Loose monetary policy has dumped billions of dollars of easy money into the world’s financial systems over the last eight years, pumping up a whole slew of bubbles. We are still on the upside of the business cycle, with stock markets hitting record levels it seems like on a daily basis. But if history serves as any kind of indicator, a crisis is on the horizon.
What will precipitate it? That’s the proverbial $64,000 question.
Jim Rickards has compared financial crises to an avalanche. Snow piles up becoming increasingly unstable. Eventually, it reaches the point when all it takes is one more snowflake to set off an avalanche.
In a recent column, Rickards highlights three potential ‘snowflakes’ that could set off the next deluge.
Credit Crisis in China
Earlier this month, Mint Capital strategist Bill Blain predicted that ‘the great crash of 2018 is going to start in the deeper, darker depths of the credit market.’ Hearing this, most Americans will immediately think of debt piling up in the US. But Rickards says China is actually in an even bigger credit bubble. He uses an anecdotal story to illustrate this point.
This post was published at Schiffgold on NOVEMBER 30, 2017.