• 526 days Will The ECB Continue To Hike Rates?
  • 526 days Forbes: Aramco Remains Largest Company In The Middle East
  • 528 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 928 days Could Crypto Overtake Traditional Investment?
  • 932 days Americans Still Quitting Jobs At Record Pace
  • 934 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 937 days Is The Dollar Too Strong?
  • 938 days Big Tech Disappoints Investors on Earnings Calls
  • 939 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 940 days China Is Quietly Trying To Distance Itself From Russia
  • 941 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 945 days Crypto Investors Won Big In 2021
  • 945 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 946 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 948 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 948 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 952 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 952 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 953 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 955 days Are NFTs About To Take Over Gaming?
Michael Pollaro

Michael Pollaro

Michael Pollaro is a retired Investment Banking professional, most recently Chief Operating Officer for the Bank's Cash Equity Trading Division. He is a passionate free…

Contact Author

  1. Home
  2. Markets
  3. Other

The Next Great(er) Recession Now Baked In The Cake?

It's basic cause and effect. Monetary inflation causes economic busts. And the larger the monetary inflation, the larger the bust. As brilliantly explained by the Austrians (see here), monetary inflation distorts interest rate and price signals. As a consequence, businesses embark on projects and consumers make purchases and/or investment decisions that turn out to be mistakes, malinvestments if you will, that sooner or later must be liquidated. An apparent boom turns to bust.

Founded on Chairman Bernanke's QE-based money printing programs and now increasingly being driven by private bank money creation too, the US money supply is booming. TMS2 (TMS for True "Austrian" Money Supply), THE CONTRARIAN TAKE's broadest and preferred US money supply aggregate, posted another double digit year-over-year rate of increase in December, this one coming in at 11.2%. Give or take one or two basis points, that was the 49th consecutive month that TMS2 posted a double digit year-over-year rate of increase. This kind of monetary largesse says to us that an economic bust, and a pretty big one is in the offing. Indeed, the last time we saw anything even approaching a 49-month double digit rate string was the 36-month string that gave us the housing boom turn bust turn Great Recession.

US True Austrian Money Supply (TMS)
Larger Image

The question before us is this: Are we be looking at another Great Recession? We think the answer to that question is yes. In fact, we think we are staring at the next Great(er) Recession?

Have a look at the following two charts which compare our latest installment of monetary inflation - call it the Bernanke boom-bust-to-be in honor of its founder - against the monetary inflation that produced the tech boom-bust at the turn of the millennium and the monetary inflation that gave us the housing boom-bust turn Great Recession of 2008-09. The first chart plots the year-over-year rate of change in TMS2, cycle trough to trough. The second chart plots the cumulative change...

 

Click here to read the rest of the article.

 

Back to homepage

Leave a comment

Leave a comment