Whenever the next depression arrives, it will be severe. The FED has kept rates way too low for far too long. The critical result in the economy is malinvestment. The critical financial result is that leverage is too high, with mispriced securities and loans of lower quality, susceptible to default. Corporate leverage is elevated. Reminiscent of the 1920s’ boom in closed-end funds, often leveraged, a broad array of leveraged ETFs are invested in stocks. The first such was in 2006 and now there are 200 of them. Margin debt is at a peak. The federal government is leveraged to the … Continue reading The Next Depression