Credit Bubble Bulletin/Doug Noland/10-14-2022
“It would have been a nonevent; inconsequential. Confirming New Cycle Dynamics, the Truss government’s “mini budget” has unleashed absolute mayhem. Pension funds blowing up. Emergency central bank rescue operations. Global market instability. UK’s Treasury Secretary sacrificed after a mere 38 days, while an entire government hangs in the balance. Friday evening Financial Times headlines: ‘Gilts in Fresh Slide as Investors Say Truss U-turn Did Not Go Far Enough.’ ‘Can Liz Truss Survive as UK Prime Minister?’; ‘Austerity Beckons as Truss Seeks to Restore Britain’s Reputation with Investors.” And “UK Debacle Shows Central Bank ‘Tough Love’ is Here to Stay.’
The world has changed right before our eyes. It has been one of my favored rhetorical questions for the past couple decades: Is ‘money’ (monetary inflation) the solution or the problem? The answer is obvious – has been for some time, and I’ll assume central bankers have accepted the harsh reality. Years of unprecedented monetary inflation created false realities. The perception of endless cheap (free) “money” distorted how our market, economic, financial, political and social systems function. The long-overdue adjustment period has commenced, and there’s every reason to expect it to be especially brutal. So quickly, so many things are different. There were this week more tremors and that nagging feeling the ground was about to give way.”
USAGOLD note: Noland at his best……dissecting the economic crisis in Britain. Investors there are flocking to gold.
