Economics is in Wonderland
All Central Bankers feel like they are in wonderland …. they are so far off their internal targets they are shitting themselves … literally.
Imagine no gilt investments world wide that give any return….yes in fact some give a negative return, in other words, if you park and cash here you pay to do so.
Mad scramble to reduce currency values, increase manufacturing and export competitiveness against a backdrop of far reduced commodity prices. Reduction of interest rates do not work anymore, except to fuel unsustained asset increases.
This is a zero sum game for Central Banks.
They are ignoring the obvious because Governments keep on fucking up. Government ineptitude is causing chaos, chaos in the minds of citizens, those serfs that pay taxes to enable politicians to spend on anything, without oversight or costings.
They have ignored the mere fact that consumer demand is down worldwide, as the population that they govern sense something is wrong. They are hoarding cash and not spending monies.
If one looks at certain asset classes they are rising considerably, whilst other assets are in a deflationary spiral.
All booms bust, but now when they do, it will be the biggest bust on this planet and the ramifications are worldwide.
Debt will be the problem, always was and always will be.
Your debt, Government debt…
All Central Banks have no tools left in their arsenal and they no longer have control of their currencies. Resultant impact is that you are all fucked, to put it mildly.
Yellen will increase interest rates on or before the end of September 2015….that single event will create currency chaos, as funds move to the USD and the US stock markets soar. The problem though, is that the amount of free cash is huge, so when the pendulum shifts, which it will, then watch out below.
And do not think that Central Bankers will sway Yellen, (they have tried believe me), she herself knows that the prolonged zero interest rate policies implemented do not work, she has seen Japan’s woeful excuse being repeated in America.
Your debt, as too every other Countries debt, will be impacted by deflating currency wrangle against the USD. Interest rates will increase exponentially as countries and companies rush to cover their collective arses.
One would think that Central Bankers would wake up…throw their Greenspan Rule Book out the window…..in conjunction with setting a high domestic interest rate (say 10%) across the board, print more money to enable the Government to pay back all debts (on the basis that the Government cut out spending completely and work with what they have) and rejig the taxes…. No income tax but a VAT/GST across the board at 20%.
The logistics is take care of your own first, if they do not then havoc and continued economic pain will plague the masses. Depression is a hard taskmaster ….a tough one, prolonged which no one wants.