Let's see. The Fed prints around $20-30B per year. The size
of US economy is $12,000B, the size of carry trade is 400,000B.
Where did all the liquidity and inflation come from? I have
only one answer: LEVERAGE. M3 is LEVERAGE, M1 is declining.
Now, with 500 Biliion of hedge fund money shorting volativity
with HIGH LEVERAGE,
what would you think a breakout in volativity would do? Oh,
well, I have my view, and it's that IF this is the real thing,
which, of course, NOBODY knows, THEN the initial decline could
be a lot faster and deeper than in 1929. It ain't 1987 Box.
Yes, if we get the initial decline, US economy will stay
in dolldrums for decades, given all the central pranking that
will keep the bad debt on the books. Kind of like Japan. But
hey, I visited Japan in the 90-s, and life was GOOD. Occasional
harakiris at high levels, but nothing too bad for the
ordinary folks. |
