They just don’t get it.
The article referenced is about the ECB, sort of, but, it does gives us a pretty good glimpse to what is going on nearly world wide. It starts with a funny headline.
May join? For those not familiar in this case “doves” means the central banks providing easy or free capital to all the other bankers. The thought being, if the money was just a little more looser, people would borrow and buy and expand economies. We’ve only been doing this since before the recession hit the hardest. For some reason, they just think they haven’t provided enough free money. Maybe just a little bit more and then we’ll be in hog heaven!!!
LONDON (Reuters) – Even as the euro zone economy shows faint signs of stirring, the European Central Bank is likely to send a dovish message this week that more monetary help will be on the way before long.
After a plunge in inflation to 0.7 percent in the year to October, well below the ECB’s target of just under 2 percent, UBS and RBS are among those who reckon a rate cut could come as soon as Thursday’s policy-setting meeting. …..
ALL OPTIONS OPEN
A cut in the ECB’s main refinancing rate, now at 0.50 percent, would have the greatest headline impact.
Yes, reducing from 1/2% should do it. Then economies will start to grow!!! Ask the US how that’s been working out. But, check this other option!!!
Other options include a reduction in the deposit rate to below zero, which would have a bigger effect on money market rates, or a promise of another long-term refinancing operation to ensure banks have plentiful liquidity.
What? Really? A deposit rate to below zero. Let’s say that again!!! A deposit rate to below zero!!!
I wonder. Could anything backfire on doing something like that? What would be the assumed outcome of such a policy?
Let me save these people some trouble. To all readers! I will do you the favor of holding your money. All you have to do is pay me a small stipend to do so. Let’s say 1/4%. Yes, yes, I know. It would be a horrid sacrifice on my part, but, that’s what I’m willing to do for all of the readers here.
But, why not? It’s time we have a different mechanism which would have disastrous no growth implications. I’m tired of the same old, same old …..
Economists unanimously expect the Bank of England this week to keep its short-term policy rate at 0.5 percent and its asset purchases at 375 billion pounds, even though the British economy has logged two consecutive quarters of robust growth and house prices are surging in and around London.
And many believe the Federal Reserve, which held policy unchanged last week, is unlikely to start reducing its bond purchases from $85 billion a month until 2014, not least because economic statistics have been muddied by last month’s partial government shutdown in a row over the federal budget.
Friday’s U.S. employment report for October is likely to show that nonfarm payroll growth slowed to 125,000 from an already unimpressive average over the previous three months of just under 150,000.
Economists polled by Reuters are also forecasting the unemployment rate to tick up to 7.3 percent from 7.2 percent.
At what point do people say, “I keep doing this and the results still aren’t doing what I want them to do. Should I change my actions?” Or will they ever say that?
With the Fed waiting to examine ‘clean’ data, the preliminary report of third-quarter GDP will be less important than usual. Economists expect a growth rate of 1.9 percent, down from 2.5 percent in the April-June quarter.
Far more important in the longer run for the global economy will be a gathering of the Chinese Communist Party’s Central Committee to plot economic strategy for the next few years.
Let’s repeat that, just because ……. Far more important in the longer run for the global economy will be a gathering of the Chinese Communist Party’s Central Committee to plot economic strategy. Say it over and over again until we realize how far we’ve gone from a true market based economy.
Dr. Mitchell had a couple of interesting graphs the other day. Here’s one.
Why is this important? Because the lunatics are basing much of their decisions on GDP and it’s growth rate. But, government spending is part of the calculations in figuring the GDP. For the leftards, it’s a beautiful circular argument. They claim government spending can help increase an economy. Well, no, it can’t except for very special circumstances, which all governments are already engaged in. But, as they increase government spending, so too would the GDP. And, then the lunatics look at the increase of the GDP and say, “see, we improved the economy”. But, that’s the other half of this madness with all the QE. They’ve effectively rendered the GDP a completely useless metric.
Both government spending and the various methods to printing employed by the central banks is only moving wealth, already earned, around. It doesn’t do anything to grow anything. It doesn’t address any fundamentals of an economy, but, puts more pressure on higher taxes and wealth confiscation.
And, someone is actually contemplating a “below zero deposit rate”. They’ve taken free market economies and stood them on their head. And they’ve done such a bang up job in destroying our economies that they now look to a “gathering of the Chinese Communist Party’s Central Committee” as to our possible salvation.
It’s like they’re intentionally trying to destroy the socio-economic model which has served humanity so well for so long that many nations are now living twice as long as we did just a couple hundred years ago. Adam Smith must be spinning right now.