Friday, May 20, 2016

Central Banks Are Losing Credibility
& Promoting A Vicious Negative Cycle
"We see a growing gap between the central banks’ narrative – which is that you have a trickle-down impact from lower rates – and the situation on the ground. People understand that zero interest rates are a reflection of zero growth, zero inflation, zero hope for changes, and zero reforms .. The elite and the academics talk down to the average voter. By doing that, of course, they alienate the voters from their representatives. That’s what we see globally, that’s why Brazil is going to change presidents, why Ireland could not get its government re-elected with 6% growth. It’s not about the top line, but about the average person seeing that we need real, fundamental change .. We have a very vicious negative cycle that is initiated by the central banks. They’re not exclusively guilty, of course, and central bankers would rebut this argument with one saying that monetary policy cannot work on its own, you also need fiscal stimulus… but that’s all nonsense .. We are now questioning the central banks’ model."
- Saxo Bank Chief Economist Steve Jakobsen
LINK HERE to the interview transcript

No comments: