Loading ...DAVID STOCKMAN
In fact, the Ian Shepherdsons of the world are just the auxiliary posse of the Keynesian PhDs and apparatchiks who run the Fed and other central banks based on the same anti-market arrogance.
They have spent the last 10 years blocking, nullifying and suffocating market forces in the financial system. So doing, they have drastically falsified any and all financial asset prices—from overnight carry trade money, to the FAANG stocks, the 10-year UST, shale-patch junk bonds and the 100-year debt issued by Argentina (of all places) last June, among countless others.
The result is a financial system fraught with incendiary bubbles, excesses and booby-traps, such as the hundreds of billion of ticking time-bombs in the risk parity trades or in the momo roach motels of the stock market like Amazon, Netflix or highflyers in the tech space like Nvidia and Broadcom. During the last 5 years, the latter two have posted 17X and 12X gains in market cap, respectively, compared to net income growth of just 5X and 4X.
Moreover, these distortions and metastases have spilled over into the real economy big time.
The Fed’s Bubble Finance regime on Wall Street, in fact, is a predator on main street. It incentivizes the corporate C-suites to strip-mine cash flows and balance sheets in order to fund massive financial engineering maneuvers, thereby shrinking investments in productive assets, new products, more efficient and skilled employees and other entrepreneurial ingredients of capitalist growth.