The 'Everything Bubble" Has Popped

[Peter1469]

The 'Everything Bubble" Has Popped

Zerohedge has a theory- now that the Fed and the ECB (European Central Bank) have stopped printing money and handing it out to the wealthy (individuals and corps) the bubbles made in the years of printing money are going to burst- the central banks can't manage the deflation of the bubbles. Interesting.

The cartel (especially the ECB and the Fed) is hoping it can gently deflate these bubbles it created, but that's a fantasy. Bubbles always burst badly; it's their nature to do so. Economic suffering and misery always accompany their termination.

It's said that "every bubble is in search of a pin". History certainly shows they always manage to find one.


History also shows that after the puncturing, pundits obsess over what precise pin triggered it, as if that matters. It doesn’t, because 'cause’ of a bubble's bursting can be anything. It can be a wayward comment by a finance minister, otherwise innocuous at any other time, that spooks a critical European bond market at exactly the right (wrong?) moment, triggering a runaway cascade.


Or it might be the routine bankruptcy of a small company that unexpectedly exposes an under-hedged counterparty, thereby setting off a chain reaction across the corporate bond market before the contagion quickly spreads into other key elements of the financial system.


Or perhaps it will be the US Justice Department arresting a Chinese technology executive on murky, over-reaching charges to bully an ally into accepting that unilateral US sanctions are to be abided by everyone, regardless of sovereignty.


How was it that the famous Tulip Bulb bubble came to a crashing end back in the 1600’s? No one knows the exact moment or trigger. But we can easily imagine that in some Dutch pub on the fateful night on the Feb 3rd1637, a bidder on the most-coveted of all bulbs, the Semper Augustus, had an upset stomach and briefly grimaced when hit by a ripping gas pain:

***

Greed & Fear

Every bubble requires two essential inputs to fuel its rise:

1. a compelling story
2. ample credit

If either is missing, no bubble.
Price bubbles are not financial phenomenon, but rather psychological constructs born and nurtured in the human brain stem. Greed and fear -- that’s what drives bubbles.
Greed on the way up and then fear on the way down. But neither has much influence without a tempting yarn and a lot of easy credit.
Attempting To Replace The Business Cycle With A Credit Cycle

In their quest for power and glory (and accompanied by a dead-flat learning curve), the world’s central banks are now pursuing their third, largest, and most ill-considered attempt to defeat the business cycle by replacing it with a credit cycle. The fact that the prior two credit cycles blew up spectacularly doesn't seem to be deterring them in the slightest.


A rather minor business cycle slowdown in 1994 was fought with a tidal wave of new credit under Greenspan. That ultimately resulted in the Dot Com Bubble crash of 2000, but the lesson went unlearned.


Instead the Fed concluded that the idea was sound, but was simply not taken far enough. The elite cheerleading squad, captained by Paul Krugman, fully supported a doubling down, and the media unquestioningly went along with the program.


So Greenspan and Bernanke created the Housing Bubble 1.0 by offering the world’s credit markets a price of money so low it couldn't be refused. Housing was the story, and the Fed supplied the credit. As predicted by a scant few of us, that all blew up spectacularly in 2008. And no constructive lessons were drawn from that experience, either.


With the political aircover to "save the system" (from the problems that it created!), Bernanke, Yellen, Kuroda and Draghi then led the most aggressive, coordinated central bank bender in all of human history.


$Trillions and $trillions were printed up, and many times that amount were leveraged and loaned throughout the banking and speculative finance universes:

Read the entire article at the link. A great explanation, but bad news.

[donttread]

The 'Everything Bubble" Has Popped

Zerohedge has a theory- now that the Fed and the ECB (European Central Bank) have stopped printing money and handing it out to the wealthy (individuals and corps) the bubbles made in the years of printing money are going to burst- the central banks can't manage the deflation of the bubbles. Interesting.



Read the entire article at the link. A great explanation, but bad news.

