Review on Systemic Fragility in the Global Economy by Jack Rasmus

Abstract

Global central banks are unwinding their balance sheets, flattening the yield curve, and inverting it; with global trade tensions, appreciating dollar (liabilities), and emerging capital market stress (bond sell off/capital outflows), the global economy is extremely fragile and could experience a financial crisis and recession by 2020 (the consensus is by 2021). Systemic fragility is caused by policy mistakes, made by central bankers. These decisions make the financial system more fragile, as current central bank ideologies and orthodoxy are deficient, and unorthodox. Central bank policies are making matters worse, by driving costs of capital to zero (negative), replacing real for financial assets, printing trillions to bail out banks, and purchasing bad debt and defective financial products, allowing massive leakage of capital to flow unregulated (shadow banking) across globe platforms, etc.; and all with no effect on real economic growth, wage growth, labor participation, inflation, and more importantly, standards of living and social welfare.