The end of easy money

Cheap, easy money has greased the US economy for decades. Now it’s running dry.

Man with a till full of dollars
(Image credit: © Joe Raedle/Getty Images)

Times they are a-changin’, and the key difference between the present and the 40 years between 1980 and 2020 is money-printing. In the US’s fake money system, new wealth is not earned, it’s created by lending. The Fed lends to member banks. The banks lend to hedge funds, smaller banks, corporations, whoever wants the money. The money supply gets bigger, but so does the debt.

The big borrowers are on Wall Street, financial players who use the cheap money to speculate. As long as the volume of money – the liquidity – was increasing, it was reasonable to expect asset prices to go up. And they did. The Dow, for example, rose from under 1,000 in 1980 to over 36,000 today.

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Bill Bonner is an American author of books and articles on economic and financial subjects. He is the founder of Agora Financial, as well as a co-founder of Bonner & Partners publishing.