In yet another example of central planners not comprehending the unintended consequences of their actions, Glenn Stevens - head of the Reserve Bank of Australia - commented last night on the curious lack of animal spirits holding back the global economic recovery. As Bloomberg's Richard Breslow notes though, of course, his argument is disingenuous at best since it is the actions (and consequences) of central banks crowding out other market participants and creating a culture of investors who moo (herd-like along with their yield-chasing, buyback purchasing, capex cutting peers) rather than roar... Central banks have turned investors from bulls to cows...
Glenn Stevens speech last night wasn’t the important monetary policy marker that it had been flagged to be, yet it was still telling in a "thou doth protest too much" fashion, Bloomberg’s Richard Breslow writes.
Stevens commented on what he thinks is a curious lack of animal spirits holding back global economic recovery. He focused on the limits to monetary policy and why the world needs entrepreneurial spirit to take hold.
Of course, Breslow blasts, his argument is disingenuous at best, especially when saying there are limits to monetary policy when rates are at/near zero.
Central Banks remain cautious of the fragile global economy; the monetary policy transmission mechanism isn’t working; and the multiplier is near zero while at the same time there is neither capacity nor will for fiscal action.
The absence of animal spirits isn’t surprising - it is a direct result of activist central bankers and sovereign wealth funds crowding out other market participants and creating a culture of investors who moo rather than roar
He also mentioned how eerily calm markets are in face of all the geo-political uncertainty, but it’s really just the same side of the coin, markets are relying on activist central banks who are in control:
Trouble/Turmoil... Ease... QE... Rinse and Repeat
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And ever it shall be.. .and ever more cow-like investors will become (zombie cows perhaps).
