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Central Banks: No Cutback in Money Creation

Posted on October 25, 2013

We are at the cusp of another round of global monetary easing,” said Joachim Fels, co-chief global economist at Morgan Stanley in London.

Policy makers are reacting to another cooling of global growth, led this time by weakening in developing nations while inflation and job growth remain stagnant in much of the industrial world. The risk is that continued stimulus will inflate asset bubbles central bankers will have to deal with later. Already, talk of unsustainable home-price increases is spreading from Germany to New Zealand, while the MSCI World Index of developed-world stock markets is near its highest level since 2007.

“We are undoubtedly seeing these central bankers go wild,” said Richard Gilhooly, an interest-rate strategist at TD Securities Inc. in New York. They “are just pumping liquidity hand over fist and promising to keep rates down. It’s not normal.”

Normal or not, that’s been the environment now for five years after monetary authorities fought to protect the world economy from deflation and to hasten its recovery. In the advanced world, central banks drove interest rates close to zero and ballooned their balance sheets beyond $20 trillion through repeated rounds of bond purchases, a policy known as quantitative easing.

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4 thoughts on “Central Banks: No Cutback in Money Creation

  1. Thank you liberal an RINO Keynesian fools for bringing this fate to the world. There will be a day of reckoning. I'm not asking for it but I know its coming. The anger I see brewing among the herd is astounding. It will not end well.

  2. I have been writing in my blog about this for over a year now. Finally I am getting some agreement from the mainstream. If they invent a time machine in my lifetime I'm volunteering to go back. Then John Maynard's name would never be heard and the economic world will be saved a world of hurt. See my blog at http://cranky-conservative.blogspot.com

  3. Some people never learn. History repeats itself. How long do you suppose the government can continue to spend recklessly, borrow money, print fiat currency, buy its own debt, etc. Many governments did musch as we are doing today – big "free" giveaways, etc. The German Weimar Republic in 1929 is an example. The Germans had all these pie-in-the-sky programs, but no hard currency. The exchange rate became so terrible tha ONE U.S. dollar equaled 4 trillion Deutschmarks. Peron's Argentina did similar things. The Argentine peso eventually tanked and Argentina experienced a depresssion greater than our own Great Depression. Napoleon had a similar inflationary problem due to his military exploits into Prussia, Austria, Russia, etc. He had no hard currency; his government began to print assignats, francs backed by land in what later became the Louisiana Purchase. Modern France, Greece, Portugal, Spain et al are in the same fix. Sooner or later the rubberband will break, and our currency will collapse. God help us when that happens, because Obama and his minions won't be able to help anyone.

  4. Just part of Obama's exit strategy.Keep the wheels greased with fiat money until he can safely make it out of office with the rest of the swag. He bought a house in Hawaii, and actually has everyone believing that he will retire there. Since he knows he won't be safe in any U.S. jurisdiction, he must have an unpublicized home that he has bought somewhere in a safe, neutra,. country with no extradition treaty.