Wednesday, August 1, 2012

Pictures of monetary instability

Via:  FT

In line with my thesis that the coming years will feature a degree of monetary instability unprecedented in human history, beginning with ubiquitous negative real rates that are the scourge of banks….

Negative rates as a precursor to the death of banking

Posted by Izabella Kaminska on Jul 31 16:02.

FT Alphaville has presented its case on negative rates and zero deposit rates here andhere (amongst other places).

What we believe is that rather than stimulating the lending market — and the economy along with it — such a rate policy could have a disastrous impact on collateral markets and money market funds, not to mention the net interest income of lending institutions. All of which could unleash a protracted deflationary spiral.

The move could also presage the death of banks and lending institutions completely. […]

Check out the pictures of some major yield curves around the world:




If you buy the argument that central banks this far gone down the path of excessive accommodation lo this past forty years have only one option left to serve their masters, the fiscal authorities and the creditors, inflate or die, then keep in mind that historically, the quickest way to get an inflation going is to start a big war.

I am beginning to see why Charles Nenner says there is no free will—yet I retain hope that there is.

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