by Bill Bonner, Casey Research:
For nearly two decades, the world’s central banks have labored hard, sweating to coax more digital money out of a stony and grudging economy.
More than $20 trillion did they bring forth via QE (buying stocks and bonds with newly created cash) – a mighty sum indeed.
But that is past. It is what wrought a Dow at 23,000 points… Amazon shares trading for $1,000… and a $6,000 bitcoin.
What it might wring out of the future is our subject for today.
The coast is clear for a blow-out spree of money printing, borrowing, spending, and debt.
The world’s four major economies are ready for it – with Shinzō Abe re-elected in Japan… Europe still under the spell of Mario “Whatever It Takes” Draghi… Donald J. Trump ready to do the Deep State’s bidding in America… and China with little choice but to pump in more cash and credit, as now the whole economy has come to depend on it.
(We read recently that the Chinese government is attempting to prop up the real estate market by buying nearly one out of every four new apartments.)
When it comes, the fireworks will probably be like what Austrian School economist Ludwig von Mises had in mind when he described a “crack-up boom,” the sort of nervous frenzy you get before you go to pieces completely.
But not so fast. There’s something missing… another sort of delirium that will bring on the final fever.
Stocks have been going up for the last eight years.
From whence cometh so much buying pressure?
Didn’t people already have enough stocks in 2009? Did they yearn for more?
Or did they earn so much more money… did they save so much with rising profits and wages that the real economy produced… that they ended up with trillions of dollars in unhoused money in need of a good home?
Instead, the money came from central banks. European Central Bank (ECB) President Mario Draghi has been pumping $70 billion a month into the world’s capital markets.
Bank of Japan Governor Haruhiko Kuroda has been adding another $30 billion.
And China has added $8 trillion in debt (money from nowhere) over the last two years.
Of course, everyone believes in the Stimulus Theory just as fervently and unquestioningly as they once believed in the Virgin Birth or Prohibition.
And we have no doubt that, when the going gets rough, the authorities will go back to the electronic printing presses… from which they will tease out more cash and credit than the planet has ever seen.
But the going is not rough yet. And the authorities aren’t complete boneheads. They know they have pitched their tents in the monetary equivalent of Bangladesh – with only a few feet between them and sea level.
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