What about all that unbacked , unprinted e-money in the world? Is that bubble due for a pop too?

[Peter1469]

What about all that unbacked , unprinted e-money in the world? Is that bubble due for a pop too?

That is part of what the article is about.

[midcan5]

I tried to read that piece but so much BS was more than I could step over. The economy is going to change and probably go down as this administration lowered taxes and lower taxes never do a darn thing. See link below on taxes and see link on ZeroHedge.


https://mediabiasfactcheck.com/zero-hedge/


Repost:


"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well."

http://www.huppi.com/kangaroo/L-taxgrowth.htm



"This is when the Republican Party set its trap. Meeting in closed sessions at the beginning of the Obama regime, the party of tax cuts for the rich, unfunded wars, and the largest deficit in the history of the country redefined itself. It suddenly became the party of deficit reduction through lean government joined to supreme confidence in unregulated financial and corporate markets. It even opposed the bail out of General Motors and Chrysler, though these actions stopped unemployment from reaching a dangerous tipping point, allowed the two companies time to reconstruct themselves, and enabled them to pay back the loans within two years–-creating one of the most successful bailouts in the history of Euro-American economic life." William E. Connolly

See http://fortheloveofcontemporary.blog...r-machine.html

"Faced with looming deficits, Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business. Despite the fact that such increases were anathema to conservatives–and probably cost Reagan’s successor, George H.W. Bush, reelection–Reagan raised taxes a grand total of four times just between 1982-84."

https://shadowproof.com/2009/02/01/n...es-you-idiots/




"I have to wonder how many know wealthy people who use their wealth to create jobs? In truth it is the struggling that create jobs as they want a bit of the wealth. The truly rich could give a crap, well maybe they care a bit about their portfolio. But wealth for corporations is another issue, they do sometimes create jobs here and abroad but they are privileged as Baker writes."

https://deanbaker.net/books/the-cons...anny-state.htm

[Hoosier8]

“This has been a blue-collar recovery, the best blue-collar job performance since the mid-1980s and also the best blue-collar wage performance,” ~ Kudlow

[Peter1469]

I tried to read that piece but so much BS was more than I could step over. The economy is going to change and probably go down as this administration lowered taxes and lower taxes never do a darn thing. See link below on taxes and see link on ZeroHedge.


https://mediabiasfactcheck.com/zero-hedge/


Repost:


"There is no historical evidence that tax cuts spur economic growth. The highest period of growth in U.S. history (1933-1973) also saw its highest tax rates on the rich: 70 to 91 percent. During this period, the general tax rate climbed as well, but it reached a plateau in 1969, and growth slowed down five years later. Almost all rich nations have higher general taxes than the U.S., and they are growing faster as well."

http://www.huppi.com/kangaroo/L-taxgrowth.htm



"This is when the Republican Party set its trap. Meeting in closed sessions at the beginning of the Obama regime, the party of tax cuts for the rich, unfunded wars, and the largest deficit in the history of the country redefined itself. It suddenly became the party of deficit reduction through lean government joined to supreme confidence in unregulated financial and corporate markets. It even opposed the bail out of General Motors and Chrysler, though these actions stopped unemployment from reaching a dangerous tipping point, allowed the two companies time to reconstruct themselves, and enabled them to pay back the loans within two years–-creating one of the most successful bailouts in the history of Euro-American economic life." William E. Connolly

See http://fortheloveofcontemporary.blog...r-machine.html

"Faced with looming deficits, Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business. Despite the fact that such increases were anathema to conservatives–and probably cost Reagan’s successor, George H.W. Bush, reelection–Reagan raised taxes a grand total of four times just between 1982-84."

https://shadowproof.com/2009/02/01/n...es-you-idiots/




"I have to wonder how many know wealthy people who use their wealth to create jobs? In truth it is the struggling that create jobs as they want a bit of the wealth. The truly rich could give a crap, well maybe they care a bit about their portfolio. But wealth for corporations is another issue, they do sometimes create jobs here and abroad but they are privileged as Baker writes."

https://deanbaker.net/books/the-cons...anny-state.htm

You don't know what you are talking about. And the Zerohedge article about tax cuts ignores the real issue- the tax burden. When taxes on the rich were high, they had all sorts of tax breaks to lower their tax burden. When many of those breaks were eliminated, the rich paid more even though the tax rates were lower.

