I can't remember who, but a columnist once wrote "I want you to imagine George W. Bush and Dick Cheney in the oval office in October 1962."

The Great Recession took the shape it did because Ben Bernanke was (and is) one of the leading scholars on the Great Depression. Therefore, his response to 2008 was to avoid the Great Depression at all costs. What he did was basically roll out a "new deal" for the investment class: banks got a giant bailout and Americans were told to go buy cars and refrigerators. FDR might well have taken a similar approach if he weren't dealing with an extremely real Socialist movement on his left flank; as it is, most of the ideas for the New Deal were a backstop against Huey Long.

The result of Bernanke's programs were basically institutionalizing the inequality between the monied and the scrabblers. Had leftist organization been stronger, Occupy Wall Street might well have turned violent and accomplished something. As it was, it was a bunch of people with a grievance but no real recourse. Their situation has largely worsened. Meanwhile all the money the Fed has pumped into the economy has gone 100% into the stock market.

It is now leaving the stock market.

More than that, in the ten years since that money was pumped into the stock market, all the humans have been replaced with algorithms. All the funds have been replaced with ETFs. And everyone has been trained on a pavlovian response of "fed adds money, markets go up." If you've been a financial manager for ten years, you have never seen a recession. And if you're an ETF manager, you have zero incentive to buy the dip.

Jerome Powell, upon taking office, said that recessions are the natural order of markets. Jerome Powell, upon meeting Trump, cuts rates whenever Trump Tweets. The repo crisis, which nobody outside of finance and only a splinter fraction of the financial markets are discussing, is a problem of the Fed not being able to keep rates at their target. The Fed not being able to control rates - the one thing they do - is an existential crisis minus all the rest of the BS.

And there's a lot of BS now.

You cannot eliminate volatility. You can only suppress it for a while.

FUNDAMENTALLY: the Fed's massive cash injection from 2008-2011 did not fix the financial crisis. It postponed the financial crisis. The phrase used perennially back when people were still discussing it was "kicking the can down the road."

The road has a pothole. The can has stopped. And here to save the day is Larry Kudlow.

You know what caused the Great Depression? Fundamentally? This is one of those things that people wave their hands about and pretend they understand because when we're talking about money we have to speak in abstractions lest the proles realize how little we know.

The Great Depression was caused by the conversion of the hopes that the Germans would pay for WWI transforming into the reality that nobody was going to pay for WWI. It ruined Germany first - the argument made by idiots is that war reparations destroyed the German economy but Germany fundamentally paid fuckall in part because as soon as they were forced to pay in foreign currency they printed however much money they needed to buy foreign currency. But the reality is, the Great Depression is what happens when unrealized gains become write-offs.

There's a lot of IOU's out there. What happens next is anybody's guess. In the short-term, though? It's gonna be interesting.