With the Fed slashing the funds rate to 1% on Wednesday, it’s worth remembering what happened the last time they did this: We got the most massive housing bubble in the history of mankind.
On Wednesday, in the midst of this crisis, where the only concern appears to be for the present moment, the seeds for the next bubble were being sown. The adjusted monetary base has increased by 35% in just the last six weeks: Adjusted Monetary Base Chart.
My prediction is for a super bubble in commodities. With the emerging world industrializing, the squeeze on the fixed amount of materials in the earth is poised to intensify over the next 15-20 years. Combine that with the loosest, most reckless, monetary policy in history and I think the stage is set for $500 oil, $15 copper and $4000 gold.
This kind of thing is going to be an economic, as well as a geopolitical, problem. I’m talking about wars between countries for the control of natural resources.
The corresponding destruction of the monetary unit and resulting hyperinflation will also create all kinds of problems for economic exchange and the entire specialized, division of labor structure of the global economy.
On Wednesday, the seeds were being sown for an economic apocalypse.
