'..Governments and corporations have vastly increased their debts during this most recent outbreak of central bank largesse, with outstanding debt securities increasing by $30 trillion to $100 trillion globally since the onset of the crisis (mind that this figure excludes the increase in bank credit)..'<blockquote>'..any renewed downturn will be extremely painful and likely reignite the panic that has been officially declared over.
What is very worrisome in this context is that central banks have fought the post-boom recession all over the world by printing wagon-loads of money and pushing interest rates to zero – the same policies they have implemented before, only on a much greater scale. For unfathomable reasons, a great many people appear to expect a different outcome this time. However, bubble conditions have once again developed, which will undoubtedly prove unsustainable. What will be the encore when that becomes evident?
Note that we are not making a prediction regarding the timing of this event. There has been such a huge inflationary push that the effects continue to percolate through the economy and there is no way of objectively timing the inevitable turning point. It should also be clear that even during major inflationary bubble periods, there is always a certain amount of genuine wealth creation taking place, so the impoverishment from capital consumption that will eventually be unmasked is only relative to the situation that would have obtained absent the futile attempt to inflate us back to prosperity.
Anyway, central banks have engaged in a major experiment, piling one ad hoc policy decision upon another (surely no-one believes that the central planners actually have a plan – they don't. In fact, they have not the foggiest idea what will happen). Governments and corporations have vastly increased their debts during this most recent outbreak of central bank largesse, with outstanding debt securities increasing by $30 trillion to $100 trillion globally since the onset of the crisis (mind that this figure excludes the increase in bank credit)..'
- Acting Man,
The Government Debt Ponzi, June 10, 2014</blockquote>
'..my philosophical aversion to speculating in steeply overvalued markets, and my ethical objection to policies like quantitative easing that encourage it. In order to profitably exit that speculation, someone else must be guaranteed misery.'<blockquote>'The reality is this. While we certainly hope to provide evidence and data sufficient for disciplined investors to maintain their confidence in our full-cycle approach, we have no particular desire to convert disciplined buy-and-hold investors or reckless speculators to our views (though I do think “buy-and-hold” investors with horizons shorter than 7-10 years have poorly matched their strategy with their objectives). Meanwhile, given that the majority of my income is directed to charity, I have a rather vested interest in doing good for others over time (undoubtedly, my particular focus on finance and autism research demands unusual patience, long horizons, a deep respect for evidence, and no expectation that progress evolves smoothly).
Yet as much as we focus on the long-term good, equilibrium creates an unfortunate constraint: by encouraging one investor to defend their financial security by selling overvalued stocks, the result is that someone else must end up buying the stock at these same levels. That poor soul, we expect, is likely to be worse off for the trade. That may explain my philosophical aversion to speculating in steeply overvalued markets, and my ethical objection to policies like quantitative easing that encourage it. In order to profitably exit that speculation, someone else must be guaranteed misery.
In a financial market where price signals encourage savings to be allocated toward productive uses, what helps an individual investor often helps the entire economy. But in a severely distorted and speculative market, any effort to help one investor is really quite a zero-sum game that requires someone else to be injured. This is just an unhappy result that years of quantitative easing have now foisted upon us.'
- John P. Hussman, Ph.D.,
The Journeys of Sisyphus, May 19, 2014</blockquote>
Context<blockquote>
'..We are, after all, in the midst of the “Granddaddy of all Bubbles”..'(Global) - '..how monetary policymakers somehow remained oblivious to the havoc they were instrumental in fomenting.''..the unprecedented inflation of non-productive Chinese Credit..'Spanish 10-Year Bond Yield Lowest Since at Least 1789; Reflections on Absurd Risk Assumptions, June 09, 2014
Beyond democracy - 'Open source .. to positively change our society..'(Banking Reform - English/Dutch) '..a truly stable financial and monetary system for the twenty-first century..'</blockquote>