I really fear for the unwind of the “global government finance Bubble” – the grand finale of a multi-decade period of serial Bubbles. It’s history’s first systemic global Bubble, encompassing the world’s Credit systems, securities markets and monetary systems more generally. Excesses have engulfed the heart of “money” and Credit throughout both the “developing” and “developed” world. Central banks (of all stripes) have printed Trillions of “money” and Trillions more have been created in the process of leveraging securities and other assets. This type of monetary inflation invariably incentivizes destabilizing speculation, fraud, malfeasance and wealth redistribution. It’s fomented a geopolitical tinderbox.
I allow my mind to imagine the type and poor quality of assets on (bloated) Chinese, Brazilian, Russian, Asian and EM bank balance sheets – yet it’s surely a lot worse. I ponder how desperate governments will use their state directed lenders to stimulate and obfuscate – and then I contemplate the scope of future government bailouts. On a global basis, I believe there is today more speculative leverage in global currencies and securities markets than ever – and I fear my bearish imagination might only scratch the surface. There have been too many years of financial manipulation, innovation, experimentation and exploitation – on an unprecedented globalized scale.
To be sure, the past three years of global do “whatever it takes” central banking exacerbated “Terminal Phase” excess virtually everywhere. Central bank mores, practices and principles – tested and trusted over generations – were handily discarded in favor of New Age experimental monetary inflation. Speculative markets reveled accordingly.
