The ‘Everything Bubble’ and What Happens if Credit Freezes Up in a Credit-Based Economy

“It could get really messy.”  Wolf Richter on the X22 Report

The US government bond market has soured, even the 10-year yield is surging, and mortgage rates have jumped. Read… What Will Rising Mortgage Rates Do to Housing Bubble 2?

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  62 comments for “The ‘Everything Bubble’ and What Happens if Credit Freezes Up in a Credit-Based Economy

  1. Phil Collins says:

    We are heading for sovereign defaults over the next 5 years.

    There is too much debt in the world, I don’t know if it is going to be like dominos or jenga but it will happen.

    • Rob says:

      Puerto Rico fist to go. But weed taxes could help a lot of states

      • mean chicken says:

        Pretty sad state of affairs when government must rely on taxing ganja or any other thought impairing compound to keep the lights on. Doesn’t sound promising to me, just dirty hippie talk.

        But what do I know….

        • Dave says:

          All the things that were illegal the government has taken over one by one. Alcohol, lottery, casinos, marijauna next cocaine and prostitution.

    • two beers says:

      A sovereign never has to default on debt paid in its own currency.

      • NoEasyDay says:

        Greenspan: “There is nothing to prevent the government from creating as much money as it wants.”

      • Pat McKim says:

        yea, right, they go the way of Venezuela and the whole economy falls apart and grinds to a halt and super markets have nothing on the shelves, crime goes up, and prostitution shoots up as well. Same in Weimar. If you have a deflationary collapse, then you have an inflationary one.

        Each time the gov’t “creates as much money as it wants,” the amount it needs to goes up and it needs to print more.

    • van_down_by_river says:

      Those sovereign defaults will happen through currency debasement.

      Ben Bernanke and Janet Yellen say inflation is wonderful – it will save us from the drudgery of work. Simply borrow and borrow and watch the debt inflate away.

      I need not concern myself with who raises my food or builds my products – it’s reassuring to know they will always work for printed dollars. Their earned dollars won’t buy much so I harvest their labor and get to freeload. We all win – master and slave alike.

      • zoomev says:

        that sounds horrible

        • c smith says:

          That’s because it IS. Best part is, it happens in a way that not one person in a hundred can figure out. People know something is VERY wrong – and there is – they’re slaves. It’s why bread and circuses were invented.

    • Boiled Coffee says:

      No country that issues debt in its own currency is or will ever be at risk of default.

      • Rates says:

        +100, but that does not mean it can’t lose value. Hyperinflation is a possibility with all currencies, sovereign or not.

    • Broker dan says:

      Been hearing this for 5 or 6 years

      • Mr. Knoss says:

        People have been writing books about this since the 1970’s.

        Still waiting…

  2. Maximus Minimus says:

    I am not sure if you are saying: “God give me chastity, but not just yet”?
    Stock market crash will not be such a big deal, but credit is a problem? All sorts of pension funds are up to their ears in the stock market. This is not discretionary investment. The domino effect would be huge.

    • cdr says:

      “All sorts of pension funds are up to their ears in the stock market. This is not discretionary investment. The domino effect would be huge.”

      Agree. But the solution should not be a good use of a big crisis. That’s how QE, twist, paper-flipping, and the Euro-ponzi were created.

  3. AG says:

    This is another great summary about our economy and dependence on credit. But one area that I’d like to see more discussion about is credit card debt, which for many people has a more immediate effect than mortgage rates.

    I read that total credit card debt went up nearly 8% in 2017, and is now over $900 billion. But that total debt doesn’t really take into consideration a person’s monthly interest payments, which ranges from 15% to 30%! BofA now charges interest on purchases, which I recently noticed, but have not read about in the press.

    Then add in the less-publicized penalties for late payments, and the figures skyrocket even more. For instance, some student with a $2,000 credit card balance who pays a few days late, gets slammed for around a $25 fee. Which comes to 15% annualized. Add in lets say there is a 20% rate on the balance, and they’re actually paying 35%! Another little known secret is that credit card companies can and will raise your rate if you’re late, by even a day. One can change the rate they charge from 20% to 30% if you pay late after a few times in a row. These are phenomenal rates, and the issuers seem to have no legal limits.

