One Man’s Opinion: The Truth About The Great Depression That All Mainstream Economists Ignore

OneMan'sOpinionBy Phoenix Captial

Ben Bernanke is back at it.

Bailout Ben, the “hero” who missed the housing bubble, then oversaw the single largest handout in crony capitalist history, all the while playing favorites and lecturing the rest of us that we should be grateful that he “saved” the world, is in Japan.

His purpose?

To help them implement Helicopter Money.

This is the same man who generated the single weakest recovery in history after wasting $3 trillion in QE. On a per job basis, the Fed, under Bernanke, spent over $300K for every job created post 2008.

In Bernanke’s world, failure of this magnitude is not because you’re wrong, it’s because you didn’t do “enough.”

So it’s fitting that Bernanke is going to Japan. After all, they’re a full two decades ahead of the rest of the world when it comes to insane Keynesian policies. Japan has been playing with ZIRP and QE since the late ‘90s. The fact that those policies have failed to end Japan’s economic malaise doesn’t seem to have deterred them from doing more.

Indeed, Japan has also implemented the single biggest QE program in history, equal to 25% of Japan’s QE. The fact that this generated at most an uptick in economic activity for a mere six months is again, not indicative of the fact QE CANNOT generate growth. Instead it simply indicates the Bank of Japan hasn’t done “enough.”

So Bernanke is there, advising them on how to funnel money straight into Japan’s economy. This is the famous “helicopter” money he promised would stop deflation no matter what.

The problem with this?

Bernanke’s entire thesis is bogus.

Bernanke believes the Great Depression was caused by the Federal Reserve not doing enough. He never bothers to point out that the Fed actually expanded its balance sheet by 300% at that time bringing its balance sheet to 25% of US GDP…which by the way is even larger relative to GDP than the Fed’s balance sheet is now.

This is the dark secret of the Great Depression: the Fed printed its brains out fighting deflation. It failed MISERABLY to generate GDP growth.

Instead it eventually created inflation… and a stock market bubble.

From the market bottom in 1932, to its peak in 1937, the Dow rose 387%.

Then, in 1937, as CPI exploded higher to 3.6%, the Fed hiked rates, and the bubble burst losing 50% of its value in a single year.

Again, during the Great Depression the Fed printed a TON of money, growing its balance sheet exponentially, resulting in a stock market bubble during a weak economic recovery, ultimately leading to inflation, which caused the Fed to raise rates… resulting in the bubble bursting.

Sound familiar?

The Fed has literally repeated the same thing since 2008. And it will end the same way: with this bubble imploding.

The time to prepare for the next Crash is NOW, before it hits.

[Ulli comment: The way to prepare is to not only have an exit strategy in place no matter what you invest in but also be ready to execute it when the signal has been given]

About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
This entry was posted in Market Review and tagged . Bookmark the permalink.

Comments are closed.