3. Completely delusional about the how things would have been without Fed’s enormous intervation since 2008: “The government can make all the excuses it wants, can shout from the rooftops that the policies over the past six years are “working,” that financial crises take a long time to heal and that in the absence of its policies things would be a lot worse. But that volume does not change the fact that this recovery has been uniquely sluggish, and that millions of Americans have suffered from the poor policies of the last six years (Europeans have been subject to similar policy landscapes). Obviously better policies (known to all nonideological economists) would have created higher income growth and faster and more sustainable jobs growth than ZIRP and money printing (and with less of an effect exacerbating inequality).”
4. Complains about derivatives as well as regulators’ attempt to regulate banks: “The enormous derivatives positions are the main (but of course not the only) culprit in the long march toward an unsound global financial system. Of course, the government should not have encouraged (actually, demanded) that mortgage loans be made to people who put up no money and were not creditworthy, and “homeowners” should not have taken on such burdens or lied on their loan applications. But the proximate cause of the collapse was the instability of the financial institutions, due to their opacity and over-leverage.”
5. All developed economies are long-term insolvent: “s. Nearly all of the countries in the euro block are long-term insolvent (as are Japan and the U.S.) because of a combination of debt and unpayable long-term entitlements.”
6. Inflation numbers are artificially understated, serious inflation is a serious possibility: “Nobody has ever seen anything like this QE/ZIRP/NIRP before, and nobody knows how it will turn out. Saying serious inflation is impossible and can be dealt with easily if it rises out of the permitted range is an act of blind faith. Focusing all policy efforts on boosting inflation rather than on structural reforms to boost growth will potentially be seen in retrospect as one of the most inexplicably ridiculous mass delusions in the history of economic and monetary policy in the developed world.”
7. The decline in oil prices is bad for US growth; we should take action to boost oil prices: “The price plunge is new, but if it is not reversed relatively quickly, it could make the apparently strong economic numbers in the U.S. in recent months seem like a lost warm memory by the middle of 2015.”
I will take a moment and state that this is the dumbest thing I ever heard. So, if oil prices decline to zero accidentally, that’ll potentially mean ruins for the World’s biggest energy consumer?
8. China is on the verge of a 1929-like collapse: “We cannot know whether the corruption, bad loans, see-through projects, and internal dynamics of the Chinese system are bad, very bad, or headed for a crack-up, but any set of developments that challenge the widespread assumption of complete Chinese control over its destiny would be a very large shock to global markets. We suggest you take a look at a chart of Chinese retail margin debt, but not just right before bedtime. It looks something like the U.S. figures heading for 1929.”