Crack Up

There's a room where the light won't find you
Holding hands while
The wall come tumbling down
When they do, I'll be right behind you
--Tears for Fears

Several excellent points made in this interview with David Stockman, including:

Many people who opposed the bailouts of 2008/2009 seem to have no problem with suppressing interest rates for extended periods of time. These people do not appear to realize that extended interest rate suppression policies are essentially prolonged bail out programs favoring one group (foolhardy borrowers and lenders) at the expense of another (savers).

The collapse of the US shale oil patch is just another example of the boom/bust pattern put in motion by central bank easy money policies.

Extreme move by central banks like NIRP are a sign that we are entering the 'crack up' phase. CBs have painted themselves into a corner that they know no way out of. They are now stepping on the gas out of desperation.

Expect huge market volatility following periods of calm and complacency. The discounting mechanism has been broken and market participants are reactive--meaning little warning will precede sharp declines.

Whatever drives the 'weight of disbelief' in central bank omnipotence is what will kick volatility into high gear. While they can win a few rounds, central banks are certain to lose the ultimate confidence game in the end.

Greece's new found pushback against EU-imposed measures designed to keep holders of Greek bonds whole constitutes an important inflection point. Previous can-kicking exercises are wearing out. The new Greek government is now speaking the unspeakable: We're broke. We can't pay out debt back. If this message resonates, then the 'weight of disbelief' increases dramatically.

Political blowback from profoundly stupid and unsustainable fiscal and monetary policies is likely to increase. In previous episodes of blowback led to world war.