The global Central Banks and the Fed have been slaves of the
shadow banking system, the enormous derivatives Ponzi scheme, for
over a decade. It must
be reformed and/or extinguished, and a chain reaction collapse
must be allowed, or we will face hyperinflation. Yet, the
collapse will not be allowed. There is no solution. The
monetary policy won't work to fix the system. As simple as that.
IMHO. I may be a pessimist, and indeed, the shadow system is
not as large as indicated by notional numbers, everything
is netted, and could potentially work. Yet, seeing astronomical
numbers growing 30% per year all decade gives me the Willies.
My current bet? Since December 2008 the notional value of OTC
derivatives grew 30% AGAIN to
over 1 Quadrillion, while the real values dropped from 30
Trillion to below 10 Trillion. We should find out at some point.
To make a prediction, if they drain enough to stall this
bubble, the markets will crash again. The markets will
threaten to crash periodically unless shadow banking
system is painfully reformed, and the Fed will be required
to print more and more in order to avoid the next domino
collapse. In the meantime, we will be seeing most unnatural
markets, going up virtually linearly without much volatility. |
