Credit Out of “Thin Air” Brings Wealth Destruction
Federal Reserve policy has been to expand credit out of nothing without regard for the real damage it does to the economy.
Source: Mises Institute
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DW NOTE
The Mises Institute has been making this argument since 1982. The premise is sound — credit expansion unbacked by savings distorts the capital structure — but the Fed's balance sheet has expanded from $900 billion in 2008 to $7 trillion today, and the predicted collapse keeps not arriving. Either the transmission mechanism is broken or the timeline is longer than any observer's career.