Friday, July 18, 2014

Fed tapering means more, not less, ‘investment’ in property and other assets

Is centre of global economic crisis shifting to emerging markets?

Claims QE liquidity stimulated financial markets but not the economies of advanced economies (AE) and that most of what wasn't hoarded as cash on AE banks' balance sheets was invested in emerging market economies (EMEs), both in their real economies and in their stock, bond and other securities markets. China's expansion thro' fiscal stimulus boosted demand for commodities, so 2010-13 was good for EMEs. Then the Fed announced 'tapering' of QE and the EME money flowed back into AEs, disrupting EME economies and weakening their currencies and, ironically, injecting more, not less, liquidity into AE economies, financial markets and other assets. Hence slowing growth in EMEs, some growth in AEs......and further inflation of property prices.

Posted by icarus @ 11:32 AM (2641 views)
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6 thoughts on “Fed tapering means more, not less, ‘investment’ in property and other assets

  • mountain goat says:

    Yes when the Fed said it was going to reduce QE it was Emerging markets that were hit, so obviously QE money was going abroad.

    Is it possible for the financial world to become more low and amoral? A mal-investment crisis of their making was bailed out by tax-payers money. This bailout money was then promptly invested abroad in emerging economies instead of locally to struggling UK business’. I remember well when the recession hit how a friend who runs a local business manufacturing luxury soap couldn’t borrow money at reasonable rates even though the BoE was giving UK banks free money.

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  • There is obviously no end to tapering, the FED are merely buying through a third party.

    Look at the interest rates.

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  • You can’t taper a Ponzi!

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  • The Fed announced tapering in order to shore up the value of the dollar and its international role (confidence in it was being undermined by QE). But it needed the low IRs that QE provided so it bought bonds through the back door, a third party operating through a securities clearing system in Brussels. Maybe it didn’t need to do this, given the liquidity surging back from EMEs.

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  • Maybe it didn’t need to do this, given the liquidity surging back from EMEs.

    That’s actually yet another example of a dump. The American people are just going to have to swallow the high inflation, until they decide enough is enough.

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