Sat Mar 23, 2024 11:33 pm by globalturbo
Central banks are stuck on a money printing treadmill
May 24, 2013
Wednesday night’s panic in Tokyo, where the Nikkei dropped a stomach
churning 7pc, kicking off a global chain-reaction that saw the FTSE fall
143.48 points, demonstrates just how difficult it is going to be for
the world’s central banks to exit their loose money policies. It’s not
even as if Ben Bernanke, chairman of the Fed, said he was planning to
exit; in fact, initially he said the reverse, in testimony to Congress.
It was only in the Q&A, and in minutes to the last meeting of the
Fed’s Open Markets Committee, that a clear bias emerged to slow the pace
of asset purchases “in the next few meetings”, so long as the economic
data were strong enough. What the subsequent violent gyrations in
markets indicate is that any hint of applying the brakes risks
generating a fresh financial crisis, which, in turn, would render the
economic recovery still-born. Both financial markets and the real
economy have become addicted to “quantitative easing”. So much so that
they cannot do without it. The upshot is that we are going to see
financial repression of the type being practised in virtually all the
major advanced economies – including, if only to a more limited extent,
the eurozone – continue into the indefinite future. More
Thanks to: http://endtimeheadlines.wordpress.com
