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Tag Archives: monetary stimulus
Emerging Market Contagion Threatens Oil Market
Emerging Market Contagion Threatens Oil Market The emerging market currency crisis is not over yet, and could yet morph into a broader contagion that threatens to drag down oil demand. Last week, Argentina’s peso fell by around 20 percent in just a few days, taking year-to-date losses over 50 percent. The central bank frantically hiked […]
China Announces New Stimulus Measures
China Announces New Stimulus Measures Another day, another stimulus announcement by China. One day after Beijing threw in the towel, and in addition to monetary easing announced it would be far more “proactive” in fiscally stimulating the country, Chinese banks received notice from regulators on Wednesday that a core capital requirement will be eased in […]
The Eurozone’s Coming Debt Crisis
The Eurozone’s Coming Debt Crisis The European Central bank has signaled the end of its asset purchase program and a possible rate hike before 2019. After more than 2 trillion euro of purchases and zero interest rate policy, it is overdue. The massive quantitative easing program has generated very significant imbalances and the risks outweigh […]
Nomi Prins: Central Bank-Inspired “Major Credit Squeeze” Will Trigger Next Crisis
Nomi Prins: Central Bank-Inspired “Major Credit Squeeze” Will Trigger Next Crisis For all the talk about tapering (in both the US and Europe), the Federal Reserve has actually done remarkably little to reduce its balance sheet. And in an interview with Macrovoices Erik Townsend, former Wall Street executive Nomi Prins expands upon some of the […]
Effects of Monetary Pumping on the Real World
Effects of Monetary Pumping on the Real World As long time readers know, we are looking at the economy through the lens of Austrian capital and monetary theory (see here for a backgrounder on capital theory and the production structure). In a nutshell: Monetary pumping falsifies interest rate signals by pushing gross market rates below […]
Taking the Pulse of a Weakening Economy
Taking the Pulse of a Weakening Economy Corporate buybacks provide the key analogy for the economy as a whole. Central banks have been running a grand experiment for 9 years, and now we’re about to find out if it succeeds or fails. For 9 unprecedented years, central banks have pushed the pedal of monetary stimulus […]
Why Trade Wars Ignite and Why They’re Spreading
Why Trade Wars Ignite and Why They’re Spreading The monetary distortions, imbalances and perverse incentives are finally bearing fruit: trade wars. What ignites trade wars? The oft-cited sources include unfair trade practices and big trade deficits. But since these have been in place for decades, they don’t explain why trade wars are igniting now. To truly […]
Can Money Pumping Stimulate Economic Growth?
CAN MONEY PUMPING STIMULATE ECONOMIC GROWTH? According to most economic experts when an economy falls into a recession the central bank can pull it out of the slump by means of money pumping. This way of thinking implies that money pumping can somehow grow the economy. Indeed US historical evidence supposedly does show that easy […]
The End of (Artificial) Stability
The End of (Artificial) Stability The central banks’/states’ power to maintain a permanent bull market in stocks and bonds is eroding. There is nothing natural about the stability of the past 9 years. The bullish trends in risk assets are artificial constructs of central bank/state policies. As these policies are reduced or lose their effectiveness, the […]
The Irresponsible ECB
Daniel Roland/AFP/Getty Images The Irresponsible ECB Ultra-loose monetary policy stopped being appropriate long ago, and is especially inadvisable now, with the global economy – especially the developed world – experiencing an increasingly strong recovery. As recent stock-market turbulence shows, refusal to normalize policy faster is drastically increasing the risks to financial stability. FRANKFURT – The Dow […]
Three Crazy Things We Now Accept as “Normal”
Three Crazy Things We Now Accept as “Normal” How can central banks “retrain” participants while maintaining their extreme policies of stimulus? Human habituate very easily to new circumstances, even extreme ones. What we accept as “normal” now may have been considered bizarre, extreme or unstable a few short years ago. Three economic examples come to […]
Why the Financial System Will Break: You Can’t “Normalize” Markets that Depend on Extreme Monetary Stimulus
Why the Financial System Will Break: You Can’t “Normalize” Markets that Depend on Extreme Monetary Stimulus Central banks are now trapped. In a nutshell, central banks are promising to “normalize” their monetary policy extremes in 2018. Nice, but there’s a problem: you can’t “normalize” markets that are now entirely dependent on extremes of monetary stimulus. […]
Weekly Commentary: Epic Stimulus Overload
Weekly Commentary: Epic Stimulus Overload Ten-year Treasury yields jumped 13 bps this week to 2.48%, the high going back to March. German bund yields rose 12 bps to 0.42%. U.S. equities have been reveling in tax reform exuberance. Bonds not so much. With unemployment at an almost 17-year low 4.1%, bond investors have so far […]
Surveying the Damage of Low Interest Rates
Peter Macdiarmid/Getty Images Surveying the Damage of Low Interest Rates Few would disagree that it was necessary to slash interest rates in the immediate aftermath of the 2008 global financial crisis. But after a decade of ultra-loose monetary policies across advanced economies, growth remains tepid, financial risks have proliferated, and middle-class savers have lost […]
It’s More Than Just the Absences of Acceleration, It’s the Synchronization Where There Should Be None
IT’S MORE THAN JUST THE ABSENCE OF ACCELERATION, IT’S THE SYNCHRONIZATION WHERE THERE SHOULD BE NONE BY JEFFREY P. SNIDER According to the latest ECB figures, as of yesterday total “liquidity” added to the European banking system for that central bank’s ongoing monetary “stimulus” was just shy of €2 trillion. The outstanding balance in the […]
