"So what do I worry about? I worry that investors forget how devastating a deep investment loss can be on a portfolio. I worry that the constant hope for central bank action has given investors a false sense of security that recessions and deep market downturns can be made obsolete. I worry that the depth of the recessions and downturns – when they occur – will be much deeper precisely because of the speculation, moral hazard, and misallocation of resources that monetary authorities have encouraged. I worry that both a global recession and severe market downturn are closer at hand than investors assume, partly despite, and partly because, they have so fully embraced the illusory salvation of monetary intervention."
This is a theme I have discusssed on these pages. Specifically here, seven months ago, where I said:
"I see the incessant focus on the power of the central bank to manage an economy as being misguided and inappropriate. The world reached a financial crisis principally because of a lack of proper regulation and enforcement of the financial services
industry. In addtion to this, the Eurozone reached their crisis because they gave up their currencies, and the global trade system shifted production to Germany for high valued manufacturing and China for low valued manufacturing. Regardless of the price level, these economies are not going to generate jobs for their unemployed. Many academics and market participants who view religion as nothing more than superstition, seem to have elevated the central banks to Christ-like status. "
This is a theme I have discusssed on these pages. Specifically here, seven months ago, where I said:
"I see the incessant focus on the power of the central bank to manage an economy as being misguided and inappropriate. The world reached a financial crisis principally because of a lack of proper regulation and enforcement of the financial services
industry. In addtion to this, the Eurozone reached their crisis because they gave up their currencies, and the global trade system shifted production to Germany for high valued manufacturing and China for low valued manufacturing. Regardless of the price level, these economies are not going to generate jobs for their unemployed. Many academics and market participants who view religion as nothing more than superstition, seem to have elevated the central banks to Christ-like status. "
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