{"id":12419,"date":"2015-09-19T15:08:49","date_gmt":"2015-09-19T20:08:49","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12419"},"modified":"2015-09-19T15:08:49","modified_gmt":"2015-09-19T20:08:49","slug":"riding-zirp-into-the-doom-loop-monetary-central-plannings-dead-end","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12419","title":{"rendered":"Riding ZIRP Into The Doom Loop\u2014\u2013Monetary Central Planning\u2019s Dead End"},"content":{"rendered":"<h3 class=\"entry-title\"><a href=\"http:\/\/davidstockmanscontracorner.com\/riding-the-zero-bound-into-the-doom-loop-monetary-central-plannings-dead-end\/\" target=\"_blank\">Riding ZIRP Into The Doom Loop\u2014\u2013Monetary Central Planning\u2019s Dead End<\/a><\/h3>\n<p><em><strong>What the Fed really decided\u00a0Thursday was to ride the zero-bound right smack into the next recession.<\/strong><\/em>\u00a0When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a\u00a0desperate Alan Greenspan after Black Monday in October 1987\u00a0will come to an abrupt and merciful halt.<\/p>\n<p>Why? Because Keynesian money printing is in a doom loop. The Fed\u2019s ZIRP\u00a0policies guarantee another financial crash, which will trigger still\u00a0another outbreak of\u00a0panic in the C-suites of corporate America\u00a0and a consequent liquidation of excess inventories and labor on main street. That\u2019s the new channel of monetary policy transmission, and it eventually leads to recession.<\/p>\n<p>This\u00a0upcoming recession, in turn,\u00a0will prove beyond a shadow of doubt that in today\u2019s financialized\u00a0global economy\u00a0you can\u2019t manage the GDP of a single country as if it\u00a0were isolated\u00a0in an economic\u00a0bathtub surrounded\u00a0by high walls; nor can you\u00a0attain domestic\u00a0macro-targets\u00a0for employment and inflation through the blunderbuss instruments of pegged money market rates and\u00a0wealth effects levitation of the stock market.<\/p>\n<p>Instead, the Fed\u2019s falsification of financial asset prices simply subsidizes gambling in\u00a0secondary markets; enables daisy chains of collateral to be endlessly hypothecated and re-hypothecated;\u00a0causes vast misallocations and malinvestments of corporate resources, especially stock buybacks and other financial engineering; and sends money managers scrambling for yield without regard to risk, such as in junk bonds and EM debt.<\/p>\n<p>What it doesn\u2019t do is get households all jiggy, causing them to boost their leverage and spend up a storm. That\u2019s because they reached \u201cpeak debt\u201d at the time of the financial crisis, and have been struggling to reduce debt ever since. In the most recent quarter, in fact, household debt posted at $13.6 trillion or 3% lower than in early 2008.<\/p>\n<p>&nbsp;<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Riding ZIRP Into The Doom Loop\u2014\u2013Monetary Central Planning\u2019s Dead End What the Fed really decided\u00a0Thursday was to ride the zero-bound right smack into the next recession.\u00a0When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a\u00a0desperate Alan Greenspan after Black Monday in October 1987\u00a0will come to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[952,68,125,5979,2120,1732,303,305,451,1940,1939],"class_list":["post-12419","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alan-greenspan","tag-ben-bernanke","tag-central-planning","tag-contracorner","tag-david-stockman","tag-emerging-markets","tag-fed","tag-federal-reserve","tag-janet-yellen","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12419","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12419"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12419\/revisions"}],"predecessor-version":[{"id":12420,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12419\/revisions\/12420"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12419"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12419"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12419"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}