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Deflation Threat Seen Triggering Rate Cut From Swedish Riksbank

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http://www.bloomberg.com/news/2014-07-02/deflation-threat-seen-triggering-rate-cut-from-swedish-riksbank.html

Sweden’s central bank is seen cutting interest rates again to ward off deflation from taking hold in the largest Nordic economy.

The bank will lower its benchmark rate by 0.25 percentage point to 0.5 percent, the first reduction since December, according to 16 of 17 economists surveyed by Bloomberg. The bank will announce its decision at 9:30 a.m. in Stockholm tomorrow.

“Anything but a rate cut from the Riksbank would be a major surprise,” Danske Bank A/S analysts said in a note. To meet expectations the bank needs to signal a “relatively high probability” for another cut, delay a first increase “another quarter or two” and lower the rate path for the end of 2016 and 2017 by about half a point, the analysts said.

Exponential growth is the only way forward!

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Nuts to deflation - people just need to get into the London property market. No deflation there.

Edited by Sour Mash

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Deflation is good, it makes your money go further.

Deflation is the jewel in the crown of free market capitalism- it's what justifies all the negative stuff like inequality- all that competition driving down prices for consumers is what it's all supposed to be about.

But when we actually get deflation it's presented as a disaster? Something odd about this.

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They'll be downgraded to ABBA soon.

(The old jokes are the best.)

Money Money Money It's all very funny.

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Deflation is the jewel in the crown of free market capitalism- it's what justifies all the negative stuff like inequality- all that competition driving down prices for consumers is what it's all supposed to be about.

But when we actually get deflation it's presented as a disaster? Something odd about this.

Nothing odd. Inflation in debt and assets keeps the elite in the phenomenally comfortable manner in which they have put themselves.

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Nothing odd. Inflation in debt and assets keeps the elite in the phenomenally comfortable manner in which they have put themselves.

But that's plutocracy not capitalism.

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Deflation is the jewel in the crown of free market capitalism- it's what justifies all the negative stuff like inequality- all that competition driving down prices for consumers is what it's all supposed to be about.

But when we actually get deflation it's presented as a disaster? Something odd about this.

I think that depends on debt levels, if you have huge debts and contracting income servicing the debt becomes impossible and deflation is a disaster.

I think this is why debt jubilees happened, unfortunately the surviving texts from the time don't really offer enough details about what was going on.

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A Desperate Sweden Looks To "Fix" Broken QE With Massive Muni Monetizing Madness

SwedenTeaser.png

Way back in June we documented the “curious” case of Sweden’s broken QE and when we used the term “broken”, we didn’t just mean that inflation expectations weren’t moving higher. We meant that bond yields were rising as the adverse impact from the illiquidity "premium" surpassed the price appreciation benefit from frontrun central bank buying. Fast forward three months and Sweden looks set to “solve” the broken QE problem and by extension ensure it can stay in the currency war games by expanding the list of eligible assets to muni bonds.

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its coming isn't it?

BIG QE is on the cards

Not just in Sweden, but sweeping the world in a last gasp attempt to prove that 'they' can fix this mess

They can't, but that doesn't seem to deter them from trying

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http://www.independent.co.uk/life-style/gadgets-and-tech/sweden-fast-becoming-world-s-first-cashless-society-a6694001.html

Sweden is fast becoming the world’s first cashless society due to the growing use of a new mobile payment system.

According to a new study from Stockholm’s KTH Royal Institute of Technology, there is currently less than 80 billion Swedish crowns in circulation (around £6 billion), which is a sharp decline from the six years ago, when there was SEK106 billion in circulation.

Niklas Arvidsson, an industrial and management researcher at the institution and the author of the study, said that while cash is an important means of payment in other countries, but that Sweden’s use of cash is small, “and it is decreasing rapidly”.

The move towards a cashless society has come from the prevalent use of a mobile payment system called Swish, which is a direct payment app that is used for transactions between individuals in real-time.

And fast moving to a cashless society it seems.

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Now they're trying to create immigration leagues, welcoming leagues and wefare leagues :rolleyes: - no matter that for example Sweden's land area is nearly twice that of the UK with about one sixth of the population.

Edited by billybong

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"Giant Wave Of Money" Heads For Sweden, As Draghi Creates "Nightmare" For Riksbank

TidalWave.png

"The nightmare for the Riksbank board is maybe something like this: they are gathered in the south of Sweden, looking out over the Baltic Sea, when they see a giant wave of money coming in from the euro zone and try to fight it with a hose."

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http://www.zerohedge.com/news/2015-11-25/sweden-warns-dire-consequences-massive-housing-bubble-heavily-indebted-households

Late last month, Sweden tripled down on QE, as the Riksbank announced it would expand its asset purchases by SEK65 billion. Or, visually:

Krugman.png

The recent history of Swedish monetary policy is viewed by some as a cautionary tale about what can happen when a central bank attempts to normalize policy too “early.” As a reminder, the Riskbank began raising rates in 2010. Reminiscing about the bank’s decision four years later, Paul Krugman blew a gasket on the way to accusing Sweden of being a nefarious lot of job hating heretics hell bent on perpetuating global inequality by enriching creditors at the expense of impoverished debtors.

Of course Krugman needn’t have been so hard on the Riksbank. After all, they reversed course a little over a year later and since then, it’s been nothing but easing as the repo rate fell 35 bps into negative territory.

20150914_sweden_0.jpg

The problem, as we've documented quite extensively, is that Sweden's adventures in NIRP-dom have done little to boost inflation (to be fair, unemployment has fallen).

20151125_SWECPI_0.jpg

For the Paul Krugmans of the world, that's evidence of a hangover from the series of hikes the Riksbank embarked on beginning in 2010. For anyone who is sane, it's evidence that, i) unconventional monetary policy is bumping up against the law of diminishing returns , and ii) when everyone is easing, no one gets the benefits.

But while NIRP may not be doing much for inflation, it sure has been effective at creating a rather scary looking housing bubble. Have a look:

20150914_swehome_0.jpg

SwedenInflation.png

We discussed this at length in "Sweden Goes Full Krugman, Gets Massive Housing Bubble." Here's what the Riskbank had to say about this after its September meeting:

"Low interest rates contribute to the trends of rising house prices and increasing indebtedness in the Swedish household sector continuing. Current debt levels already pose a substantial risk to the Swedish economy. It is thus essential that the Riksdag (the Swedish parliament), the Government and other authorities implement measures to reduce this risk.
If no measures are taken, this, in combination with the low level of interest rates, will further increase the risks, which may ultimately be very costly for the economy."

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As Stocks Plunge, Swedish Central Bank Holds Extraordinary Meeting, Says Will "Instantly Intervene" If Necessary

riksbank.jpg

Markets have started 2016 with a healty dose of turmoil, and so many were wondering how long - and who - would be the first central bank to intervene in either directly or verbally in markets. Moments ago we go the answer when Sweden's Riksbank announced it has held an extraordinary monetary policy meeting in which it took the decision required to be able to "instantly intervene on the foreign exchange market if necessary, as a complementary monetary policy measure, to safeguard the rise in inflation."

Couldn't locate the other Riksbank thread.

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