It Became Necessary to Destroy the Global Economy to Save It, by Charles Hugh Smith

The global economy is addicted to fiat debt and low interest rates. Withdrawal without destroying the economy would be impossible. From Charles Hugh Smith at oftwominds.com:

As the high generated by the previous iteration of financial repression wears off, the dose increases, as do the stakes when that high wears off.

You’ve no doubt heard “We had to destroy the village in order to save it.” The original quote noted by reporter Peter Arnett in 1968 was “It became necessary to destroy the town to save it.” The phrase (whether an exact transcript or not) became emblematic of America’s war in Vietnam, encapsulating the impossibility of fighting an unconventional war without front lines for “the hearts and minds” of the citizens with massive firepower.

We find ourselves in a similar situation today as all the immense firepower of central bank stimulus and intervention will be unwound in a chaotically destructive fashion in what I term The Great Unwinding of all the excesses of leverage, debt, stimulus and feverish speculation that now dominate the global financial system and economy.

As in Vietnam, the policies were launched with good intentions: Saving South Vietnam from Communism, the Domino Theory, etc. were the stated goals at the start, just as the goal of all the “emergency measures” pursued by central banks and Treasury departments in 2008-09 was “saving the system from collapse,” a possibility succinctly expressed by President Bush at the time: “This sucker’s going down.”

Just as America’s intervention in Vietnam was an “emergency measure” that started out limited and then ballooned into all-out war, the Federal Reserve and other central banks unleashed the financial equivalent of Operation Rolling Thunder while governments cranked up deficit spending, i.e. borrowing and spending trillions to prop up the economy.

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