The Granddaddy of All Bubbles Is Here
Doug Noland, a credit bubble historian and analyst, spoke with Financial Sense Newshour about the global credit bubble now forming, which he calls the "Granddaddy of all bubbles."
Noland warns: "We’ve never had such a synchronized global bubble in sovereign debt markets and equity markets, and we’ve never seen such concerted central bank policies. It’s almost like one global monetary policy, and I would also argue that the global system was much closer to a serious crisis this past summer than most appreciate; then we had the Draghi plan and then Mr. Bernanke with open-ended quantitative easing. So, from my standpoint, we’ve been in desperate policy measures since last summer."
When asked about Cyprus, he said that it was a "dramatic development" with Germans now having to conduct a delicate balancing-act between any further bailouts and domestic backlash. Cyprus may just be a model of things going forward.
Whether a Cyprus-style haircut on deposits could happen in the U.S., Noland says that he sure hopes not but, in a way, U.S. depositors—savers—"are getting a haircut each year with negative real interest rates. The Fed is reflating the economy, inflation is prevalent in the markets now and we as depositors get a zero return."
With regards to our current market he says, "Everyone’s gotten all bullish, the markets have been really strong and now we’re starting to see, perhaps, a little bit of reality come back as we see some cracks out there."
With that said, Doug believes the bubbles are back and likens the period we're in now to the 1990's when hot-money continually flooded back into the U.S. anytime there was a crisis abroad. In comparing now and then, he says "the U.S. economy and markets could outperform and be a magnet in a period of unstable global markets. I don’t think it’s positive because down the road when the markets finally discipline our policymakers, then the dollar would be in trouble; but, in the near term, it could be a magnet again."
When asked how long this current bubble could last for, he said that it's impossible to predict but, if it truly is the "Granddaddy of all bubbles" as he believes it is, "it shouldn’t surprise us if the excesses completely amaze us."
If you would like to hear this full interview or receive access to our premium content, CLICK HERE to subscribe.
About James J Puplava CFP
James J Puplava CFP Archive
|01/17/2017||Dr. Amy Myers on the Thyroid Connection: Why You Feel Tired, Brain-Fogged, and Overweight||bcast|
|01/16/2017||How to Get Into Financial Shape for the New Year||bcast|
|01/14/2017||Forecast 2017: The Oracles||bcast|
|01/14/2017||Gary Dorsch on Stocks, Bonds; Frank Holmes on Gold, Oil||bcast|
|01/10/2017||Lifetime Income Series: Karen Covy on “When Happily Ever After Ends”||bcast|
|01/09/2017||Lifetime Income Series: 50 Shades of Grey Divorce||bcast|
|01/03/2017||Professor Robert Merton on the Crisis in Retirement Planning||bcast|
|01/02/2017||Retirement Facts That Will Scare the Crap Out of You||bcast|
|12/31/2016||Marc Levinson on An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy||bcast|