The real-life speculator who got rich in "The Big Short" gave an interview on the post-crisis banking system. He said this:
"The biggest hope I had was that we would enter a new era of personal responsibility. Instead, we doubled down on blaming others, and this is long-term tragic. Too, the crisis, incredibly, made the biggest banks bigger. And it made the Federal Reserve, an unelected body, even more powerful and therefore more relevant."
His conclusion: another crisis is coming. Why?
"Well, we are right back at it: trying to stimulate growth through easy money. It hasn't worked, but it's the only tool the Fed's got. Meanwhile, the Fed's policies widen the wealth gap, which feeds political extremism, forcing gridlock in Washington. It seems the world is headed toward negative real interest rates on a global scale. This is toxic. Interest rates are used to price risk, and so in the current environment, the risk-pricing mechanism is broken. That is not healthy for an economy. We are building up terrific stresses in the system, and any fault lines there will certainly harm the outlook."
How will you deal with negative interest rates? Withdraw money in cash? You anti-social capitalist speculator! That's unpatriotic!
What will the FED do next time? Exactly what it did last time: bail out the big banks at our expense. That's what it was set up to do in 1913.
Ry Cooder wrote and performs a song on this: "No Banker Left Behind." It's done in a 1930's style.
There will be another recession. There always is. If you are not a big bank banker, you may be left behind.
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