Salient to Investors:

David Stockman writes:

  • Keynesian central banking has created a worldwide financial bubble.
  • Soaring bond yields and the fear of losing debt market access are the one force that can cause governments to sober-up and acknowledge the facts.
  • Reagan did not want Volcker to ease the intense upward pressure on interest rates and private investment that the giant US deficits imposed. Three decades later, the world is upside-down, with sovereign debt markets becoming financial whore houses, all due to Keynesian economics’ unrelenting falsification of bond prices using QE and ZIRP. Much of Wall Street loathed monetization in Reagan’s day, but today feast on and worship it.
  • The 10-yr German bund trading at 0.05 % and long-term Italian (a quasi-bankrupt country) bonds trading at under 1% is absurd.
  • The Greek showdown is a striking example of how monetary evil-doing imperils political democracy. Greece bankrupted itself years ago using a debt market falsified by the ECB and remains a notoriously corrupt, inefficient, special interest dominated economy.
  • The Greek economic expansion between 2001 and the 2009 peak of 10% nominal GDP growth was unsustainable because it was a debt fueled bubble of public and private construction investment, new household consumption and drastically increased pensions and other social welfare programs.
  • Greece’s current public debt ratio of 180% of GDP cannot be serviced over the long haul. Greek Prime Minister Tsipras’ left-wing statist economics would cause Greeks catastrophic suffering if it were ever implemented but he is absolutely correct on the matter of political self-governance.
  • The Greek default drama provides an opportunity to deal a death-blow to today’s malignant regime of Keynesian central banking. There is no way that the euro and ECB could survive a Greece exit, nor could worldwide Keynesian central banking survive the blow of their demise.

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