How Long can Markets Continue to be Insane?

Since 2007, central banks have saved everyone’s ass. Central banks have injected almost $20 trillion and have gone so far as to buy up stocks, bonds and anything else to delay the impacts of the Global Financial Crisis. The markets are no longer about fundamentals and instead seem to react to whatever Yellen, Draghi, Kuroda-san and Zhou have to say.

According to the IMF, total global debt has increased from around $142 trillion to $230 trillion since the GFC, an increase of over 60%! In the U.S., we are talking about $63 trillion in combined public and private debt. That’s $200,000 of debt for every single U.S. citizen! Yet, the dollar is still viewed as a “safe haven” currency and treasuries are still popular. Not that other fiat currencies are any better.

At what point do the masses get tired of fiat currencies and realize that we’ve all been had for the last 30 years? Do we transition to gold, silver, bitcoin, ether, or other cryptocurrencies? What happens to all of the current bubbles we have in nearly all asset classes from property, debt to equities? We can’t afford even the increase in interest costs on our national debt, much less the impact of retiring Boomers with related social security, pension, and healthcare costs and lower tax revenues. How do you reconcile this with the automation of much of what we do through AI, robotics and software?

We desperately need leaders in government who are there to help their city, county, state and country and not focused on helping themselves and their friends. Leaders more like Governor Jerry Brown here in California who has pushed climate change, budget cuts and many other common sense policies for the good of the public. Leaders who will plan for the future and not continue to consume our future today. Government is cyclical and we seem to have peaked, but I hope we can avoid sliding to the depths of democracy before we realize what is desperately needed.