{"id":13915,"date":"2015-10-28T07:34:38","date_gmt":"2015-10-28T12:34:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=13915"},"modified":"2015-10-28T07:34:38","modified_gmt":"2015-10-28T12:34:38","slug":"sweden-launches-moar-qe-as-krugman-paradise-quadruples-down-after-dovish-draghi","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=13915","title":{"rendered":"Sweden Launches MOAR QE, As Krugman Paradise Quadruples Down After Dovish Draghi"},"content":{"rendered":"

Sweden Launches MOAR QE, As Krugman Paradise Quadruples Down After Dovish Draghi<\/a><\/h3>\n

Over the last six months, we\u2019ve documented Sweden\u2019s descent into the Keynesian Twilight Zone in great detail.<\/p>\n

Once upon a time, the Riksbank actually tried to raise rates, only to be lambasted by a furious Paul Krugman who accused the central bank of unnecessarily transforming Sweden from \u201crecovery rockstar\u201d to deflationary deathtrap. Tragically, the Riksbank listened to Krugman and reversed course in 2011. Before you knew it, rates had plunged 35 basis points into NIRP-dom. Unemployment subsequently fell, but the promised lift in inflation didn\u2019t quite pan out. Sweden did, however, get a\u00a0massive housing bubble<\/a>\u00a0for their trouble:<\/p>\n

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h\/t\u00a0@auaurelija<\/em><\/a><\/p>\n

Obviously, those charts beg the question of why in the world Sweden (or\u00a0Denmark<\/a>,\u00a0or Norway<\/a>\u00a0for that matter… or hell, even the US) are trying to contend that there’s no inflationary impulse, but let’s leave that for another day.<\/p>\n

As for the Riksbank\u2019s QE program, things\u00a0began to go awry<\/a>\u00a0during the summer when the central bank managed to buy such a large percentage of the stock of government bonds that market depth was affected, causing investors to reconsider the trade off between liquidity and the benefits of frontrunning central bank asset purchases. In short, government bond yields began to rise in what perhaps marked the first instance of QE actually breaking.<\/p>\n

But that didn\u2019t stop the Riksbank from\u00a0doubling down<\/a>\u00a0and increasing their asset purchases just a week later.<\/p>\n

Since then, it\u2019s been touch and go, with Stefan Ingves\u00a0looking warily<\/a>\u00a0south towards Frankfurt hoping Mario Draghi doesn\u2019t do something that sends the krona soaring on the way to ushering in a deflationary impulse.<\/p>\n

Well, that\u2019s exactly what Draghi did last week when the ECB telegraphed either a further depo rate cut, an expansion of PSPP, or both in December. That pretty much sealed the deal for the Riksbank – either cut, expand QE, or concede defeat in the global currency wars.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n","protected":false},"excerpt":{"rendered":"

Sweden Launches MOAR QE, As Krugman Paradise Quadruples Down After Dovish Draghi Over the last six months, we\u2019ve documented Sweden\u2019s descent into the Keynesian Twilight Zone in great detail. Once upon a time, the Riksbank actually tried to raise rates, only to be lambasted by a furious Paul Krugman who accused the central bank of […]<\/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":[1719,124,233,366,406,2340,472,1044,534,1241,614,3471,741,771,824,4318],"class_list":["post-13915","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond","tag-central-banks","tag-ecb","tag-global-economy","tag-housing-bubble","tag-housing-market","tag-krugman","tag-mario-draghi","tag-monetary-policy","tag-norway","tag-paul-krugman","tag-riksbank","tag-sovereign-debt","tag-sweden","tag-unemployment","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13915","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=13915"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13915\/revisions"}],"predecessor-version":[{"id":13916,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/13915\/revisions\/13916"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13915"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13915"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13915"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}