OnlyMe, on 06 May 2012 - 11:55 AM, said:
Exactly, that was the purpose of low interst rates, riggind the gilt/treasury yields, and that of QE.
TO HERD INVESTMENT INTO RISKIER ASSSETS.
Even if they didn;t pass the smeell test insurance comapnies, pensions, investmonet co's bought CDO's, MBS and the other trash because they had no other choice to have any chance of funds keeping up with inflation or providing an actul investment return.
I think the process is slightly different.
If entities (countries, people etc.) fail to trade in balance, and without fiscal means to redress such a balance, the remaining tool to avoid mass default is interest rates to keep the credit engine pumped...but the indebted simply become more and more indebted.
QE is a continuation of this policy, but the 'rich' are almost universally able to gain even more by getting into assets of various kinds as QE and low rates make them even richer. Meanwhile predominantly currency holders are the ones stuffed, ie. those with savings but not so much they feel they can 'risk it' on assets - they are the ones that bear the brunt of the mathematical need to bring the money system back into balance and stop it blowing up.