As the Federal Reserve’s intervention into the financial markets is seemingly increasing by the day, what’s worth noting is that there’s no indication that the problem is getting any better.
In fact the conditions are looking more and more similar to what happened in 2008. When even after many mortgage-related assets started to decline throughout the year, it turned out to be just the tip of the iceberg.
Now we’re seeing a similar unraveling following the Fed’s attempt to tighten policy over the past few years, and analyst David Jensen explains how once the Fed started cutting the money supply, it set into motion the chain of events that’s unfolding right now.
“There’s $14 trillion of money, and $72 trillion of debt. And it doesn’t take a lot of constriction in the availability of money to have an impact. That interest has to be serviced every year, and if you’re not continuously increasing the money supply, you’re cutting the ability to service the existing debt.”
It’s still hard to know exactly what’s happening. Because while the Fed is injecting a lot of money into the system, they still really haven’t explained what’s happening that’s required the intervention.
Although fortunately David was kind enough to join me on the show to explain what’s going on, and what to expect going forward.
So click to watch the interview now!
Chris Marcus
October 25, 2019