This is the problem now. As the economy slows, the asset bubbles are blown bigger and bigger. Despite record QE, disinflation (falling inflation) continues – PCE price index change year over year is falling.
See chart on debt driven growth. Notice that debt and growth worked together until 1980. Now more debt is created than growth. How much more debt is created above GDP growth?
I see this cycle continuing as the policy is not to reform but simply to push harder on monetary policy. However, when the bubble bursts, recession becomes likely.
Investors think they get ahead with asset bubbles but only Wall Street does with bonuses/commissions. It’s like a roller coaster where you’re entertained/having fun with the ups and downs, but all the while you fall further behind as you end up lower than where you started. If asset bubbles paid off, why is the number of 55+ people still working at record highs?
See also…
Taleb: “Debt does not create growth it raises the risk of catastrophe”
I agree with this…
Credit Flow Investor 