    One big difference with credit card debt and mortgage debt is that mortgage rates can go up, but it mostly effects new buyers. You can keep living in your house and nothing changes, even if your property value goes down. If you need to sell to downsize or relocate, you get less but then benefit by also paying less for your next house. It could even be a wash.

    But regardless, credit card debt effects everyone every day, and the credit card companies have few if any limits on what they can do. I’d like to read more about that.

    • California Bob says:

      “One big difference with credit card debt and mortgage debt is that mortgage rates can go up, but it mostly effects new buyers.”

      Begs the question: how much current mortgage debt is in ARMs? IIRC, the last crash was partly precipitated by a rise in interest rates, which trapped ARM mortgage holders with–sometimes rapidly–rising payments.

    • David Calder says:

      In 2008-09 everyone I worked with who had a credit card from a bank had their rates raised to something around 27% or higher and these were union high paying jobs with people with excellent credit.. Everybody jumped to a credit union with rates at 9%. My rating was 801 but when I went to Video Only to buy a plasma TV I was turned down for a “same as cash” revolving credit because GMAC was broke.. If this really does become a credit freeze it will become a rout and quickly..
      I don’t think the danger lies in a sovereign debt crisis but private debt that becomes unsustainable.. Very few mainstream economists saw 2008 coming because most of them dismiss private debt as being all that important.. Krugman didn’t see it coming and has spent the last 10 years spinning how “concerned he was”.. blah, blah, blah..
      If you really want to see just how dangerous nongovernment debt has become then check out Prof. Steve Keen on youtube. It’s dense and long but it is an eye-opener..

      • alex in san jose AKA digital Detroit says:

        David Calder – try rates going to 37%. Credit card companies exist to lure you in with rates of 5% or less and then jack them up to, not nearly, but over 30% and hope they can milk you for a few or several years before you wise up and step off of the grid.

        Too many of us are suckers who believe in honesty and hard work. I thank God the economy crashed and got me off of that treadmill.

        A friend of mine, in the same business and who had it happen to him, too, probably thanks God he got sick, really sick, and almost died because it got him off of the treadmill too.

        I refuse to participate in any form of credit now.

        • David Calder says:

          My wife decided on a last minute business expansion so I snagged a Home Depot card and hammered away.. 25.99% later I’m now paying that card down by $2,000 a month.. Rates like this, with super cheap money buoying up the banks, was a shock. After seeing what happened to friends in 2008-09 with no warning or explanation when rates exploded because the banks were in worse shape than the people we decided to pay off everything..
          The irony is when President Carter went on TV and asked the people to pay off or down their credit debts the economy tanked.. It wasn’t doing well anyway but the connection to debt and prosperity was made very clear. If all of us who can pay down their debts actually do so the same thing is going to happen. But, as with you, that will be someone else’s problem because we are out also..

      • Tom T says:

        Thank you for the link to Keen’s presentation. Very illuminating. Have always appreciated Keen, but now understand his reasoning with more clarity, in spite of my own “dense” head.

    • Max Power says:

      What do you mean by “BofA now charges interest on purchases, which I recently noticed, but have not read about in the press“?

      • FluffyGato says:

        I can’t speak for AG, but I believe he meant to say that BofA is now charging interest on *fees*.

      • AG says:

        Replying to Max, but hoping not to hog up the discussion here, since the credit card stuff was off-topic.

        I have always had a very good credit score, a few years back it was about 810. Last summer my BofA Visa balance was $2,110, but being a busy procrastinator, I paid a few late the months before. I looked at my statement in June, and line called “Interest charged on purchases,” which was $25.90. Since my purchases that month were $456, it was based on the stated APR of 12.49% for “purchases.” There was also a $26 fee for paying late that month.

        BTW, on the front of the statement is a typical “Late payment warning,” stating that late fees can be up to $37 and APRs “may be increased up to the Penalty APR of 29.99%.”

        But the interest on purchases issue so surprised me, I called them to inquire. They admitted it was a relatively new policy, so I had them to send me a letter, which I kept, explaining.

        It says, “… we will not charge you any interest on Purchases if you always pay your entire New Balance Total by the Payment Due Date… otherwise, each Purchase begins to accrue interest on its transaction date…” It added that to get out of being charged interest for purchases, I had pay on time for two billing cycles.

        The good news is I learned. The bad news is that most people I know often pay late-considering credit card bills usually give only 3 weeks to pay-and are in the dark about interest rates, late fees, interest on purchases, etc. It’s easy to assume that many average Joes could be paying up to 50% with all those added charges.

