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Finally The “Very Serious People” Get It: QE Will “Permanently Impair Living Standards For Generations To Come”
Finally The “Very Serious People” Get It: QE Will “Permanently Impair Living Standards For Generations To Come”
When “very serious people” (even if it is those who once ran now defunct Bear Steanrs) announce it, with a 6 year delay, they make the Financial Times.
On the other hand, when Zero Hedge said precisely this 6 years ago, it was cast as a tin-foil clad group of conspriators who see the worst in every situation.
What is “it”? This:
The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.
In this case, it was said this week by Guggenheim’s Chairman of Investments and Global Chief Investment Officer, Scott Minerd. We are happy that increasingly more “serious people” come to the same conclusion which we posited first a 6 years ago.
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Here is the full note:
The Monetary Illusion
As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold. Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal U.S. dollars, is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.
In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policymakers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency.
…click on the above link to read the rest of the article…
The Monetary Illusion Again in Trade
The Monetary Illusion Again in Trade
Just as a follow-up to further highlight and emphasize the “monetary illusion” of currency devaluation in this closed environment, the yen’s returned devaluation against the “dollar” more recently has renewed confusion (or intentional misdirection) about what Abenomics is supposedly accomplishing. Taken solely from the perspective of the Japanese internally, exports to the US are once more growing, and doing so rather sharply. December’s year-over-year gain, in yen, was almost 24% while January came in at an equally robust 16.5%.
Taken by themselves without context, it would seem great fortune and monetary capability to gain in exports at such huge growth rates. But, as I have shown time and again, what goes out of Japan is matched by what comes in to the US. For all that buzz over huge export growth, nothing much shows up on this end.
Both months were positive in “dollars” but barely and thus no actual growth took place. Economists and central bankers even concede the disparity, but don’t much care about it. They simply assume that Japanese exporters now flush with more yen will hire more workers and pay the ones they have even more, igniting that virtuous circle of “aggregate demand.” In reality, why would they do that?
…click on the above link to read the rest of the article…
