Wednesday, February 3, 2016

The Chimps Or The Ones That Follow

Central Banks don't control interest rates, multinational corporations importing poverty control interest rates. Central Bankers are just hired chimps to give the illusion of control. 

When the ship has a massive hole in it, no amount of Monetary stimulus is going to bail it out...

"This year will be different"
"We believe you, because we're as dumb as you are"
Japanese 10 year yield:

Liquidity trap visualized:
"Down periscope. Prepare to dive"

Central Bankers are like oil analysts, they couldn't get a real job, so they went to work at a place where you never have to be right, you never have to deliver on your promises, and you don't even have to have a fucking clue what you're doing. 

If low interest rates cause "inflation" then why are global interest rates at 500 year lows amid the lowest inflation rates in the past century? And if monetary expansion creates inflation, then why are Central Bank balance sheets at the most inflated levels in human history amid persistent deflation? EconoDunces tells us that inflation is "always and everywhere a monetary phenomenon". Sure it is.

The reason of course is because the global output gap is so wide that poverty is flooding every corner of the globe. And debt levels are already so high that the marginal borrower is maxed out and unwilling to take on more debt regardless of "interest rate". The middle class has no money, because there's not even a fucking middle class anymore. 

The U.S. output gap is at recession wides...

Now the Bank of Japan's Kuroda Chimp just said he is willing to take interest rates deep underwater to -1%. What he really means is that he's willing to take real interest rates down in line with deflation. He's pretending to be in control while have no fucking control whatsoever. He's competing with sweatshops in China, Vietnam, Philipines, Thailand and Malaysia which have an unlimited supply of cheap labour. 

But he'll get to his 2% inflation target by paying people to borrow money. Sure. 

This year WILL BE different, because the hairless monkeys won't see it coming.