Updated: Sep 25, 2019
Can Debt be a problem after we print debt to equal zero?
Fisher and Minsky assumed debt holders required repayment in actual dollars earned in the real economy. Neither economists readily believed the government would print money at virtually zero percent interest rates to allow debt owners to maintain their speculative finances by rolling over their debt with monetary ease. Sure the poor go bankrupt, but they pose no systemic threat. The rich, with massive debts, rollover their term structure and await the Fed's induced "wealth effect" to earn monetary induced returns on investment. But Berananke's Bail Out and Drahgi's "whatever it takes," i.e. NEGATIVE INTEREST RATES, stemmed the outgoing tide. Minsky and Fisher viewed economic debt as a slowly metastasizing cancer that would derail the global economy. Bernanke, Yellen and Drahgi viewed debt as a bedrock to global economic growth. As Fisher and Minsky's theories proved correct regarding optimism and over-extended debt, Bernanke first and foremost change the story. Too much debt was not the problem, collapsing asset prices fomented systemic risk. Take the cost of debt to zero, by printing money, and asset prices would rise creating wealth to avert another Great Depression.
In the short-term, Bernanke, et.al should be knighted.
Today we begin the long-term effects. Bubbles percolate everywhere. Nowhere more so the Private Equity and Emerging Markets. My recommendation, prudently turn risk adverse. (Think of Uber, Lyft, WeWork, etcs.)