It’s similar to what we’ve seen in Japan, where there really is no recovery. We see it happening in the States where there’s no recovery. The only hint of a recovery is coming from the fact that you took rates to zero. You let the marginal buyer buy a home. You let the marginal buyer buy a car. Those slight gains, which are often at very low levels, have kept the economy bumbling along here.
But as you know, there are lots of signs that the economy is not strong. Retail sales were down 0.3 percent for the month of June.1
The middle class is getting pillaged because inflation is way higher than the wage gains they have seen. Therefore, there’s no extra money for discretionary spending, even in the US.
Europe looks like it has failed the Greek situation here.
And we even have a situation in China now where the monetary authorities were perhaps too lax and now they are paying the price.
The population bought into the stock mania and now they are getting their hats handed to them too.
The theory that central planners can alter events on a sustained basis is fundamentally wrong. We saw the central planners fail in the USSR. We see them failing in Japan. We see them failing in the ECB. We see them failing in the US.
I think it all shows that fiat currency -- and more importantly
That’s essentially where we are now. Countries, central banks, and people really can’t take on more debts. Therefore, you’re likely to see a contraction in economies as that extra spending from debt vanishes from the scene.