Mish: A transfer of wealth never solved any nation's economic problems, but efforts to do so have caused such problems.
I am going to end this soapbox with the first question I raised:
Other than economic depression and bankruptcy wiping the slate clean how does a transfer of wealth happen to cure all of the above problems?
You posted the answer to your question earlier this morning, with the link to the Mises Institute article. The answer of debt liquidation via market processes is very unwelcome. Most (including Zeev, as I understand him) seem to believe the Fed and fiscal policy must try to steer us out of this pothole by transmuting the market's ordinary approach (a correction in price) to a kinder and gentler one (a correction in time; i.e., same net effect of return to trend, but spreading it over, say, 10 years, so the market goes sideways while the economy grows and sustainable valuations return).
The Austrians (whose views I share) don't believe the gov't can do more than prolong the pain. How long a time-based correction is too long, before the purportedly kinder approach (pull out all the stops to hold up the economy) ceases to be truly a gentler one? The question doesn't impact traders but it is huge from a LT perspective. I don't think the gov't knows or would admit the answer. The truth about politicians' aversion to hard corrections after booms is as simple as NOMW: "not on my watch."
So I think the investment implication is that we can count on both reflative efforts and their lack of success, making for an ongoing secular bear with interim bounces and cyclical rallies. Almost dictates trading; I'm holding less.
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