Currently economists and market watchers roughly fall into two camps: Those who believe that the Federal Reserve must begin raising interest rates now so that it will have enough rate cutting firepower to fight the next recession, and those who believe that raising rates now will simply precipitate an immediate recession and force the Fed into battle without the tools it has traditionally used to stimulate growth. Both camps are delusional, but for different reasons.
Despite overwhelming factual evidence that crackpot Keynesian spending machinations; debasing the currency; interest rate manipulation; globalization; perpetual war; incurring unpayable levels of debt; making $200 trillion of unfunded welfare promises; has created a seething anger across the land, Hillary Clinton and her establishment flunkies propose doubling down on those same failed policies.
"QE need not be confined to bond instruments in our mind. By limiting themselves to bonds, central banks are indeed deemed to face quantitative constraints given declining government bond issuance even as spread product issuance has increased" - JPM
There was a time when former Harvard head and Democratic administration darling, Larry Summers, would draw out a crowd at every public appearance. Those days are gone, however, and now the formerly corpulent cogitator is forced to resort to Twitter for his rants, such as the one he unleashed early this morning when in "tweetstorm" of 11 consecutive tweets he slammed Yellen for even daring to think about tightening.
First Japan, now German savers are leaving the "security" of savings banks for the true safety of paper cash parked inside home safes, where the central bank's negative rates can never reach. As a result safes across Germany are selling out as German savers finally "lose faith in banks."
Central bankers these days are seriously trapped. They cannot now reverse their policies for that means they have to admit that they have failed. That is far more serious than you might imagine. To even entertain backing down from negative interest rates means they have to admit that Keynesian/Marxist economics has failed and therein socialism, which is based upon the very principle that government can and is capable of managing the economy.
“We call ourselves “Generation Screwed” because governments are spending money but leaving the bills behind for the young to pay,” says Gunn. “Apathy is our biggest challenge. Many youth are so burdened with the demands of getting a start in life, they are unaware of the lousy hand they are being dealt.”