“The economy is looking great,” how many times have they told you that? And why do you usually hear it when you are late on a mortgage payment or during a downsizing purge at your company? Relying on your senses is always a safer bet than trusting the wishful thinking of those who invested political capital in failed solutions. The chorus of voices warning about the next ‘Big One’ has become hard to ignore.
A Pending Disaster, Worse Than the Last Crash
It looks like the next big financial crisis is coming, and while cycles are a natural feature of market economies under normal circumstances, this one is promising to be a bit different. The global economy has been somewhat expanding for the better part of the past decade, although many experts would say that governments and central banks have only reinflated the bubbles that popped in 2008. Indeed, what quantitative easing and record low interest rates mostly did was to mitigate the symptoms, not cure the disease.
The financial meltdown we had over 10 years ago was mostly caused by debt. But instead of addressing the core issue in a way that would allow a lasting solution, policy makers around the world led their economies into deeper debt by printing more money via quantitative easing (QE) and cutting interest rates to previously unseen low levels, below zero in some cases. The result of these futile efforts is a skyrocketing debt which actually dwarfs the pre-crisis borrowing.
Stock broker and financial commentator Peter Schiff, one of those who accurately predicted the Great Recession, believes the upcoming quake will be epicentered around sovereign debt and a crisis with the U.S.