        • alex in san jose AKA digital Detroit says:

          O … K … you see, the thing with credit cards was, there used to be a “grace” period, typically of 30 days, before interest started accruing. Let’s say you couldn’t resist buying that wonderful, huge, “painting” mostly in orange, but “mixed-media” too that featured an engine head gasket. Or, an ashtray made of an abalone shell with a taxidermied baby alligator on it. Or that delightful set of glass whales, the biggest weighing a few pounds, the smallest, well, smaller, all green of various shades, Daddy Whale, Mommy Whale, Baby Whale … I mention these things because they were certainly in my household when we were middle-class … well, if credit cards had been a thing then, Dad would have had 30 days to pay the balance on the card before that sweet 30% interest started adding up.

          Some lines of credit have a grace period and some don’t. It took me far too long to realize a car loan I had did not have this. The difference between waiting until just before the due date on a payment and getting a payment in the mail with a turn-around of less than a day after the bill came in was a difference of over a hundred dollars, I think closer to two, in how much the principal went down.

        • andy says:

          Get a debit card. That what all the millennials are doing.

          CC rates are theft.

        • alex in san jose AKA digital Detroit says:

          Andy – Yep, debit card here. I find it very useful.

    • Mark says:

      Pay off those credit cards and start living within your means rather than as a paycheck-to-paycheck debt serf and you’ll never need to worry about APR or fees ever again, in fact, when you don’t rely on credit, you can use it for your advantage.

      I churn through CCs for maybe $2000 in reward points a year and get a free trip or two a year. My credit score? I don’t know or care what that number is, somehow I don’t get turned down for new business from Visa or Chase.

    • Wolf Richter says:


      About a month ago, I addressed rising rates and credit cards. It doesn’t cover all points, but it goes into some of the issues:

      • California Bob says:

        One of the HELOC lenders is running a commercial that states–literally–‘Your house is your bank.’ At least, they were being a subtle for a while.

    • You need to consider Consumer Credit in the aggregate. You buy a home on 120% appraisal they put money in your pocket, for a down payment or renovations. RE values appreciate you draw a line of credit on the new appraised value and pay off your credit card. In 07 you used your credit card to pay your medical bills. Now you have a universal plan that caps your medical liabilities but that might not last. Your mortgage goes underwater you mail in the keys wait two years and get back in the market. The family is CH11, but CC doesn’t enter into it, and that’s because GW Bush made it law that CC could not be written off in CH11 and without a liberal Consumer Credit policy there is no GDP. So it was a bad law which needed a lot of workarounds. If they restore Health Care it will keep CC debt low (in the event that RE values collapse) and improve Consumer Credit and GDP.

  4. timbers says:


    Regarding you comment malls closings and “they aren’t really well located for anything” (paraphrased) here’s as suggestion:

    Turn vacant malls into Soylent Green factories. And we can change zoning laws to make if favorable to locate the many “urgent care” offices popping up, and encourage hospitals and nursing homes next to them, too.

    Problem solved.

  5. michael Engel says:

    Some oil co are in a horrendous shape.
    $WTIC is moving higher. Co assets are moving up.
    For the hopeless, better go BK, when oil @ $65 rather than @ $26.

  6. michael Engel says:

    China, no longer export deflation, they export inflation .
    Everything you buy from there there is going up.
    When you own a small business and have to pay rent plus home,
    in major cities, the combine RE cost, is a big portion of your annual
    sales. It usually exceed everything else. That’s what the ledger says.
    When you are short on payroll by the end of the week, you go to the credit cards.
    When you are short on rent by the end of the month, you go for credit cards.
    When you are short on credit cards on due days, again you go for
    credit cards, if you still can.
    With suppliers, you can beg and play games.

  7. Lee Blockchain says:

    Something that some are missing is the easy credit gave too many their high mortgages, 40-70K SUVs, trucks and extended credit card debt, let alone their false sense of wealth. Easy credit pushed demand forward, without seriously higher wages, which isn’t coming, this problem can’t be fixed, without a lot of pain. In 2007 the economy rolled over before the stock market did, this time I believe, will be the opposite.

  8. cdr says:

    The only way credit can freeze up in any economy is if liquidity disappears. Period. It’s that simple. No mathy explanations needed. All Econ 101.

