Toro
Diamond Member
- Thread starter
- #41
I'm not sure.
James Grant of Grant's Interest Rate Observer has been noting the truly staggering sums regarding the stimulus. According to Grant, in the 1990-91 recession, the total stimulus - fiscal deficits plus monetary easing - accounted for 2.8% of GDP. The 2001-02 recession, total stimulus was 7% of GDP, at the time the biggest stimulus ever. Today, the stimulus is a stunning 30% of GDP.
On the other hand, much of the channels that facilitated the housing bubbles - i.e. the shadow banking system - have collapsed. That makes it more difficult for liquidity to spread into asset markets.
But spread it will. The only question is by how much and what the unintended consequences will be, which will be something that no one is currently considering.
James Grant of Grant's Interest Rate Observer has been noting the truly staggering sums regarding the stimulus. According to Grant, in the 1990-91 recession, the total stimulus - fiscal deficits plus monetary easing - accounted for 2.8% of GDP. The 2001-02 recession, total stimulus was 7% of GDP, at the time the biggest stimulus ever. Today, the stimulus is a stunning 30% of GDP.
On the other hand, much of the channels that facilitated the housing bubbles - i.e. the shadow banking system - have collapsed. That makes it more difficult for liquidity to spread into asset markets.
But spread it will. The only question is by how much and what the unintended consequences will be, which will be something that no one is currently considering.