Bubble risks will not be resolved. Unprecedented Credit growth. An epic cycle extended by increasingly intrusive government intervention and monetary stimulus. Deepening economic maladjustment. Monetary Disorder. There are clear and ominous parallels to the “Roaring Twenties” – today in China, the U.S. and globally.
The Fed and market pundits stick blindly to the assertion “inflation expectations will remain well anchored” – assuring the bond market, dovish Fed policies and the great bull market are all equally well anchored. Yet this is not an environment where anything is securely anchored.
There is an overarching issue I haven’t been able to get off my mind: Are we at the beginning of a new cycle or in the waning days of the previous multi-decade cycle?
“Guessing” is giving the Fed the benefit of the doubt. It’s more of a declaration: inflation is not and will not be an issue. And I doubt there’s anything that would shift their approach. Our central bank has its heels firmly dug in.
Not again. Bloomberg is referring to “the bond market riddle.”
The “global government finance Bubble” is alive and unwell.
While ebullient markets have briskly moved on, I’m not done with Archegos.
Debt structures degenerate over time, as the boom is perpetuated by expanding quantities of debt of deteriorating quality. Archegos is emblematic of an out of control mania and a complete breakdown of responsible lending and regulatory oversight.
The parallels to 1929 turn only more compelling and ominous.
I’m not fond of self-promotion, but I would like to support Jonathan Doyle’s “The Supply Side” podcast. Jonathan interviewed me this week. Click here.