The Global Economy

The credit crisis that began in July 2007 has ravaged the global economy. All asset classes globally (stocks, bonds, currencies, commodities and real estate) have seen unprecedented declines.

The Acamar Journal has been warning since its inception in 2004 that this crisis was on its way and called the recession in November 2006, well before the credit crisis began.

The US has committed $ 13 trillion in loans and guarantees so far to try to rescue a $ 14 trillion economy.

Unfortunately, government is part of the problem. It was the Federal Reserve trying to avert a deep recession after the Internet bubble in 2000-2001 with record low interest rates that led to the housing bubble and the catastrophic current global crisis.

It was record debt levels and high leverage that created this mess and more leverage and liquidity is not the solution. By interfering with the business cycle, governments run the risk of dipping the existing recession into a depression.

The record stimulus applied globally will not stop a painful recession from playing out but is likely to lead to much higher inflation in the coming years.

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