Can the injection of new money into the economic system enhance economic growth? Not really. Increasing (or decreasing) the money supply affects the demand for money but doesn't make us wealthier.
Economically speaking, the US government is bankrupt even if the government won’t admit what is obvious. But how would an actual bankruptcy proceeding go?
The world is changing, and in the coming five years we'll see how accelerating debt, declining demand for dollars, and rising price inflation will show how deficits do matter, after all.
Despite the soothing hot air from the White House and Fed officials, the financial system is becoming increasingly fragile and unstable. Maybe all of that intervention the past decade was not wise.
This episode of Good Money with Tho Bishop features guest Ryan Griggs of Griggs Capital Strategies.
By any conventional measures of finance, the Federal Reserve has negative equity. In the long run, cooking the books only puts off the day of reckoning.
One: the Republicans want big cuts and austerity. Two: The US has never defaulted before. Three: Default is the end of the world.
A "soft landing" is impossible unless the government cuts both taxes and government spending at the same time interest rates are rising. This won't happen, so get ready for a hard landing.
We are familiar with the five stages of grief. However, it is not a stretch to apply those stages to what is happening to the banking system. Right now, we are in the second stage: anger.
A new Fed survey shows that banks are cutting back on lending big time. Over the past thirty-five years, this almost always predicts recession. Our economy can't survive without endless new infusions of easy money.
