The Bubble Epoch Gets Worse, by Bill Bonner

The problem with serial bubble blowing by central banks is that each bubble has to be bigger than the previous ones to keep them all from popping. From Bill Bonner at rogueeconomics.com:

YOUGHAL IRELAND – Yes, it’s the age of miracles. The Bubble Epoch. The silly season.

And it just gets sillier and sillier.

Christine Lagarde, who holds the top spot at the European Central Bank (ECB), announced that she’s going to continue pumping up the money supply by 17 billion euros per week.

She says it is going to add 1.8% to Europe’s growth over the next two years. That is, somehow the fake money will be magically transformed into real wealth.

How does she know that?

Strange Voodoo

Oh, Dear Reader, is that a serious question? Of course, she has no idea…

And by the way, if her €17 billion per week would add precisely 1.8% to the economy, why not print €18 billion and get 1.9%, we wonder? Or €100 billion?

Apparently, none of the journalists who cover the ECB thought to ask… So we’ll just have to go on wondering.

What strange voodoo is this… that 17 billion per week is the exact number of euros needed to raise GDP by 1.8%?

A Good Deal

Meanwhile, her co-delusional over in the U.S., Federal Reserve chief Jerome Powell, says he’s going to continue the money-printing, too – at the rate of $30 billion per week.

His aim is to hit 2% inflation – not 2.1%, not 1.9% – which he’s convinced is some sort of sacred number guaranteeing uninterrupted growth and full employment.

What it actually guarantees is higher prices, as we see in the asset markets. The S&P 500 just hit another new all-time high. As did house prices.

The Fed is buying $40 billion worth of mortgage bonds each month, driving down mortgage rates to the point where you can get a 15-year mortgage at a negative rate.

That is, your mortgage interest will be less than the going rate of consumer price inflation.

A good deal? Apparently.

And it’s likely to be a better deal if tomorrow’s inflation makes today’s mortgage rates even more negative.

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