Is history just going to repeat itself?
Back in 1978, Director Richard Condie and The National Film Board of Canada put together a great 10-minute cartoon discussing one of the greatest bubbles of all time – The Mississippi Bubble. I ask the question if Mr. Condie had any premonition that 38 years later, this cartoon would have so much context to today’s financial situation.
I want to preface the video with this:
While you are watching the video, in your mind replace the following characters:
“Regent” with “Government”
“John Law” with “Central Bankers”
“Mississippi Company” with “Stocks/Real Estate”
“Royal Edicts” – “Government and Central Bank Policies”
I ask you a simple question - In today’s world, why do we see such things as:
- Massive corporate share buy backs implemented with money borrowed almost for free
- Massive central bank money printing through quantitative easing in almost all countries
- Using printed money, why did the Bank of Japan buy close to 50% of all outstanding Japanese government bonds, stock ETFs and real estate investment trusts (REITS) in their country?
- Why is there an active currency war amongst countries for competitive devaluation? Why did Japan actively destroy close to 40% of the purchasing value of its currency from 2013-2015?
- Why do negative interest rates exist? Why is there close to $10 trillion of global bonds yielding negative interest rates?
- In a Deutsche Bank report, why is Dominic Konstam talking about penalizing savings with negative retail deposit rates and wealth taxes? Why does he feel negative mortgage rates for new buyers is a necessary incentive?
- Why are governments and central banks trying to eliminate high denominations of currencies? ($500 Euro bill being the most recent)
You can decide for yourself.
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