Why The Markets Are Overdue For A Gigantic Bust It's just not possible to print our way to prosperity - part 1

Let's begin with a caveat: confirmation bias is an ever-present risk for analyst as we are. Based on lots of historical inputs, we may anyway conclude that rinting money out of thin air can engineer lots of things, including asset price bubbles and the redistribution of wealth from the masses to the elites. But it cannot print up real prosperity. As much as I try, I simply cannot jump on the bandwagon that says that printing up money out of thin air has any long-term utility for an economy. It's just too clear to me that doing so presents plenty of dangers, due to what we might call 'economic gravity': What goes up, must also come down. Which brings us to the enclosed chart. The 200 bubble blown by Greenspan was bad, the next one by Bernanke was horrible, but this one by Yellen may well prove fatal. At least to entire financial markets, large institutions, and a few sovereigns. It's essential to note that more than two-thirds of the net worth tracked in the above chart is now comprised of ‘financial assets.’ That is, paper claims on real things. As the central banks have printed with abandon over the past decade, they’ve created the most extreme gap between real things (GDP) and the claims on those same things (Net Worth) in all of history. Following the Great Recession, the ‘plan’ of the central banks, such as it was, seems to have been to jam up people’s paper wealth, under the theory that people who feel wealthier are more likely to spend more and hopefully borrow more, too. That plan has worked rather well, at least from the standpoint of creating vastly larger amounts of new borrowing (debt and credit). But "how much GDP growth has resulted?" Not that much.The gap between the two only grows and grows at this point. And the central banks are now stuck at this point. They literally have no idea how to undo this problem they've managed to create. At some point that gap is going to have to close.