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Halligan On Zero Interest Rates

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http://www.telegraph.co.uk/finance/comment/11792182/Raising-rates-is-trickier-now-that-QE-is-a-lifestyle-choice.html

This six-year policy, has, quite simply, allowed the authorities to claim that we’re back to “normal” and economy is on the road to recovery. “Look, the stock market is booming and bond yields are down,” they say. The reality is that no-one truly knows what will happen when interest rates rise, and the prospect of QE is no more. Messrs Yellen and Carney have inherited a massive asset price bubble that may need an everlasting supply of oxygen in the form of zero interest rates. Once they go up, that bubble could go bang.

And, into that toxic mix, we must now add the dangerous, potentially incendiary nonsense that is “The People’s QE” – a policy of outright debt monetisation proposed by would-be Labour leader Jeremy Corbyn.

This is what happens when the financial and political establishment, for its own convenient ends, promotes a policy that printing free virtual money is fine, does no harm and, maybe we don’t even have to unwind the policy as the government bonds can be “retired” or somehow made to disappear. Along comes an economically illiterate, populist politician who then says “we want some of that” and starts to get the public behind outright monetary expansion to fund schools, hospitals, public sector pay rises and the like – the stuff of Weimar economics.

Although apparently it's not Weimar economics when said free money is given over to the monetary system.

However when rates do increase this is the real question what happens to the bubble that has been propped up so far by ZIRP, will it pop or can it be gently deflated?

"Did he fire six shots or only five?" Well to tell you the truth in all this excitement I kinda lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world and would blow you head clean off, you've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

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https://mises.org/library/unseen-consequences-zero-interest-rate-policy

In a dynamic economy, an action not only triggers just one effect, but always an entire series of different consequences. While the cause of the first effect is easily recognizable, the other effects often occur only later and no such recognition occurs. Frédéric Bastiat described this phenomenon in 1850 in his ground-breaking essay “What Is Seen and What is Not Seen”:

In the economic sphere, an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them …
There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. Yet this difference is tremendous; for it is almost always the case that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Hence it follows that the bad economist pursues a small present good that will be followed by a great evil, while the good economist pursues a great good to come, at the risk of a small present evil.
...

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They really dont want to pay back the money they owe.

They dont want to loose.

They want it all.

Cake and eat it springs to mind.

The other thing that springs to mind...f**king criminals

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However when rates do increase this is the real question what happens to the bubble that has been propped up so far by ZIRP, will it pop or can it be gently deflated?

Japan deflated slowly over many years, but with ZIRP. I can see the same happening in western economies.

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Usual Torygraph bullsh1t.

In a few short paragraphs halligan (who is permanently wrong) swings from

"Nobody knows" to

we must now add the dangerous, potentially incendiary nonsense that is “The People’s QE”

People apparently pay to read this drivel & more incredibly some people apparently believe what they read.

As I posted yesterday on the Corbynomics thread, the thoughtful considered public debate on helicopter money wont extend to the usual nutjobs in the right wing media who are incapable of either thought or considered debate.

Edited by R K

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And, into that toxic mix, we must now add the dangerous, potentially incendiary nonsense that is “The People’s QE” – a policy of outright debt monetisation proposed by would-be Labour leader Jeremy Corbyn.

This is what happens when the financial and political establishment, for its own convenient ends, promotes a policy that printing free virtual money is fine, does no harm and, maybe we don’t even have to unwind the policy as the government bonds can be “retired” or somehow made to disappear. Along comes an economically illiterate, populist politician who then says “we want some of that” and starts to get the public behind outright monetary expansion to fund schools, hospitals, public sector pay rises and the like – the stuff of Weimar economics.

It's a laugh when they use Corbyn's policy, which is very similar to the policy they've been using themselves, to criticise him as illiterate and populist proposing dangerous incendiary nonsense.

They must be thinking along the lines of "yikes if people get free money before us then they might be able to outbid us for houses and other things".

Only crooks and charlatans.

Edited by billybong

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Well said RK. Torygraph is just as bad as the Sun and Daily Mail. Free money for HTB? Fine. Free money for actually investing in the country? Nope. Must be a socialist. Die die die

Two wrongs don't make it right. Fail.

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