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There's a Problem with Kicking the Can down the Road

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Bernanke was actually talking about the fiscal cliff, and not monetary policy, but kicking the can down the road is exactly what he is doing in his domain.

Instead of letting the shadow banking bubble burst and liquidate in 2008, he has allowed it to slowly deflate, all the while pumping up the traditional banking sector with heavy, heavy liquidity. The reduction in shadow liabilities remains a massive deflationary and depressionary force and probably the main reason why a tripling of the monetary base has not resulted in a severe inflation.

Trillions and trillions of liquidity later, Bernanke is barely keeping the system afloat. We chose the path of Japan, which has spent the last twenty years depressed, not the path of Iceland, which is emerging from its depression. We chose to kick the can down the road. The system is rotten, and the debt load is unsustainable.

(Read the full article at ZeroHedge.com)

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