Report Global Real Narrow and Broad Money Cratering in House prices and the economy Posted April 14, 2018 What’s probably happening in my view is just the follow on from the 2007-9 problems. The problems started building from the mid-1990s. Private debt levels soared out of control, and resulted in housing and stock bubbles in western countries. On the other side some countries like China and Germany have run huge current account surpluses. Together this resulted in the first financial crisis. Global imbalances are they key. Sir Mervyn got a lot wrong; he will be proved correct on this though, in the next 12-18 months. Nothing has actually been done to fix the global imbalances and bubbles which caused the financial crisis. Instead interest rates were cut to zero, housing and stock market bubbles reflated. The world carried on. Politicians don’t want to face the truth because it isn’t very popular. Osborne in 2010 should have stood up and said the unbalanced nature of the UK economy, house prices, housing equity withdrawal, the dodgy mortgage market and private debt levels were the problem. That was Gordon Browns legacy. Instead the side issue of the government’s finances were focused on along with maintaining and expanding the bubble at any cost. Zero interest rates and cutting government expenditure are pretty much the opposite of what should have been done. If a severe recession does develop monetary policy will be virtually impotent this time. The can kicking will come to an end. The only way of boosting the economy will be via the government. This is likely to cause some rather serious political problems in monetary sovereign countries and will probably be fatal for the Euro area.