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Credit Bubble Bulletin/Doug Noland/1-23-2021
“Yellen: ‘The smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs.’ I hate being this pessimistic. But in no way do the long-term benefits of massive deficit spending today outweigh the cost. Current market and economic structures ensure resources are poorly utilized. The securities markets are today a powerful mechanism for resource misallocation and wealth-destruction. And I see Trillions of deficit spending generating limited sustainable economic benefit. Meanwhile, ‘acting big’ will further fuel ‘Terminal Phase’ excess, with terrible long-term consequences…
My biggest fear is materializing. When this historic Bubble bursts, a major crisis will unfold with our nation’s finances in complete shambles. The Fed’s ‘money printing’ operation has gone parabolic as it desperately attempts to sustain an unsustainable Bubble. Treasury debt growth has gone parabolic as Washington tries to sustain an unsustainable economic structure. The system is on a trajectory that ensures a crisis of confidence – and I don’t see this as some long-term concern. This is an issue of short-term sustainability.”
USAGOLD note: Yellen says “the world has changed.” Noland says “History will not be kind.” By that, we are not certain if he means history will be a harsh judge, or that it will deliver an inevitable comeuppance. Either way, the wolf, it would seem, is at the door.
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