Posted on 08/26/2010 3:37:09 PM PDT by combat_boots
This morning I wanted to puke up my coffee while listening to CNBS, which was going on about "policy mistakes" and the Jackson Hole symposium that is opening today.
In short, the premise they're running (along with the rest of the media) is that we're "trying" to have a recovery, and only a policy mistake by the Central Banks can destroy it.
This is a damned lie.
The policy mistake was already made, 10 and 20 years ago, and it was both governments and central banks that made it.
The policy mistake was to allow leverage to masquerade as growth.
Let me explain.
If I have a dollar of actual production profit that didn't exist before, I have a dollar of growth. It's organic and it's real.
But if at the same time I produce a dollar of production growth, and then expand the leverage in the system that this dollar is put through from 10x to 30x, it appears that I have three dollars of growth.
That is a lie. I have only one dollar of actual production growth.
(Excerpt) Read more at market-ticker.denninger.net ...
“The policy mistake was to allow leverage to masquerade as growth.”
Bingo, we have a winner.
Bingo is right and very well written article.
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