Opening an outstanding post by Joshua M. Brown:
The only way to save the economy is to crash it.
“You can blame the Federal Reserve’s loose money policies if you’d like” — a torrent of devalued-capital that gets turned into ubiquitous glut and the ruination of selective intelligence:
Here’s the perfect business idea for this environment: Open a Hundred Dollar Bill Store™. You sell hundred dollar bills for ninety dollars each. You’ll lose ten dollars per transaction but you’ll do a trillion in revenues in year one. Maybe you show an ad to everyone who walks into the store and you break even. User growth with be on the order of 1000% per month. A billion users. You’ll be the biggest IPO of all time when Goldman’s underwriters get wind of that growth rate. Go public and let someone else worry about a competitor selling hundred dollar bills for eighty-five.
Brown’s conclusion is close to a definition of economic sanity:
I don’t have any answers other than what I began with – we need a washout. A recession would be plenty, no need for anything worse [hmmm]. It’s got to be flushed from the system. Bad business models that were never designed to succeed outside of raising capital to continue must not be allowed to continue. No need for legislation, the cycle will clean it up. It always does. The best thing that could happen here is for a return of the cycle. We’re in year seven of an “expansion” and no one is happy. It’s time for a contraction. It’s long overdue.