In case anyone thought only the U.S. was guilty of using money printing to prop up a struggling economy, both Europe and China have recently announced monetary stimulus measures in the face of mounting pressures in their respective economies.
First, Mario Draghi’s European Central Bank announced a plan to buy as much as a trillion euros ($1.243 trillion) worth of bonds, a move that comes amid fears that the eurozone may fall into a triple-dip recession.
Not long after that, the People’s Bank of China announced a surprise cut in interest rates, just as the Chinese economy is on track to close the year at its slowest growth rate in more than a decade — and as I’ve said many times before, I think the situation is much worse than China will even admit.
This comes as no surprise to me. When we wrote our first book, "America’s Bubble Economy," we first thought of calling it "The World’s Bubble Economy," because that’s really what it is. Our focus skews toward the U.S. because we, along with most of our audience, live here, and also because the U.S. plays such a central role in the bubble economy.
But the problems we’re dealing with are truly global, and these recent developments highlight that. Countries are trying to deal with slowing productivity, and rather than make tough choices and do the hard work of solving that problem, they’re resorting to financial wizardry. Sound familiar?
The same thing is true elsewhere as well. Japan, in addition to printing enormous amounts of money, has a government debt-to-GDP ratio twice as high as ours. Smaller countries like Brazil or Turkey may not have as much power to stimulate their economies as others, but they are doing everything they can. Pretty much nobody is addressing the fundamental, underlying issues. They’re all just trying to make the party go on a little bit longer.
So does this mean we’re safe? Of course not. Just like during the Great Depression, the rest of the world was feeling the pain too, but that didn’t make Americans feel any better. Just because other countries are acting as irresponsibly or more irresponsibly than the U.S. doesn’t mean we’re going to escape the consequences.
In fact, the only thing that’s changed is that we no longer have the high ground when it comes to maintaining the integrity of our currency and our financial system. Now we’re behaving as terribly as anybody else.
But enough money talk. Frankly, we talk too much about money.
And what I love about this time of year is that it reminds us what’s really important — family and friends. Hopefully, you will spend some time with your family and friends in the next few days. I get a second helping of thankfulness when I celebrate the anniversary of my engagement to my wonderful wife on Thanksgiving eve. It’s a time to remind myself that no matter what happens in the economy, I should never lose sight of what’s most important to me.
Here’s hoping that all of you remember that too, and have a fantastic holiday.
About the Author: Robert Wiedemer
Robert Wiedemer is a managing director at MacroView Investment Management, a Registered Investment Advisor. He is a regular contributor to the Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here to read more of his articles.
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