{"id":49722,"date":"2019-11-20T06:30:54","date_gmt":"2019-11-20T11:30:54","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49722"},"modified":"2019-11-20T06:31:00","modified_gmt":"2019-11-20T11:31:00","slug":"the-next-wave-of-debt-monetization-will-also-be-a-disaster","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49722","title":{"rendered":"The Next Wave of Debt Monetization Will Also Be A Disaster"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.dlacalle.com\/en\/the-next-wave-of-debt-monetization-will-also-be-a-disaster\/\">The Next Wave of Debt Monetization Will Also Be A Disaster<\/a><\/h3>\n\n\n\n<figure><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/O_sfwU386qk\" width=\"560\" height=\"315\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">According to the&nbsp;<strong>IMF (International Monetary Fund)<\/strong>&nbsp;and the<strong>&nbsp;IIF (Institute of International finance)<\/strong>&nbsp;global debt has soared to a new record high. The level of government debt around the world has ballooned since the financial crisis, reaching levels never seen before during peacetime. This has happened in the middle of an unprecedented monetary experiment that injected more than $20 trillion in the economy and lowered interest rates to the lowest levels seen in decades. The balance sheet of the major central banks rose to levels never seen before, with the Bank Of Japan at 100% of the country\u2019s GDP, the ECB at 40% and the Federal Reserve at 20%.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">If this monetary experiment has proven anything it is that lower rates and higher liquidity are not tools to help deleverage, but to incentivize debt. Furthermore, this dangerous experiment has proven that a policy that was designed as a temporary measure due to exceptional circumstances has become the new norm. The so-called normalization process lasted only a few months in 2018, only to resume asset purchases and rate cuts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Despite the largest fiscal and monetary stimulus in decades, global economic growth is weakening and leading economies\u2019 productivity growth is close to zero. Money velocity, a measure of economic activity relative to money supply, worsens.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">We have explained many times why this happens. Low rates and high liquidity are perverse incentives to maintain the crowding out of government from the private sector, they also perpetuate overcapacity due to endless refinancing of non-productive and obsolete sectors t lower rates, and the number of zombie companies -those that cannot pay their interest expenses with operating profits- rises.\u00a0 We are witnessing in real-time the process of zombification of the economy and the largest transfer of wealth from savers and productive sectors to the indebted and unproductive.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Next Wave of Debt Monetization Will Also Be A Disaster According to the&nbsp;IMF (International Monetary Fund)&nbsp;and the&nbsp;IIF (Institute of International finance)&nbsp;global debt has soared to a new record high. The level of government debt around the world has ballooned since the financial crisis, reaching levels never seen before during peacetime. This has happened in [&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":[124,16957,1256,9544,418,431,534],"class_list":["post-49722","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-daniel-lacalle","tag-debt-monetization","tag-iif","tag-imf","tag-interest-rates","tag-monetary-policy"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49722","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=49722"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49722\/revisions"}],"predecessor-version":[{"id":49723,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49722\/revisions\/49723"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49722"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49722"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}