GFC 2.0 ? or not?


#41

Isn’t one of the key factors of having a debt based monitory system is that 100% of all of the money in the system is debt owed by someone to someone else and as interest is charged, infinite growth is hardcoded into the financial system as without it the whole show is derailed. Even if someone “helicopters” a few trillions into the system, that money will be created by borrowing it from someone.

The debt can only grow, it cannot shrink, it goes against the religious teachings of the FIAT economy.


#42

Faith is about to be tested. Few are prepared.


#43

The debt wasn’t exactly used to tool up factories etc it just blew bubbles. To scale such dizzying heights of debt to do that…


#44

Ok but, who will “helicopter” the money in? The IMF?..who supplies their line of credit? Trade links are being tested…


#45

Any central bank at the request of a government will create money out of thin air in exchange for collateral that the government will have to pay to get back with interest.


#46

More great analysis, IMHO, on asset bubbles from Wolf Richter.


#47

#48

GFC hmmm, maybe more like GFR, R = Reset


#49

Central banks around the world are surprising markets with aggressive rate cuts: Here’s why

Central banks in New Zealand, India and Thailand all announced larger-than-expected cuts to interest rates on Wednesday, furthering a global trend of monetary policy easing.

The Reserve Bank of India cut rates by 35 basis points for a fourth straight meeting this year, while the Bank of Thailand unexpectedly cut its rate by 25 basis points for the first time since 2015.

The Reserve Bank of New Zealand (RBNZ) stunned markets with a 50 basis point cut, twice the expected level, to take its official cash rate to an all-time low of 1%. The Reserve Bank of Australia, meanwhile, held rates at a record low following cuts in June and July.

The main takeaway from the raft of monetary policy easing points to central banks signaling major concerns about the outlook for economic growth, and resorting to sharp monetary policy action in order to stave off a downturn. Central banks often resort to lower interest rates in environments like this in order to boost money supply in the economy, stoke demand and provide an impetus to growth.

Central banks around the world are surprising markets with aggressive rate cuts: Here’s why

Demand has to be constantly ‘stoked’ this decade. Even in developing economies. When is it ever enough


#50

Growth! Growth! nothing but growth will do, but in reality growth is also cancerous, such growth will eventually cause the biggest financial bubble to pop or else lead to the total destruction of the environment as natural resources are plundered for eternity, until there’s none left!


#51

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#54

FT: Federal Reserve sees huge demand for cash after money market jolt

Banks and investors rushed on Wednesday to gobble up $75bn in short-term cash the Federal Reserve made available in a second attempt to steady one of the world’s most important money markets. Dealers submitted requests for over $80bn in overnight borrowing, exceeding the maximum amount the New York Fed had placed on offer. That amount far exceeded the $53bn demanded when the central bank stepped into the market on Tuesday for the first time in more than a decade. In a sign of the crunch that has hit the short-term borrowing market, the Fed’s main policy rate, the federal funds rate, has jumped above the central bank’s 2 to 2.25 per cent target. Data released on Wednesday morning showed the rate rose to 2.3 per cent on Tuesday, from 2.25 per cent on Monday and 2.14 per cent at the end of last week. The central bank has been forced to intervene after a severe imbalance in the so-called repo market sent the cost of borrowing cash overnight, known as the repo rate, surging to a historic peak.

There is more


#55

From ZH: Reports are emerging of a lack of liquidity in the US, which the FED cannot contain even with the recent cash injections.
IIRC similar conditions preceded the last GFC…


#56

QE = Fed increasing its balance sheet.
Fed increasing its balance sheet = money printing.
Skip forward to today and we are hearing the term POMO being bandied about, which stands for Permanent Open Market Operations.
Which is effectively a form of balance sheet expansion.
Just don’t call it money printing. Wouldn’t want people catching on.


#57

Powell Sees Fed Resuming Balance-Sheet Growth, But It’s Not QE

“In no sense, is this QE,” Powell said in a moderated discussion after delivering his speech.

https://www.bloomberg.com/amp/news/articles/2019-10-08/powell-says-fed-to-resume-balance-sheet-growth-but-it-s-not-qe


#58

Great analysis from Wolf Richter. Worth a listen for his explanation of how the increasingly precarious repo market props up REITs…

#59

https://www.bloomberg.com/news/articles/2019-11-06/europe-warned-to-prepare-for-the-worst-as-imf-sees-clouds-darken?srnd=premium-europe
Buckle up folks


#60

“A synchronized fiscal response” may be necessary, the fund said in the report

Ireland should take a back seat on this one imo. Let the big boys take on the liability.