I read the paper and the anticipated growth in sales for black Friday tomorrow. The markets are at record highs there is growth in the economy and interest rates are the lowest in history it all feels so good. Does it?
For this Austrian economist things beneath the surface could not be further from the rosey outlook. Government and central bank intervention has destabled world economies by mispricing interest rates and the valuation discount rate. Just like an internal infection out of the line of site is hard to pinpoint what it really is, so is this debt fuelled central bank monetization. Economists have felt unwell for some time but nobody could put their finger on it. Now there is a sense that the medicine applied has done it’s magic but it has done nothing but numb the pain the root cause of the disease remains.
I know I am sounding like a broken record and I accept it. I also know governments will throw QE10 at the problem if they need to. Everyone (majority) thinks that QE works in a vacuum and there are no side affects or that they can be contained. They are wrong in the big picture scheme there is a natural threshold where the economy will say no more. I have no clue when that is but I certainly will not fall into the deadly trap of embracing a sick festering disease and call it cured.
MESSAGE TO SELF JUST REMEMBER NO SHORTING MICHAEL.