By John Rubino
Today’s world can be summarized in two sentences:
Unless continuously fed with new credit, the global financial system will implode. And when confronted with this possibility, governments will always respond with new credit.
This has been true at least since the Long Term Capital Management collapse in 1998, and in the ensuing 14 years the global financial markets and the world’s governments have been partners in a dance in which crisis elicits monetary ease, which ignites an asset bubble, which bursts and elicits a new flood of credit. After each sequence the total amount of debt — and the system’s fragility — is even higher than before.
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Related reading:
Paul Krugman: But What About the Deficit?
Bloomberg Businessweek (30 April 12)