    To maintain liquidity you DO NOT implement programs such as interest on excess reserves (IOER), in other words, the Fed paying the banks to not lend. That actually causes liquidity to contract, just as common sense would clearly show. The Fed can TEMPORARILY have a sale on money that’s not much different than the kind of sale a department store has occasionally to pump floor traffic … not an excuse to have 10 years of QE and its related effects.

    Rates that are too low for too long cause an economy to contract at worse and stagnate at best. Income from savings is reduced. The temporary sale on money is a last resort event for emergency purposes only and only if the contraction is massively world shaking … such as people realizing the Eurozone is a money printing extravaganza with no substance behind it. NOT because the DOW falls 8% or even 20% or even 30%. Short terms funds only need apply. Operation twist for long term rates is a scammer’s proposition.

    A Bullard event that DOES NOT promise QE, but rather explains the Fed is there to make sure cash can flow easily though the real economy … not the paper flipping economy … would be helpful. Him explaining working capital loans should be included in his CNBC visit.

    Pressure for the banks to make working capital loans would be quite good.

    • Nick says:

      Ken Fisher in an interview with @thestreet published on Dec 14, 2017 on youtube, mentioned how mifid and FAS 157 regulations removed 2 trillion of liquidity in a matter of a year, catching him off guard and causing an impact toward the 2008 crash. Didn’t mifid 2 just kick in in Europe this January? Can someone explain if Fisher is over-reaching or if this regulations did have the impact he claims? Maybe we’re about to get a repeat?

    • Nick Kelly says:

      It is indeed true that the only way credit can freeze up is if liquidity disappears because it is a truism.

      Credit is ACCESS to someone else’s liquidity (cash)
      But it must be accessible.

      There were vast pools of liquidity in 2007-08 but because their owners lost confidence there was no credit. This was largely due to the stupidity of putting Lehman into bankruptcy, the US FED apparently not realizing that in the UK a financial institution in bankruptcy must immediately cease operating.

      So if a corresponding bank had just deposited fifty million with Lehman, its money disappeared that second.
      The next day banks stopped lending to each other, let alone GM.

      There was liquidity but no credit.

      Maybe the word ‘liquid’ encourages comparison to a reservoir of water supplying a hydro-electric generator. If for some reason the spillway shuts off, there is still a reservoir of liquid, but no movement and no power.

      In the case of money credit, the gate to the spillway is confidence.

    • cdr says:

      ioer is not liquidity. It’s paying banks to not lend. It’s the opposite of liquidity.

      Cash to flip assets is not supporting the real economy. Liquidity in the wrong place.

      Working capital supports business and business supports the economy. Not paper flipping.

      Agree AIG was a problem affecting liquidity. A big one. The Fed created this problem by NOT doing its job. More professional economics in action.

  9. economicminor says:

    IF the Credit Markets really Seized UP! A real freeze that lasted more than a few weeks could easily be the end of life as we have known it.

    The possibilities of disaster are almost endless..

    Our entire society relies upon credit now.. Not like in the 1950’s when most transactions were cash. Today you can’t hardly do anything without a credit card or a debit card.

    It isn’t that some companies are in horrendous shape but that some that deliver necessary services are very dependent upon the free flow of credit. I’m thinking what would happen to the trucking industry IF credit card companies froze up.. In a real freeze, who decides who gets credit and who doesn’t? Is there even an agency or entity that could intervene?

    • cdr says:

      “IF the Credit Markets really Seized UP!”

      Logically, think this through …. why do they freeze? Your comment came across like a pre-panic. Your name is economicsminor. The answer is in econ 101. Really. As I said above … look up the term ‘liquidity’. As I’ve hammered on … economics is very very simple. Only a few concepts drive the whole idea. The ‘pros’ are mostly charlatans who were hired to offer explanation. They properly saw this request as a license to make things up for profit.

      • economicminor says:

        cdr, you make a lot of assumptions about liquidity. In a real down turn, which we saw in 2008, the problem was liquidity. Liquidity can evaporate easily and quickly when there are only sellers and no buyers. This is the real risk of bubbles. This is especially true with credit bubbles. When the payments stop on debts that are leveraged upon leveraged upon leverage.. Who wants to buy or loan on that kind of debt? It happened before. Only this time, there is more debt. Everything is leveraged.

