Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

Many Experts Don’t See That We Are in a Bubble Economy So They Aren’t Worried About Inflation

If you think more than tripling the U.S. money supply with QE is too much money printing, wait until you hear what economist and Nobel laureate Paul Krugman wants to do. Krugman says a mere $2–3 trillion of additional money is nowhere near enough to save our economy. In fact, Krugman thinks the Fed might need to do $8–10 trillion of money printing to save our weak economy. In fairness, this is not Krugman’s first choice. He would much prefer to use fiscal, rather than monetary stimulus. In other words, he would prefer that Congress agree to a lot more stimulus spending. But if there is no stimulus spending, then the next best stimulus is printing money.

Why do so many experts, like Krugman and others, seem to like printing money or at least don’t rail against it? The answer is frustrating but painfully simple: They don’t realize (and don’t want to realize) that this is not a healthy economy having a random heart attack; this is a falling bubble economy on the way down, and even shockingly high stimulus cannot stop the inevitable fall.

Instead of facing the facts of a falling bubble economy, Krugman and most analysts are deeply committed to the false idea that we are merely in a down market cycle. The beauty of the market-cycles thinking is that every down cycle is eventually followed by an up cycle. It’s just a matter of time, and maybe some big stimulus—like shock therapy, to get things ...