When "The Inevitable" Happens
What's that ticking sound?
The global government bond market collapse was the first stage of the crash that is inevitably ahead of us, courtesy of the time-dishonoured practice of endless creation of money out of thin air. This was the worst bond market bust in living memory which, surprise surprise, followed decades of the most rapid expansion of the money supply and most egregious distortions of capital market signals.
When the next stage - the unwinding of the AI investment bubble (and with it the stock market and the next leg of the debt market collapse) - finally arrives there will be much hand-wringing and casting about for “policy solutions”, not to mention the inevitable Hollywood reconstructions of “what really happened”.
We already know “what really happened” and we already know that this is not the Hollywood version.
It’s in the crisis phase when things get interesting.
This is when all of the grifters and their financiers call in their favours and exert their influence to jump the long queue that snakes its way to the golden trough - which may be slightly less golden this time.
A timely piece has just been published by our friend Maurice O’Shannassy in which he compares the “policy solutions” delivered during two prior and very severe busts: 1921 and 1929. Not much is said about the first of these, which is simultaneously unfortunate and convenient.
We publish the link below and encourage subscribers to read his post.
Jim Grant's history of the 1921 depression deserves mention, as it concretizes the healing process of the free market: James Grant, "The Forgotten Depression: 1921: The Crash That Cured Itself" (New York: Simon & Schuster, 2014).