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Central Banks Renew Reflation Push As Prices Weaken

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http://www.bloomberg.com/news/2013-11-08/central-banks-renew-reflation-push-as-prices-weaken.html

Central banks around the world renewed efforts this week to reflate their economies as slowing prices emerge as a threat to global prosperity.

A day after the European Central Bank unexpectedly halved its benchmark interest rate to a record-low 0.25 percent and Peru cut its main rate for the first time in four years, the Czech central bank yesterday intervened in currency markets. The Reserve Bank of Australia yesterday left open the chance of cheaper borrowing costs by forecasting below-trend economic growth.

“Central banks want to err on the side of keeping policy easier for longer as they don’t see an inflation danger out there,” said Kit Juckes, global strategist at Societe Generale SA in London. “There is a fear of deflation for some and nobody wants to increase the risk of it.”

The need to sustain or reinforce stimulus was demonstrated this week by new estimates from the Organization for Economic Cooperation and Development that showed average inflation across its 34 members slowed in September to an annual rate of 1.5 percent. That’s close to the 1.3 percent of May, which was the softest since the world was plagued by recession in 2009.

“It does look as though inflation is certainly not a concern on the upside anymore,” Robert Sinche, global strategist at Pierpont Securities Holdings LLC in Stamford, Connecticut, said in a radio interview on “Bloomberg Surveillance” on Nov. 5. “Monetary policy around the world is probably going to stay accommodative for a good deal longer.”

O FFS.

The longer they keep interest rates low the bigger the bust, in fact I'm guessing we are already probably in a position where any increase in rates will wipe out the central banks and sovereign govts as they'd have to resort to printing money to cover the interest.

Ludwig von Mises describes the endgame brought on by reckless expansion of credit: "There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved."

It would appear the game is to go for complete fiat currency failure!

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Central banks around the world renewed efforts this week to reflate their economies as slowing prices emerge as a threat to global prosperity.

Now I'm confused- we are constantly told that efficiency is a good thing as it reduces the price of goods and services- but 'slowing prices' are now bad?

So in this view we could kill two birds with the single stone of becoming less efficient, leading to more employment leading to higher prices!

But this would also be a bad thing- right?

WTF is going on? How can lower prices be a threat to prosperity? Surely the real threat to prosperity is declining wages and inflating prices?

Unless- I suppose- that 'prosperity' is deemed to equal asset prices such as real estate and shares ect- in which case the entire world economy is being run to benefit the small percentage who own real estate and shares.

Ok- I get it now- i was foolishly imagining that the economy existed to benefit the majority- which is-of course- a ridiculous idea.

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That's a relief. I was shocked at the weak price of bread in the supermarket yesterday.

..the problem is not the price of bread per se.....it is I would have thought the number of people that can or will pay the price they are now asking for it. ;)

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Isle of Jura Single malt down to £20 for 700ml bottle yesterday. Deflation stalks the earth, and it is getting tipsy :P Print all you want banker f*ucks, I will just spend less and less.

Exactly my strategy as well.

Apart from the discretionary items, which are falling through the floor, and I'm buying a load of.

I guess in Scotland whisky is not classed as discretionary !

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http://www.bloomberg.com/news/2013-11-11/race-to-bottom-resumes-as-central-bankers-ease-anew-currencies.html

The global currency wars are heating up again as central banks embark on a new round of easing to combat a slowdown in growth.

The European Central Bank cut its key rate last week in a decision some investors say was intended in part to curb the euro after it soared to the strongest since 2011. The same day, Czech policy makers said they were intervening in the currency market for the first time in 11 years to weaken the koruna. New Zealand said it may delay rate increases to temper its dollar, and Australia warned the Aussie is “uncomfortably high.”

“It’s a very real concern of these countries to keep their currencies weak,” Axel Merk, who oversees about $450 million of foreign exchange as the head of Palo Alto, California-based Merk Investments LLC, said in a Nov. 8 telephone interview. ECB President Mario Draghi, “persistently since earlier this year, has been trying to talk down the euro,” Merk said.

With the outlook for the global economy being downgraded by the International Monetary Fund and inflation slowing to levels that may hinder investment, countries and central banks are revisiting policies that tend to boost competitiveness through weaker currencies.

The global race for everyone to have a weaker currency continues. It's clearly going to be an economic success!

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They're trapped. The market is telling Bernanke to relent but he won't. QE didn't work when it was tried in Japan, and it hasn't worked in the US/UK either.

The Great Depression of 2014-. :)

5y+inflation+expectations.PNG

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http://www.bloomberg.com/news/2013-11-12/sweden-s-return-to-deflation-rekindles-speculation-of-rate-cuts.html

Sweden unexpectedly returned to deflation last month, sending the krona lower amid increased speculation the central bank will be forced to cut interest rates again.

Consumer prices fell an annual 0.1 percent in October, Statistics Sweden said today. They were seen rising 0.2 percent, according to a Bloomberg survey of 12 economists. Adjusted for mortgage costs, gains slowed to an annual 0.6 percent from 0.9 percent.

“For now we continue to forecast a sustained period of unchanged policy rates, but the balance of risks is shifting in favour of the bank making a move,” David Tinsley, an economist at BNP Paribas in London, said in a note.

The krona plunged as much as 1.2 percent against the euro to 8.902, the lowest level since June 18, 2012. It slid as much as 1.5 percent versus the dollar to 6.656, the lowest since Sept. 6. It was the biggest loser against both the dollar and the euro of 16 major currencies tracked by Bloomberg.

Deflation it's clearly global... Terrible news for the elites.

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