by Bill Holter
The 2008 Great Financial Crisis came about because we began to hit “debt saturation” levels. The crisis was one of solvency but was attended to with added liquidity. Sovereign treasuries still had the ability to add debt to their balance sheets which was done in unprecedented amounts. Now, we are again bumping up against debt saturation levels as sovereign treasuries by and large have little room left to add more debt in efforts to reflate. The root problem of solvency was never addresses, only postponed to another day. That “day” seems to be in sight.
The Fed recently did a study concluding that a $4 trillion increase in their balance sheet should be enough to reverse a future recession. I would ask several questions: first, 2008 began as a downturn in real estate in the U.S. and quickly spread to financial asset prices and thus institutional balance sheets …