Friday, September 02, 2016

Real People Are Getting Shafted
Central Banks Call It 'Financial Repression'
That Expression Doesn't Begin To Describe The Pain Inflicted On Average People
6 Ways NIRP Is Economically Negative
"If you have any doubt that we’ve wandered into a new and unexplored economic universe, consider this number: $12.6 trillion. That’s the face value of government and corporate bonds currently trading worldwide with nominal yields below zero. Note that word trading. These bonds are in fact trading. Liquidity has not dried up. An active market exists for negative-yield bonds. Buyers haven’t gone on strike, and sellers aren’t desperately dumping the bonds. This is weird. None of it should be happening. Plainly, however, it is happening. Have traders and investors lost their minds? No. They are making the most rational decisions they can in an increasingly irrational world. And therein lies the problem with negative interest rate policies, or NIRP, as we now call them (not so fondly)."
NIRP Problem #1: Failure to Stimulate
NIRP Problem #2: Betraying Lord Keynes
NIRP Problem #3: Policy Paralysis
NIRP Problem #4: Killing Insurance Companies & Pension Funds
NIRP Problem #5: Distorting Signals
NIRP Problem #6: Repressing Retirees
Retirees and their pensions are being screwed for what now passes as 'the greater good.' "Because these very compassionate overlords understand that the most important prerequisite for successful future retirements is economic growth. And they think that an easy monetary environment is the necessary fertilizer for that growth. So, when they dropped rates to zero some years ago, they believed they would soon be able to raise them again – and get people’s retirements back on track – without risking future economic growth. The engine of growth would fire back up, and everything would return to normal. So much for the brilliant plan. You and I, the expendable foot soldiers in the war to reignite growth, now gaze about, shell-shocked, as the economic battlefield morphs from the Plains of ZIRP to the Valley of NIRP. The Federal Reserve’s choice to keep interest rates near zero for years on end has exacted a direct and sometimes devastating human cost.
Real people who worked hard all their lives & made sensible decisions about retirement are getting the shaft."
LINK HERE to the PDF
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1 comment:

Anonymous said...

Vote for Brexit ! The E.U. is a failed economic entirety. Vote for Trump ! or else the USA will also be a failed economic entity and very soon too. Get rid of all spend no pain TrueDo before he wrecks Canada.

Cut the power line to the mad silly people NOW and throw them away on the garbage dump before they do any more harm. You heard it here first !