WHY QUANTATIVE EASING IS A WEAPON OF MASS DESTRUCTION !
History tells us that planning an escape from Q.E. is virtually impossible, our last effort kept rates on hold for over 23 years and concluded with the start of WW2 .
This “normalisation” of our economy is proving very painful to accept; it appears we have enjoyed the benefits of stock market; house; commodities and other high end asset market rallies but struggle to re adjust to reality. In fact Central banks have continually
encouraged us through low interest rates and cash injections to invest in our markets as they’re apply medicine when necessary. The issue now is that we have become dependent /addicted to its medicine and cannot function without it ! China new stock market
is a perfect example of this “blind faith” …….. Chinese investors bought stocks with gay abandon, adding more at rock bottom; soon finding there was a basement below …..They still kept buying as instructed by PBOC comments and false figures ; only to find
a cellar beneath ……….The Chinese bank still promised riches and still folk bought shares only to find under the cellar was HELL ………Remember what they say about Hell ……….There are 18 levels of HELL ! This continual drip of QE medicine has began to hurt our
retail investors who expects /demand government assistance again & again. Since 2009 Central banks have continued to drip feed new rescue measures and “restore” confidence in our markets; 8 times we have recovered from a 10% fall to bounce back to new highs
as QE bazooka fixes our markets .
However it appears that our Central banks are both clueless and uneducated in returning us to “normalisation “ This weapon of mass destruction have given “blind faith” to many retail investor who simply reloads his gun placing his pension ; livelihood
into our governments QE system ; allowing their stocks ,houses commodities and other assets to grow ; in fact they have probably borrowed mortgaged their assets to buy more stocks ! Sadly fuelled by central banks insistence that sell offs were instigated
by malicious short sellers ; Hound of Hounslow etc .
The quandary we have is
- Can /should the central banks reinject with another dose of QE medicine?
- Are “zero” rates the new normalisation?
- Q.E lasted 23 years previously and perhaps we are attempting to early for an exit?
- Have our Central banks finally run out of puff & bullets ; do they need a new super gun or indeed a new subject as probably happened in 1939