Most major countries still have a zero interest rate policies (except China), high deficit spending and rising debt levels even though we're 5 years past the financial crisis. Money printing continues in the US and Japan but still world-wide growth continues to slow. Government and monetary authorities are "all in" with stimulus -- but it's not working.
|Central Bank Balance Sheets Show That We Live in a QE World|
|Diminishing Marginal Returns on Debt|
The next recession will likely be the 3rd one in a row caused by a bursting financial bubble (caused by governments and central banks) that will probably originate in Asia. But when an economic decline begins, I'm saying that we could have a lost decade coming because there are no "arrows in our policy quiver"to counteract the downturn! (Only China has room to lower interest rates, but their debt levels are already near danger levels meaning that China itself may be the epicenter of the next bust.) When there is recognition of this, then you'll have the 50% drop in stock market prices that Marc Faber talks about. There might even be a gradual realization of this predicament -- with years and years of stock market (and corporate profit) declines. 2014 may be the first year of declines!
It could be that the US is truly following Japan into another lost decade during which time cash and treasury bonds could be king.