Commodity Trade Mantra

Posts Tagged ‘Monetary Stimulus’

Helicopter Money Tested And Failed Spectacularly, Surprising Only Economists

Imagine waking one morning to find extra cash in your account, a gift from your country’s central bank. That might sound outlandish. But the concept of so-called helicopter money is being seriously debated by economists. Helicopter money handed directly to consumers, the theory goes, would send us scurrying to the shops to spend our windfalls, boosting confidence in the economy.

Billionaire Investor Blasts Fed, Says Sell Stocks, Buy Gold

The bottom line, in Druckenmiller’s view: The bull market in stocks has exhausted itself, after eight years of radical monetary experiment. As he said, now is the time to buy gold & you can do so while maintaining your privacy. You just need to understand the rules. Some regard it as a metal. We regard it as currency & it remains our largest currency allocation.

Why Gold Investors Should Love Central Banks

The ECB’s announcement last week is not a good test because it announced additional monetary stimulus as well as lower interest rates. Is gold going up because of negative interest rates, or because of monetary inflation? It is probably a combination of both, but it is hard to know which is the dominating factor. At least it is a bright spot for gold investors, if nothing else.

The Negative Rates "Doom Loop" That Can Wipeout Banks & Global Economy

In a way, the move below zero was a gamble. The theory went like this: Banks would take a hit, but negative rates would get the economy moving. A stronger economy would, in turn, help the banks recover. It appears that wager isn’t working. The consequences are deeply worrying. Weak banks may now drag the economy down further.

Global Economic Fears Cast Long Dark Shadow On Oil Price Rebound

The global economic unease may begin to reach American shores. Although an economic slowdown is no doubt a negative for oil prices, the news could provide enough justification for the Fed to hold off on raising interest rates. A delay in a rate hike could likely push up WTI and Brent.

Central Bankers Understand That Monetary Stimulus Is Not The Answer Only After Quitting

What is it about central bankers who wait to tell the truth only after they have quit their post? First it was the Fed’s Alan Greenspan. Now BoE’s former head, Mervyn King after having the biggest monetary stimulus & yet not solved the problem, says, “The idea that monetary stimulus after six years … is the answer doesn’t seem (right) to me.”

The Fed “IS” the Problem!

The solvency of the Fed itself will be questioned during the next crisis, which seems to already have begun. Either the Fed gets the markets calmed down or, the markets will begin to question the Fed’s “all-encompassing power.” When will speculators take them on? Announcement of further QE will probably do the trick.

Why the Federal Reserve Will Launch Another Round of QE

Equity investors drove stock markets higher each time a new round of QE was announced. QE reflated US economy by pushing up asset prices. Odds are quite high that it will begin to deflate again when QE ends in Oct. Should that occur, would the Fed then launch yet another round of QE or fall back to severe recession & deflation?

We Must End this Addiction to Debt as the Engine of Growth

Growth is back – after a fashion – but debt levels are rising again, productivity growth in advanced economies is close to post- war lows, capital spending is becalmed, inroads into deep fiscal and current account deficits are proceeding only at glacial pace. Is this a sustainable economic model?

Inflation Does Not Produce Economic Growth

How is it possible that higher price inflation will make the economy stronger? If price inflation slightly above 2% is good for the economy, why not aim at a much higher rate & make the economy more healthier? Monetary pumping to lift rate of price inflation will only deepen economic impoverishment.

A Central Banker Has A "License To Lie’

To mislead investors is actually a key skill required by a central banker’s job description. Revealing the true state of national finances at a time when a devaluation or comparable financial crisis is looming might be to guarantee the loss of the central bank’s entire reserves.

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