FYI: The European Central Bank this month said it would keep record-low interest rates for longer. The news comes shortly after the U.S. Federal Reserve gave in to the stock market and held off on further interest-rate increases.
While investors celebrate the policy reversal, they might soon regret it.
This stimulus may indeed buy the market an additional year or two. But postponing the inevitable downturn with artificially low rates will come at a cost. The cost is a massive credit bubble that is already of biblical proportions. Its implications chill me to the bone.
Regards,
Ted
https://www.marketwatch.com/story/when-the-us-falls-into-a-recession-a-credit-bubble-will-explode-2019-03-20/print
Comments
He also said the same thing in February 2009, one month before the market bottomed: https://mauldineconomics.com/frontlinethoughts/buy-and-hope-investing-mwo022709
But here's how I agree with him. The U.S. should pay down its debt. But it should raise taxes to do so. There's no reason we can't have government policies and a social safety net with less debt. The problem is, neocons like Mauldin want to get rid of or dramatically reduce the social safety net so there'll be less debt and older Democrats are too scared to raise taxes. So the can just keeps getting kicked down the road.