Monetisation versus Growth
http://www.moneyweek.com/file/9347/is-the-us-facing-another-great-depression.html
An article from Dr Kurt Richebächer that discusses some of the issues associated with the extraordinary monetary expansion the US has experienced in this decade; how it is similar to that of the 1920's, and how it is not "growth".
An article from Dr Kurt Richebächer that discusses some of the issues associated with the extraordinary monetary expansion the US has experienced in this decade; how it is similar to that of the 1920's, and how it is not "growth".
posted by Peter at 1:31 pm
2 Comments:
THE MONETARY VACUUM CLEANER
http://atimes.com/atimes/Japan/HD18Dh01.html
"Much more significant, the end of quantitative easing will pull an enormous amount of liquidity from Asian and US stocks and bonds, prompting widespread asset price depreciation and yen revaluation."
The glacial change in Bank of Japan monetary policy has commenced, but as other commentators have pointed out, no one actually fully understands the extent of the Yen carry trade and exactly how much the repatriation of funds to Japan will affect asset prices and exchange rates.
The interest rate differential between Japan and virtually anywhere else is very substantial so a 25 or 50 basis point rise (from zero) will still leave a significant gap between say, US and Japanese lending rates. However as Iceland has recently illustrated, markets can react suddenly and swiftly when sentiment and future expectations change.
http://www.investors.com/breakingnews.asp?journalid=37116738&brk=1
In this article Michael Kahn discusses some of the fundamental issues underpinning his view of an impending stock market correction.
The stock and property markets, at this stage of the economic cycle, are largely monetary phenomena. The steady expansion of the money supply over the last 10 years has inflated these markets greatly. Likewise any sustained correction will also be a monetary phenomenon.
The process of reigning in excess liquidity in world markets is underway. The world's central banks are almost entirely in a tightening cycle. The US dollar has been the host for most of this expansion and I remain convinced that a serious monetary contraction will be linked to a progressive unwinding of US dollar dominated foreign currency holdings.
I still maintain as I did in my first post in August 2004 that the best protection during this demonetisation process remains gold, but I am no investment advisor, and this blog should in no way be relied on for investment advice. For the sake of open disclosure I also hold a modest amount of gold myself.
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