Of all commodities, copper’s price is the favorite indicator of how well the economy is doing. If demand is falling now, manufacturing is heading for the skids.
Demand is falling now.
Yesterday, the Dow Jones Industrial Average opened up by over 200 points. Later in the day, copper fell a startling 6%. The DJIA closed the day down by 27 points.
The last time copper was this cheap was in 2009.
Central banks have pumped in money. They have bought government bonds. They have bankrolled an unprecedented expansion of government debt. They have raised stock markets. They have raised bond markets.
Committees of Ph.D.- holding bureaucrats think they are wiser than the credit markets. They think they can hold off the tsunami of debt liquidation by counterfeiting money. They can . . . for a while. But then reality intrudes.
Reality is intruding. It’s pushy. It’s impolite. It’s uncaring. It’s also relentless.
What will central bankers do when the next recession hits? What is the follow-up to the largest expansion of the monetary base in history?
When a zero interest rate fails to sustain economic growth, what’s the Federal Reserve’s back-up plan?
Enquiring minds want to know.
