Debt Rattle March 14 2016

[Raúl Ilargi Meijer]

John M. Fox WCBS studios, 49 East 52nd Street, NYC 1948 • Marc Faber: Central Banks Will End Up Buying All Financial Assets (CNBC) • There’s Only One
[See the full post at: Debt Rattle March 14 2016]

[Dr. Diablo]

Crikey Keen, are you for real? It’s often been commented here that although he can be a critic of present policies, by avoiding nearly every real issue he becomes in fact a strong apologist and supporter of the status quo. This article shows that in spades.

Okay, first things first, the obvious: if nations cannot reduce their deficits–or at least he is unwilling to offer how–then the only alternative is for nations to deficit spend in increasing amounts, forever and ever. Yet anyone, no matter how compromised, can easily see infinite debt increasing infinitely will not be good for GDP, governments, or society. If ever-increasing debt is bad, that has to mean that lower debt is better. So…Mr. Keen?

The thought experiments he runs, seemingly to support infinite deficit spending–be it national or private–are all true. Yet you obviously cannot spend what you don’t have in increasing quantities to get healthier. That means the real critique here–and Mr. Keen being smart I’m sure knows this–is against the whole monetary system where money=debt, so any decrease in debt=a decrease in money supply. That is to say, the whole debt-based fiat monetary system is entirely illogical and unworkable, as given by his own examples. Yet he won’t say that and reform the system, fix the real problem, instead implying the problem is that governments refuse to spend infinite resources they don’t have. A green light for everything to get bigger, badder, and harder to repair, with the real economy grower ever weaker and disordered, which will, I fear, lead to millions of more deaths when the inevitable transition comes. Thanks to plausible apologists pushing pabulum. Keen, you know this stuff. Now is the time to speak.

#Disappointed. With reformers like this, the crooks are safe as houses.

[rapier]

Faber’s proposition that central banks and governments will buy all financial assets is pretty silly. The reason being what assets are the rich then going to own? I will agree because I’ve been pounding the same idea, “they will do anything not to let asset prices go down,”

Governments and central banks don’t have to buy all stocks and bonds they just have to be a marginal buyer, always keeping a bid under the market via direct purchases but more commonly it will be in futures and other derivatives. I don’t doubt we are in a bear market but I doubt it will be a severe one in terms of asset prices because of the above.

It must be remembered that the Fed allowed and essentially orchestrated the crash of 08 by shrinking its balance sheet and thus starving the Primary Dealers. It’s hard to imagine this was done out of ignorance. The Fed will never never never ever shrink its balance sheet again

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