Commodity Trade Mantra

Posts Tagged ‘Credit Expansion’

What Does NIRP Say About Central Banks & The Economy?

NIRP says, central banks have run out of options & are now in their own end zone, heaving the final desperate Hail Mary pass that has no hope of saving them from total defeat. An economy that needs NIRP is sick unto death & doomed to an implosion of impaired debt, over-leveraged risk-on bets, asset bubbles generated by stock buybacks & central bank purchases of risky assets.

Government Borrowing Is Not Like Private Debt

Neither borrowing nor saving is inherently good or bad. At least in the private sector. Whether one chooses to save or borrow to finance a project depends upon a subjective assessment of the relative trade-offs. It’s another matter entirely, though, when we’re talking about the government sector, as the two are not comparable.

Why the Government Hates Gold - Who is left to speak the Truth?

Corporations sold their products on cheap credit, made their profits from cheap credit & then depended on cheap credit to issue their bonds, buy back their own stock & pay their bonuses. Meanwhile, Washington ran deficit after deficit, made possible by cheap credit. And now, practically every sentient being in the nation needs cheap credit. Who is left to speak the truth?

A Portrait of the Classical Gold Standard

The gold standard was the one outstanding symbol of unity and economic solidarity which the nineteenth century world had developed. Under Bretton Woods (1944), the gold standard was effectively abandoned: domestic convertibility was illegal and the role of gold was very constrained in favor of the dollar.

Citi Warns - Central Banks Grip On The World Economy Is Waning

Not only are central bank policies having a disappointing effect on business sentiment and investment; they are failing even to revive inflation expectations. Despite having growing doubts as to central banks’ ability to create durable economic growth, we remain convinced as to their ability to push up risky asset prices.

China's Shadow Banking Grinds To A Halt As Bad Debt Surges Most In A Decade

Shadow Banking is being tamed because changing structure of TSF suggests that Beijing’s efforts in controlling some types of shadow banking have made some achievements. If shadow banking collapse virus has finally jumped to China, there is no saying how far Chinese GDP can drop if it is now constrained on the top side by surge in bad debt.

Additional Chinese Stimulus Risks Global Financial Stability: Goldman

The soft July data have once again generated expectations of monetary easing from China. Goldman believes that a combination of sectoral policies aimed at easing financial stress and structural adjustment would be a better policy option. They do not expect broad macro easing or an interest rate cut in what remains of this year.

It Can't Be A Bubble! Does One Actually Exist Or Not?

Ultimately the question is whether brisk money supply growth will be maintained and whether the economy’s real pool of funding is still large enough to allow for additional diversions of scarce resources into bubble activities. Most of the time, it’s the eventual slowdown of money supply growth that brings a bubble to its knees.

Why Central Bank Stimulus Cannot Bring Economic Recovery

The Central banks of the world are engaged in a futile effort to stimulate economic recovery through an expansion of fiat money credit. Rather than stimulate the economy, central bank credit expansion causes capital destruction and a lower standard of living in the future than would have been the case otherwise.

How Inflation Helps Keep the Rich Up and the Poor Down

It would not be uncharitable to characterize inflation as a large-scale rip-off, in favor of the politically well-connected few & to the detriment of the politically destitute masses. It promotes endless debts, puts society at the mercy of monetary authorities such as central banks & to that extent entails moral corruption of society.

How The Fed Is Driving The Next Bust

As should be evident after 6 years of frantic money pumping that old secret sauce doesn’t work any more because the American economy has reached a condition of peak debt. The Fed yet plans to keep money market rates at zero for 7 years running through 2015 on many misbegotten notions.

The Legacy of Ben Bernanke : A Weak and Mediocre Economy

If there was no pre-crisis credit boom, there would have been no large financial crisis and thus no need for Bernanke to have done better during and after. Bernanke’s policy is also rightly criticized as the great cost of these post-crisis policies is the intrusion of the Fed into politics and fiscal policy.

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