Friday, July 18, 2014
Fed tapering means more, not less, ‘investment’ in property and other assets
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.