The Fed is headed for an annual operating loss for the first time in 108 years. They will soon be forced to print the money to cover their expenses. A conundrum, indeed!
Should the Fed pay attention to the IMF’s warnings about global financial risks and deteriorating market conditions? Probably, but more red-hot inflation data means their hands are tied.
Rising interest rates reveal the consequences of exorbitant debt and leverage. When the free money disappears, what remains tends to flow into real assets.
Throughout the 1980s, Japan’s economy soared past the rest of the world. The growth that once earned the envy of investors and economists now stands as a dire warning against debt, speculation, and easy money.
If you happened to be walking around Paris from 1715 to 1722, you would have encountered one of the first experiments with centrally planned banking, paper money, and fractional reserves.