The Global Debt Machine Digests Another Crisis

Whether it’s the S&L crisis of 1989, the Asian debt crisis of 1998, the “tech wreck” of 2000, or the American subprime mortgage crisis of 2007, investors tend to look at the proximate causes and solutions of each crisis as unique. However, the problem, the solution, and the outcome are fundamentally the same in every case: Speculators get carried away with enthusiasm for one asset class; then, rather than letting the market sort out the winners and losers, a set of fiscal and monetary tools put in place during the Great Depression is used to “get us beyond the crisis,” without completely resolving the underlying imbalances. How do these tools work? What are the implications of using them? And, how can each of us use our understanding to profit from crises, now and in the future? We’ll show you the “big picture.”

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