Posted on 08/27/2016 6:52:14 AM PDT by Lorianne
With 85% of Wall Street telling Citi they expect a "dovish hike signal" from Yellen tomorrow, which means a polite request for another BTFD opportunity, even if as BofA says "expectations for a dovish Fed are coinciding with macro strength in the US (most obviously in housing & consumer spending) as well as highest level of wage inflation since Jan10"...
Risk assets are now supported by the new Keynesian Put, the expectation that fiscal measures will be deployed to combat any renewed weakness in the economy/markets (independently of any larger political projects). But asset prices remain primarily supported by excess monetary abundance across the world: 1.There have been 667 interest rate cuts by global central banks since Lehman; 2.G7 central bank governors Yellen, Kuroda, Draghi, Carney & Poloz have been in their current posts for a collective 17 years, yet only one (Yellen in Dec15) has actually hiked interest rates during this time; 3.Central banks own $25tn of financial assets (a sum larger than GDP of US + Japan, and up $12tn since Lehman); 4.There are currently $12.3tn of negative yielding global bonds (28% of total); 5.There is currently $8tn of negative yielding sovereign debt (54% of total).
(Excerpt) Read more at zerohedge.com ...
“Risk assets are now supported by the new Keynesian Put, the expectation that fiscal measures will be deployed to combat any renewed weakness in the economy/markets (independently of any larger political projects).”
Economics is not a science. Not even close. It’s a discipline of sorts, and also a ‘faith’ of sorts, with different denominations and adherents of different philosophies. I personally don’t think its a good idea basing monetary policy that can have huge effects on our lives and those of our children and our children’s children on some economy professor’s theory - in this case Keynes. We are experimenting with our future.
Even with Trump we have no way to rid the world of monetary corporate socialism slowly sliding into fascism. What we will get with Trump is some breathing room and some good trade deals which will increase trade with some countries and an opportunity to start the deleveraging process. But we probably won't. The reason is that crony capitalist economies like China can't compete on economic merit. Instead the communist leaders prop up base industries and then they have to resort to bubbles that they will try to propagate here. We can have a boom but until we get rid of worldwide economic distortions from low rates and asset purchases it will be boom and bust.
Money is a ruthless master and an unforgiving “god.” The world is being set up for the tyrannical rule of the Antichrist. The elites who worship their false gods will soon learn what a tremendous mistake they made, but only when it is too late for them.
“Financial Assets”? More like “Confederate Money”.
These are the same bogus re-hypothecated mortgage-backed loans that were traded back and forth so often that nobody knows who actually owns them.
Program note:
A trillion ain’t what it used to be.
Yes good point, and I believe much of the church is also kneeling at the feet of mammon, the love of money is a powerful evil force and the hearts of men are weak and quick to be enticed.
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