Wednesday, May 11, 2016

"This Is The Most Obvious Disaster In Finance. 
Central Bankers Don't Understand..."
"Central banks were created to be the banks for banks .. They were structured to influence the economy by increasing or decreasing the attractiveness of lending money .. No one ever asked the question of what to do if the central bank was somehow unable to increase the attractiveness of lending money? If that happened, how could central banks influence the real economy? .. It’s one of those questions that seemed so implausible that no one ever really considered it .. But by going negative, they simply push longer-dated interest rates lower, further reducing the attractiveness of making loans .. This is the most obvious disaster in finance. Central bankers don't quite understand it .. They never thought this through. And they should probably give up and raise rates to reverse this dynamic .. And the irony is that central banks are creating precisely what they’re trying to avoid."
- Eric Peters, One River Asset Management
LINK HERE to the article

1 comment:

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