...But didn’t the central banks, particularly the Fed, prevent an even worse worldwide recession with these easy-money policies? Yeah.... “But every time we fight the implosion of a speculative bubble with even more cheap money, we sow the seeds for the next even larger bubble,” he said. “All of the excess liquidity has to go somewhere.”
And it went somewhere. That “next even larger bubble” was already here, and we were in the middle of it, he said. “The stock market boom in Japan, followed by a sudden swoon. The prices of gold and other commodities, also with strong fluctuations. The gigantic flow of capital into emerging markets that is looking for investment opportunities there, and reacts very nervously at bad news. This volatility everywhere, that’s typical of a speculative bubble.”