1/ EPIC DOUG AGAIN TODAY☕️No one deserves a victory lap more than Doug for predicting the carnage from burst credit bubble-but he doesn't. Class act. He focuses on what's next. Reading it makes me proud of #Wyoming for enacting a 100% reserve bank charter.
creditbubblebulletin.blogspot.com/2020/03/weekly…
creditbubblebulletin.blogspot.com/2020/03/weekly…
2/ SORRY NEW YORK, the center of finance in US is about to decentralize to places like #Wyoming (yep🤠), which are already in process of standing up new banks w/ pristine balance sheets, carrying no legacy from prior mess. (Disclosure: I'm working to set up one & so are others.)
3/ NEVER HAS THE NEED for new banks w/ pristine balance sheets been clearer. As Doug points out, bubble finance is OVER. Deleveraging isn't done yet. There's no locomotive in the world to enable re-inflation of the prior bubble (nope, not even China-whose debt bubble also burst).
4/ THAT'S WHY it's not clear that world on the other side of this pivots to Asia. Per Doug, "Chinese banking system assets inflated from abt $7 TN to $40 TN since 2008 crisis." That staggering bubble took China only abt 20 yrs to build--much faster than US, which took abt 50 yrs.
5/ BOTH BUBBLES HAVE NOW POPPED & predictably both countries blame each other--dangerously. I haven't wanted to say it but things might get jiggy geopolitically from this. Doug says it. (Studying history, the origin of most wars can be traced to balance of payments imbalances.)
6/ THIS IS WHY REGULAR FOLKS like you & me (ppl who aren't in a state of shock right now bc we knew the debt bubble would eventually pop) need to speak out against the impulse to go to war over it. Pandemics happen (the world was due for one), but debt bubbles are our own fault.
7/ IT'S IMPERATIVE that those who understand what happened help explain it to those just learning it--bc they won't get it from mainstream economists/media, who mostly still in denial. Nope-the bubble can't be reinflated but that won't stop politicians & policymakers from trying.
8/ WHY CAN'T THE DEBT BUBBLE BE RE-INFLATED? Bc it already pierced the heart of global financial system--sovereign credit. There's no balance sheet left (ie, no assets left that haven't yet been mortgaged by new debt, directly or indirectly), as explained on @APompliano podcast.
9/ YEP, NO ASSETS LEFT TO MORTGAGE at the national level. In US at 12/31/19, net wealth=$104trn & total debt (nonfinancial sectors)=$83.3trn, for a diff of ~$21trn. The market correction has prob already carted away more than that $21trn of asset value.
10/ THE INFLATED ASSET VALUE WASN'T REAL--was inflated by bubble dynamics, just like stocks b4 1929 crash. My dad was born <2wks after that. His dad, a farmer, used to scoff at ppl who relied on paper wealth bc it was fleeting. Unlike his neighbors, he didn't mortgage his farm...
11/ ...to speculate on stocks before the crash, so he & his family survived the Depression intact bc of it. My grandpa had only an 8th grade education but understood real wealth--he had more common sense than the proverbial smartest ppl in the room, most of whom don't seem to.
12/ BIG THANKS to all praying for my relative, who tested positive for the virus yesterday. He's still in ICU but his oxygen needs dropped today. He's far from out of the woods yet, so I truly appreciate all continued prayers--& will do the same for you, if it hits your family.🙏
13/ I'LL CLOSE on optimistic note🤠. We are witnessing history--a pandemic popped history's greatest credit bubble. Grieve, but start thinking abt new future. New world will be better, fairer & more stable! OPPORTUNITY FAVORS THE PREPARED MIND (h/t @Broccolex)! Stay safe folks!🙏
(oops...here's link to @Broccolex's tweet)