The economy boomed after JFK, Reagan, and Bush the Younger lowered taxed. Additionally, today we see the greatest tax revenues in US history- after a tax cut.

[donttread]

You don't have to be an economist to know that the lion's share of our economy is fluff. Items and services we don't need and could reasonably easily do without when the $#@! hits the fan.
Things like $300.00 4-wheeler helmets and believe it or not even the wheeler itself, makeup, $100.00 jeans, eating at resturants 3-4 nights a week, LL Bean camping gear, $700.00 telephones, computerized cars , even Direct TV Sunday ticket. Although I would make a some attempt to argue that it was a psychological necessity if the wife suggested cutting it out. LOL. Broadway plays, sports stadiums, $500.00 drivers, $2,000.00 suits and so much more . All of which could be gone in an instant without effecting our health or survival .

Underneath the fluff however is a real economy. Seven billion people producing NECESSARY goods and services for seven billion people. That piece of the economy , which is a smaller piece of the economy the richer the country, cannot collapse. But poorer countries would cope much better with it being their whole economy than we would. But cope we could.

[Peter1469]

You don't have to be an economist to know that the lion's share of our economy is fluff. Items and services we don't need and could reasonably easily do without when the $#@! hits the fan.
Things like $300.00 4-wheeler helmets and believe it or not even the wheeler itself, makeup, $100.00 jeans, eating at resturants 3-4 nights a week, LL Bean camping gear, $700.00 telephones, computerized cars , even Direct TV Sunday ticket. Although I would make a some attempt to argue that it was a psychological necessity if the wife suggested cutting it out. LOL. Broadway plays, sports stadiums, $500.00 drivers, $2,000.00 suits and so much more . All of which could be gone in an instant without effecting our health or survival .

Underneath the fluff however is a real economy. Seven billion people producing NECESSARY goods and services for seven billion people. That piece of the economy , which is a smaller piece of the economy the richer the country, cannot collapse. But poorer countries would cope much better with it being their whole economy than we would. But cope we could.

I don't care if people buy "unnecessary fluff." They are fools if they go into debt for it.

[Captdon]

You don't have to be an economist to know that the lion's share of our economy is fluff. Items and services we don't need and could reasonably easily do without when the $#@! hits the fan.
Things like $300.00 4-wheeler helmets and believe it or not even the wheeler itself, makeup, $100.00 jeans, eating at resturants 3-4 nights a week, LL Bean camping gear, $700.00 telephones, computerized cars , even Direct TV Sunday ticket. Although I would make a some attempt to argue that it was a psychological necessity if the wife suggested cutting it out. LOL. Broadway plays, sports stadiums, $500.00 drivers, $2,000.00 suits and so much more . All of which could be gone in an instant without effecting our health or survival .

Underneath the fluff however is a real economy. Seven billion people producing NECESSARY goods and services for seven billion people. That piece of the economy , which is a smaller piece of the economy the richer the country, cannot collapse. But poorer countries would cope much better with it being their whole economy than we would. But cope we could.

Everything that causes the exchange of money is the economy. Necessity is what people think it is

[donttread]

I don't care if people buy "unnecessary fluff." They are fools if they go into debt for it.

Absolutely correct. Especially debt they really can't handle. But that is the American way. Anyway my point was that our economy can collapse a long way before the average American is at risk of starvation. Sadly grid failure would produce that threat much more quickly. Why? Because we did what we could without thinking about whether we should.