        Wolf’s hope is that it somehow deleverages slowly. I don’t see how that can happen. I don’t know of previous time it has happened. Human nature is to deny and obfuscate. Everyone is a guru when bubbles build.. including the proverbial shoe shine kid. And the lessons learns seem to always be short lived.

        • Raymond Rogers says:

          I cannot imagine things happening slowly either. Too many people demand want high yields, let alone cannot stomach even small losses. It is human nature that when prices are no longer sustainable, the withdrawal from the markets will accelerate. It will be slow at first, as those who throw in at the sign of a perceived “oppurtunity” will be numerous. But with each successive realization that the yields will not continue to climb at new heights, the number of people willing and able to stop the downturnwill decrease. That is when market conditions can be very scary.

          But as scary as these things become, bad debt needs to be written off.

        • cdr says:

          Liquidity crises start when there’s a rush for the door. Everyone wants to sell at the same time. They need cash and will accept whatever they can get. Prices drop like a stone. It spreads from equities to credit as the secondary market falls. Banks won’t lend for paper flipping for good reason. As the secondary credit market falls, rates rise and banks become clueless about the true cost of money for big projects. This attitude spreads to the real economy, main street, and working capital, causing the credit the real world needs to freeze.

          The incompetent Fed let the latter happen and still appears to not acknowledge the need for credit on main street, subtly conflating the credit the world needs with the credit paper flippers need to maintain the illusion of prosperity.

          True, in 2008 credit liquidity was compromised badly for many reasons. The problem was the Fed NOT adding it where it was needed. QE1 was a good idea to prime the financial market pump. The follow up QEs were not, not was twist. Nor was ioer, interest on excess reserves, which is the opposite of liquidity.

          The Fed bungled the 2008 fix in the most incompetent ways imaginable. Rather than forcing credit down the throats of the main street credit market, it decided to create a wealth effect and use the crisis to aid in the globalist initiative.

          Since most people appear to think economics is a complicated mathy religious order, rather than a few simple ideas that need to be applied logically while taking systematic cause and effect into consideration and common sense, even today history has a good chance of repeating itself. Corrupt central banks are still doing it to us and will do it again. The ECB, the BOJ, and the Swiss are excellent current examples of the same corruption.

        • economicminor says:

          cdr, What would have been better than the FED trying to fix the markets after the initial crash would have been for Congress to have put money into the lower end of the economy, like direct payments to all taxpayers or massive infrastructure projects … Instead they obfuscated and argued and whined which forced the FED to expand their QE. Congress decided to continue the transfer of wealth upward instead of stabilizing the working class. And now we have even bigger debt bubbles…

  10. Nick says:

    Milton Friedman predicted that the internet would cut revenue for the federal and local governments. Yet the Fed declared they had record revenues last year. Is property prices the new source to squeeze as far as they can? How can they give this up? Domestically there’s absolutely no incentive to have a housing crisis again unless it triggers EM and China into a deeper crash. No pain, no gain.

    in the last decade, we’ve seen FDIC insurance cover $250k up from $100k on bank accounts. (not sure if that’s per type of account or total per person in a real crisis), Now the new tax cuts double standard deductions, and even with the other changes that damage top end real estate lasting or not, i’m pretty sure the standard deductions are in for the long haul.

    Wolf, are they trying to create a “new normal”? Can they increase wages and keep unemployment at bay? Or are they paving the way for the next QE, after a recession?

  11. Bobber says:

    We need a debt freeze to initiate the asset write-downs and reorganizations that are required to fix this economy.

    There are plenty of prudent investors out there willing to buy assets at a 50% discount. As long as assets transfer from weak holders to strong holders in an orderly fashion, there need not be negative long-term impacts on the real economy, although there could be a couple years of elevated unemployment while things get sorted out.

    If you implement an infrastructure initiative to replace the lost demand, the pain could go away quickly. Call it the New New Deal. Also, a one-time wealth tax of 10% on any U.S. citizen with more than $30M in liquid net wealth would go a long way towards eliminating fiscal issues and wealth imbalances.

    Seems odd, but radical ideas like these will be needed to deal with the massive problems our government has created. Any fix to the problem is going to require some wealth redistribution. Most people with huge wealth today received financial windfalls from the government’s intrusion in the marketplace. It’s only fair that those beneficiaries fund the inevitable correction of those policies.

