The Faustian Bargain
“In Goethe’s 1831 drama Faust, the devil persuades a bankrupt emperor to print and spend vast quantities of paper money as a short-term fix for his country’s fiscal problems. As a consequence, the empire ultimately unravels and descends into chaos. Today, governments that have relied upon quantitative easing (QE) instead of undertaking necessary structural reforms have arguably entered into the grandest Faustian bargain in financial history.”
USAGOLD note: That quote is taken from a Scott Minerd essay eight years ago. “If there is too little money made available,” he says in the update linked above, “the prices of assets used as collateral backing loans will spiral downward. If there is too much, inflation will spiral out of control.” Minerd is the highly-regarded chief investment officer for Guggenheim Investments.
Repost from 3-31-2020