| Skybird |
07-29-16 12:43 PM |
America needs a good old-fashioned economic depression
Not just America. Europe, Japan, the whole paper-globe floating on an growing ocean of unsecured credit needed it. By now, time most probably already has run out.
LINK - The National Interest
Quote:
Even the radical Keynesian, Richard Koo has recognized the outrage of NIRP, which he recently described as “an act of desperation born out of despair over the inability of quantitative easing and inflation targeting to produce the desired results… the failure of monetary easing symbolizes crisis in macroeconomics."
The failure of ZIRP, QE and now NIRP is easy to see from recent corporate earnings reports and associated PE multiples: As of close of trading on Friday, July 1, 2016, the S&P 500 was trading at 24.3 times earnings over the last twelve months, close to an historical record high PE multiple. Generally (meaning before fiat money), elevated PE multiples were notched during times of increasingearnings. But for the first fiscal quarter of 2016 (FQE 3/31), S&P 500 earnings per share were only $87. That is 18 percent less than the $106-per-share earnings peak reported for the third quarter (FQE 9/30) of 2014. If money printing and central-bank-dictated interest rates were the saviors of the real economy, and if the United States were actually experiencing a real economic recovery, corporate earnings would be increasing, not declining precipitously.
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The hammer is already falling. What we feel in movement in the air, and enjoy as a subtle "refreshment" from a hot summer's day, is not just a gentle breeze of air at sunset after a day's work is over - but the first layer of the shockfront of compressed air that forgoes the steel head smacking down on us all. |