    Prudent decisions and hard work need to be rewarded. Reckless decisions, windfalls, and bailouts need to discouraged.

    • economicminor says:

      Wolf said he has never actually seen much of a deflationary period.. That is why they are so dangerous because they come so seldom.. The 1930’s was the last time in our history that the US had a prolonged deflation. Just because it was before our lifetime doesn’t mean it can’t happen or won’t happen.

    • c smith says:

      “As long as assets transfer from weak holders to strong holders in an orderly fashion…” By definition, “weak” holders are levered via margin debt, etc. This is why excessive credit is such a big risk.

      • economicminor says:

        Excessive is the problem.. because it doesn’t take much of a blip in income to throw excessive into default. When the entire system is in excessive, there are no strong hands.

  12. Realist says:

    All that is needed is that the interbank market dries up like it did the last time when banks did suspect other banks to have even dirtier shirts than themselves. The result was credit drying up for small and midsize businesses and private customers

    • cdr says:

      “All that is needed is that the interbank market dries up like it did the last time when banks did suspect other banks to have even dirtier shirts than themselves.”

      Again … liquidity. In this case regulation to prevent ‘dirty shirts’ was/might be needed. Then comes Fed intervention to keep working capital loans available … NOT loans to flip paper assets … so that the main street economy does not seize. Sending crooked bankers to jail or letting shareholders fail is another remedy. Nothing magical or complicated. It’s REALLY that simple.

      • van_down_by_river says:

        Credit will freeze when the Fed runs out of money. The Fed will run out of money when the universe runs out of vacuous space.

        • Rates says:

          Or when the US does NOT win a major war, which is a certainty nowadays. And NO ONE absolutely wants to join the armed forces unless they are desperate. Heck the armed forces is so desperate they had to do a movie Pitch Perfect 3 to serve as recruitment material.

  13. James McFadden says:

    Mr. Robot here we come

  14. raxadian says:

    The usual “solution” is currency devaluation. Hence why the US can get away with having the biggest debt in the world.

    That doesn’t help to stop an economic crisis but keeps the country from defaulting their debt.

  15. Paul Morphy says:

    The credit markets froze in 2007-2008. Banks could not, and would not, lend to one another. The aftershocks of that freezing led to the sovereigns bailing out banks, insurance company and even car manufacturers.

    And all of this begat Quantitative Easing, and central bank activity to try to prop up the “market”

    The indebtedness situation 2007/8 has become far worse by 2018.

    Capitalism was prevented from taking corrective action in 2007/8 – 2018.

    If the bubble explodes, I am not convinced that Capitalism can be prevented from taking corrective action this time.

  16. Wolf’s got it right, although comparing 2000 and 2007 is apples and oranges. Banks are strong, and this is more like 2000, where Greenspan raised rates to cool off the Nasdaq. FF and you see that the S&P is led by the FANGS, which are tech companies which weren’t around in 2000. The long steady slide in Nasdaq was a depressing sight to behold. Spec on the upside turned into forced selling which caused values to overshoot on the downside. Many of the Tech giants in 2000 never emerged, because losing time in the tech race is worse than losing money. There is less speculation in this market and more global money flows from coordinated loose money policies. In 2000 spec buying led to forced liquidation and monetary contraction, this time monetary expansion may lead to speculative selling. (You give someone a dollar on margin, they try to figure out how to keep it) Just a guess.
    The Feds concern for CRE is almost as misplaced as it concern for the dollar, or their obsession with 2% inflation targets, or the famous unemployment benchmark. The Fed has a trivial function.
    The point of a collapse is what happens when sovereignties begin fire walling themselves off from the global contagion.

  17. mean chicken says:

    Not sure how a credit system seizure is inflationary. Intuitively, it doesn’t seem that way. Seems like we’re going to need some tremendous amount of inflation to avoid losses on loans for over priced assets and thus if it doesn’t happen credit markets might seize.

    Consider that, the financial crisis was purposely contrived.

    It’s much easier for central banks to invent the future at high cost to society than it is to forecast the future, thus a logical person might ask why they’re doing this insane thing. It’s an easy sell, especially for insiders and gamblers but it’s not good at all for the whole of society. It’s simply for the benefit of insiders and special interest groups, that central banks attempt to manipulate the business cycle.

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