Our problem here in the U.S. is too much debt.
Our solution here at Survive & Prosper is less debt.
Yet the Fed and ECB continue to fight fire with more fire. That is, they’re fighting a private balance sheet recession (read: too much debt on the balance sheet) with a public balance sheet explosion (read: even more debt on the balance sheet).
For now, it seems to be working…
This chart shows how the S&P 500 goes higher when the Fed and ECB expand their balance sheets… and how the market drops when central banks don’t stimulate.
Don’t be fooled.
The private sector took on as much debt as it possibly could through 2007 (pushing the markets higher)… then it stopped. Now, the Fed and ECB are taking on as much debt as they possibly can so the music doesn’t stop. The problem is, eventually, central banks too must stop amassing debt. They too will need to deleverage.
For now this will keep the wheels turning… but this will change soon.
If you haven’t done so already read the Survive & Prosper issue on “If the Disease Doesn’t Kill Us, the Cure Certainly Will.“