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The Death Of Decoupling
Despite the increasing perception of policy divergence between The US and the rest of the world, it appears 'factors beyond the control of the central planners' has stymied hope for any US-based sparking of global growth. Between The Fed's liquidity withdrawal and the deflationary tsunami from an emerging world buried in credit-fueled mal-investment, it is increasingly clear that central banks have lost control and everything is now going down together.
Dreams of decoupling have once again been dashed on the shores of 'lagging' business cycles...
As Citi's Willem Buiter recently noted, "everything's failed" so how long before we see the money drop?
So now what? Well, this.
Buiter concludes:
The case for helicopter money is therefore partly to ensure the euro area (and some other advanced economies) reflate powerfully enough to escape the liquidity trap, rather than settle in a lasting rut of low-flation and low growth, with “emergency” levels of asset purchases and interest rates becoming the norm.
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In orderly markets and with the policy rate at the ELB, the central bank can talk loudly, but on its own – without the fiscal support required to turn its monetized balance sheet expansions into helicopter money drops – it carries but a small stick.
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If, as seems possible, the ECB will increase, in H1 2016, the scale of its monthly asset purchases from €60bn to, say, €75bn, and if these additional purchases are concentrated on public debt, the euro area will benefit from a ‘backdoor’ helicopter money drop –something long overdue.
He is right.
So let's stop pretending that the Fed has a chance in hell of reflating the economy by hiking rates just as the recession begins, and fast forward to the inevitable next step: the beginning of the end for fiat, starting with its widespread paradop above populated urban centers, much to the delight of millions of people everywhere, and a few very big and very underwater debtors, for whom runaway inflation is just what the Doctor (of economics) ordered.
Charts: Bloomberg
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EUR/USD is pretty close to parity (around 1.10). Watching FX market at end of year is like watching paint dry. Everyone's winding down positions. We'll see what happens next month.
"I'll take 'The Fall of Central Banks' for 300 Trillion, Alex"...
"What is the making of toilet paper?"
A better helicopter drop that would definitely improve the state of the economy is to toss from a helicopter: Chair Fellen, Bernanke, Greeenspan, and the other Fed a-holes who caused these problems in the first place.
The Church did declare 2016 a Jubilee year. Coincidence? I don't think so.
You buying a new car, house and furniture before 2015 ends?
I look forward to my first trillion dollar bill with Obama's face on it so I can wipe my ass with it.
Watch out you don't get that arse of yours dirty with Obozo's image.
Paper USD already smells like ass... Might as well make it "fit the bill."
The lies of fiscal monterey illusions have caught up to them. Cradle to grave slavery system is disfuntional. The NWO has always been about shifting low wages the balance planet under Project Venus.
It will end in a revolutionary act to retake property and the absence of irresponsible fuckwits called Goldman Sachs.
"starting with its widespread paradop above populated urban centers, much to the delight of millions of people everywhere"
The ONLY place helicpters are going to drop money is Washington, DC. From there it will be disseminated as politicians and the deep state see fit to their political cronies and money bankers. Ain't nothin' showin' up in nobody's back yards out in the wastelands we call the real world.
And thus you have instituted the true centralized command and control economy they always wanted in the first place.
Debt is not only an unnecessary element of any monetary system, it's specifically harmful and ensures the demise of said monetary system. Helicopter money and negative interest rates are two really good examples of essentially the admission of this fact.
if taxation without representation is a theft,
usury without liability is the yoke of the oppressed
"The case for helicopter money is therefore partly to ensure the euro area (and some other advanced economies) reflate powerfully enough to escape the liquidity trap"
The Fed shouldn't expect anyone to see their light outside the event horizon of the financial black hole they've created and live inside.
The helicopter presents a good metaphor - but what should be dropping is munitions, because that is the 'drop' which impatiently waits.
The US came out of WWII as the world's strongest military power and dominant economy. This began to change in the 1970’s, a result of increasing competition from Europe, Japan and more recently, China. In response to its structural economic decline, theUS government and corporations have 1) cut taxes for the wealthy (Reagan), 2) attacked organized labor, beginning with firing of PATCO workers, 3) outsourced jobs to Mexico, China and other low-wage platforms (beginning with NAFTA; Clinton), 4) deregulated financial industry (repeal of Glass Steagall; passage of Commodity Futures act of 2000; Clinton), 5) more tax cuts for the wealthy (Bush II). These policies have decreased purchasing power of working people and resulted in the financial collapse in 2008, still ongoing. In response, the US FED has propped up (still) insolvent banks with $ trillions, supplied by taxpayers (QE), which has inflated assets- stocks and trendy real estate in SF, NYC, Boston, and propped up auto sales with subprime auto loans and other financial gimmicks. Further, in response to the 911 attacks and continuing economic decline, US foreign policy has become increasingly bellicose, reckless and astronomically expensive for taxpayers. The financial disaster resulting from these policy decision may well end up being worse than the Great Depression.
say they decide to send everyone a check. remember in 2001 the $400 pp sent out, nice surprise.
what would it take to dislodge the 'deflationary mindset' and have the populace go out and buy everything in sight? seriously. to have the impact they think it could have how much will they need to send?? it needs to be one time, otherwise we'll just save and wait for a bigger check, right?
for me it would need to be several thousand dollars to the household. first, yes pay off or down some items, put some in the drawer, then spend the last $1500 on some fairly durable items. and that really isnt what they think will happen. 350million people; $1000/pp is $350billion given qe's were all higher, maybe $2000 pp. welcome to bizarro world
The Helicopter money is all around us.
EBT
Social Security.
Disability.
All those EPA employees.
Not to mention Zero percent on cars.
That check was to stimulate GDP. On April, 15th. You paid taxes on a free loan campaign. I didn't receive one due to salary cap qualifications. It was the first EBT attempt under the Bush RINO regime.
It'll be in the form of a tax return thru IRS like last time. But I think it'll have to be over 10 grand per taxpayer to help at all. A stackers dream that I think will actually happen soon in the US.
here's a thought less common but more obvious: reset gold to $50k and tell the population that interest rates will be 10% minimum by end 2016. Tell them to use whatever gold they have, even be it wedding rings or whatever, to reduce/finalise their debt or face foreclosure/repo
And inflation in smaller goods and thus wages will rise to match purchasing power of gold, but debt-dependent assetts like real estate will not catch the wave
I'll take helicopter dollars. Where do I stand?
They are dropping them from 5K feet and they are the 1$ coin variety; people will die trying to get them.
It's been done.
They got the Mercedes and we got the muffler.
Remember?
See Some Tailpipes Hump Some Tailpipes
This isn't unintended........ it's what "they" wanted. Coupled, for better of for worse....... and so on.
they have spent 8 years trying to avoid what was always inevitable. a helicopter drop or a massive capacity destruction event or both are in the cards. inflation is your friend. if you did what you were told and levered up as much as you could with free money you are about to be paid off.
Get going on the heli money... it can't come too soon
1967 fully loaded Z-28 Camaro? $5,410
2015 fully loaded Z-28 Camaro? $75,000
Frankly I think that Willem Buiter is full of shit. QE was never meant for the real economy but only as permanent bail out mechanism for the zombie banks sucking the real economy dry with zero interest rates creating deflation. If you want to reduce the public debt you higher the deposit rate for consumers not hike the prime rate and don't talk out of your ass.