When the “Fix” Increases Systemic Fragility, Things Fall Apart

Jon Economy

All the “fixes” have fatally weakened the real economy, and created a dangerous illusion of “wealth,” “growth” and solvency.
The “fix” of the last eight years worked, right? This was the status quo’s “fix”: 1. Massive expansion of debt: sovereign, household and corporate, all in service of a) bringing consumer demand forward b) fiscal stimulus funded by debt c) corporate stock buybacks to boost stock valuations d) asset bubbles in real estate, bonds, stocks, bat guano futures, etc. 2. Monetary stimulus, i.e. creating and distributing money at the top of the wealth/power pyramid so corporations and the super-wealthy could buy more assets with free money for financiers issued by central banks. 3. Gaming statistics such as unemployment and metrics such as stock indices to generate the illusion of “growth,” “stability” and “wealth.”

This post was published at Charles Hugh Smith on WEDNESDAY, MAY 31, 2017.