can’t be lowered any further.
I’m not a smart man, but I would wager that “helicopter drops” and other forms of fiscal stimulus (at this point likely to be based on QE) will be only meekly effectual at best.
This is not a demand crisis a la 08, so throwing money at the issue won’t work the way it did back then. Be smart. Look at the problem from all sides. What we’re encountering is a public health, labor, and supply problem. Throw money at that instead.
Ineffectual and poorly though out stimulus could serve only serve to weaken the dollar.
#recession
#finance
#depression (with a d?)
#bubble
#beargang
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