In the interview heard below Chris Martenson's PeakProsperity is joined by former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier, David Stockman, who informs listens the global economy has entered the "crack-up phase" and explains the four big characteristics we are going see as this phase gains momentum.
Stockman explains that central banks have "themselves painted so deep into the corner that they're lost and desperate," and in they're growing desperation we will see extreme central bank repression.
Almost week by week, we have another central bank – this week, it was Sweden – lowering their money market rates into negative territory. The Swiss Bank is already there, the Denmark Bank is there, the ECB is there on the deposit rate, the Bank of Japan’s there. All of the central banks of the world now are desperately driving interest rates into negative territory.
Stockman predicts increasing market disorder and volatility, highlighting that over the last three months the stock market has behaved like a "drunken sailor."
On global debt, which Stockman refers to as one, irrational and second, completely unsustainable, he is forecasting "huge deflation of commodity and industrial prices worldwide."
Look at the Baltic Dry Index. That is a measure, one, of faltering demand for shipments and, two, massive overbuilding of bulk carrier capacity as a result of this central bank driven boom that we’ve had in the last 10 to 20 years. So that is going to be ripping through the financial system, the global economy, in ways that we’ve never before experienced.
Finally stockman asserts, "demand has run smack up against peak debt," hitting a $200 Trillion threshold, meaning debt has expanded worldwide by $60 Trillion just since 2008.
So we’ve generated, because of central bank money printing and all of this unprecedented monetary stimulus, we’ve generated something like $60 Trillion of new debt in the world and have barely gotten $15-17 Trillion of new GDP for all of that effort. And I think that is a measure of why the fundamental era is changing. That the boom is over and the crackup is under way when you see that kind of minimal yield from the vast amount of new debt that has been generated.
