VECKA 22
Torsdag
28
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BT-annons
2020-05-07
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Läses på egen risk
Dagens Guru Corner läses på egen risk.

THE GURU CORNER (läses på egen risk) ”som allt annat...”

Eurocrats might be able to get tables in their favoured restaurants more easily while national governments take it on the chin. But this is a temporary situation which could easily evolve into a threat against the union.

The coronavirus crisis must cause us to rethink the idea governments can manage these situations. It is absolutely true that most private industry can be trusted, because the alternative for poor or unscrupulous providers is failure.

…. and our commitment to a Dow-to-Gold ratio of 5, I’m not concerned about the recent declines in the international gold price at all.

I hope you’re not, either. The end of a 40-year experiment in paper money was always bound to be rocky.

Financialization" is the process by which a normal economy is transformed into a fragile economy centered around financial firms. Central banks and government bailouts are to blame.

Toilet paper producers haven't stopped making it. But anti-gouging laws in many places have ensured that prices can't rise to ensure that your neighbor doesn't buy three hundred rolls at the regular price while others in greater need can't find any at all.

Finn Kydland and Edward C. Prescott (KP), the 2004 Nobel laureates in economics think that technological shocks can explain 70 percent of economic fluctuations in postwar US data. Unfortunately their quantitative methods are simplistic and ignore the real problem: central banking.

The U.S. dollar is the key to all this. The more it rises, the more “stuck” the whole system becomes, and the more things implode.

The Calvary has arrived, as Reserve Bank credit (i.e. the sum total of interest-bearing assets held by the Fed) jumped $241 billion to $4.46 trillion, triple last week’s sequential increase. That pushed the three-month annualized growth rate to 21.1%, up from 15.3% from a week ago and 13.9% on March 4.

Printing up paper money—which is the Fed's solution to nearly everything—will not bring about a miraculous replacement of the lost goods and services or repair broken supply chains.

The title of this Final Act is “STAGFLATION.” Stagnation combined with inflation. And it ends with a synchronized global currency devaluation against gold and silver… and the death of the existing world monetary order.

It occurs to me the Fed and the federal government may even decide to buy gold to kickstart inflationary sentiment.

That’s how fearless they are of stagflation.

Real wages in Japan have been declining thanks to decades of expansionary monetary and fiscal policies. Now "Japanization" increasingly looks like a fate that awaits Europe.

Thanks to relentless intervention by governments and central banks, the financial system now looks to government policy as the solution to every problem.

With both major political parties seemingly uninterested in the long-term fiscal stability of the United States, the only near-term solution for the spendthrift class in Washington, DC, is to either raise taxes or spend recklessly.

These famed "tools" of the central bank are nothing but cunning and arcane techniques for conjuring additional trillions of dollars out of thin air and pumping them into the global economy.

Although authoritarian states can indeed act swiftly, they always act on the wrong information—and the wrong objectives.

By announcing that it is willing to throw up to $1.5 trillion in electronically created money in order to give three-month loans to those institutions that bought Treasury debt earlier, the Fed is bailing out not only the holders of Treasury debt, but also the Treasury itself.

“INTERESTING” TIMES…

 
Göran Högberg

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