Kyle Bass on the Central Banker’s Potemkin Village

As one might expect, there are lots to choose from here.  Here are a few favorite excerpts, including several that echo sentiments I’ve expressed here in the past:

  • Central banks have become the great enablers of fiscal profligacy.  They have removed the proverbial policemen from the bond market highway.  (A point I’ve made here repeatedly – HT)
  • Given the enormity of the existing government debt stock, it will not be possible to control the very inflation that the market is currently hoping for…the US simply cannot afford for another Paul Volcker to raise rates and contain inflation once it begins. (And, if it cannot be afforded – and, I agree that it now cannot – they will do what they must with increasingly desperate attempts to suppress rates. – HT
  • Again the world will not end, but the social fabric of the profligate nations will be stretched  and in some cases torn.  Sadly looking back through economic history, all to often war is the manifestation of simple economic entropy played to its logical conclusion.
  • Let’s just clear this up.  The ECB is going to buy bonds of bankrupt banks just so the banks can buy more bonds from bankrupt governments.  Meanwhile, just to prop this up the ESM (European Stability Mechanism) will borrow money from bankrupt governments to buy the very bonds of those bankrupt governments. (That sort of sums up the MMT/central banking model as it exists today. – HT)

Read the whole document….


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