The financial crisis that is looming ahead is either a massive asset price crash, or permanent debt slavery for most of the population, as a result of the massive economic distortion created by the Fed. For some years now, orthodox economists have been puzzled (and liberal economists like Krugman delighted) about how the Fed's massive money printing exercise has resulted in next-to-none consumer price inflation. What they failed to realize is, the Fed assumed that the money newly printed would circulate in the economy.
What has happened instead is that money has been packed out of circulation, mainly due corporations and the wealthy hoarding massive amounts of cash (and investing in stuff like junk bonds in trying to chase yields). This has created massive asset-price inflation, which has distorted the economy to the point of oblivion.
What is going to happen now is that consumer spending will remain really low, and to spur spending the Fed is going to make policies to ease borrowing, which will push people into debt, thereby creating a perpetual debt enslavement of the masses to the wealthy classes. That's the future. Either a massive asset price crash, or debt slavery for most of us.
There is still a way out of it. The government should impose a wealth tax - take back the money that was gifted to the rich. They shouldn't have a problem with it because they didn't earn it in the first place - it was an artifact of monetary policy. Invest that money in building infrastructure, life sciences research, and forgiving student loans. Only a massive redistribution will correct this farce of an economy.
TL;DR The Fed has created huge asset price bubbles, which has distorted the economy into comical levels of inequality. We need massive wealth distribution if we don't want the masses to be debt slaves.
What has happened instead is that money has been packed out of circulation, mainly due corporations and the wealthy hoarding massive amounts of cash (and investing in stuff like junk bonds in trying to chase yields). This has created massive asset-price inflation, which has distorted the economy to the point of oblivion.
What is going to happen now is that consumer spending will remain really low, and to spur spending the Fed is going to make policies to ease borrowing, which will push people into debt, thereby creating a perpetual debt enslavement of the masses to the wealthy classes. That's the future. Either a massive asset price crash, or debt slavery for most of us.
There is still a way out of it. The government should impose a wealth tax - take back the money that was gifted to the rich. They shouldn't have a problem with it because they didn't earn it in the first place - it was an artifact of monetary policy. Invest that money in building infrastructure, life sciences research, and forgiving student loans. Only a massive redistribution will correct this farce of an economy.
TL;DR The Fed has created huge asset price bubbles, which has distorted the economy into comical levels of inequality. We need massive wealth distribution if we don't want the masses to be debt slaves.