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Banks' Rate Policies 'risk Disastrous Crash'

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Like duh, it's not rocket science.

Anybody seen any Klingons tonight?

http://news.independent.co.uk/business/new...icle1096469.ece

Banks' rate policies 'risk disastrous crash'

By Philip Thornton, Economics Correspondent

Published: 26 June 2006

Central banks must carry out a wholesale revolution in the way they set interest rates to help avert a disastrous crash in the financial markets, the Bank of International Settlements warned today.

The BIS, known as the central banks' banker, said setting monetary policy to keep inflation low in the short term risked fuelling financial imbalances that could unwind suddenly, leading to a global economic slump. It urged policymakers to give greater weight to asset prices, lengthen their forecast horizon and use other regulatory-based tools to prevent asset price bubbles.

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Guest Bart of Darkness
Central banks must carry out a wholesale revolution in the way they set interest rates to help avert a disastrous crash in the financial markets, the Bank of International Settlements warned today.

Couldn't be plainer could it?

setting monetary policy to keep inflation low in the short term risked fuelling financial imbalances that could unwind suddenly, leading to a global economic slump

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risked fuelling financial imbalances that could unwind suddenly

The west's deficit to china, which could lead to a sharp devaluation of the western currencies.

It said banks needed a "much richer" set of indicators, particularly indicators of financial imbalances. This included external imbalances such as trade deficits and internal ones such as house price bubbles. "Over long periods of time, such imbalances can pose an even greater threat to price stability than shorter-tern and more conventional inflationary "pressures" such as output gaps," it said.

A carefully crafted press-release to mitigate any responsibility for the impending carnage.

"Oh, our models don't take into account global trade imbalances,

how were we to know this terrible thing would happen? We need a global currency."

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"Oh, our models don't take into account global trade imbalances, how were we to know this terrible thing would happen? We need a global currency."

They might ask the Irish how a single currency helps to smooth out imbalances.

Edited by Jeff Ross

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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