The End of Economic Expansion

The End of Economic Expansion

By Peter B Meyer  The Final Wake Up Call

In the Name of Stimulating the Economy

Every Boom Based On Inflation, Instead Of Real Income, Crashes

 Too much Easy Money

Central banks across the entire globe have announced they’ll be cutting interest rates and drowning the world in easy money. It is not just the big central banks slashing rates. Eleven emerging market central banks cut rates in September.

That follows on the heels of 14 rate cuts by emerging market central banks in August. September was the eighth straight month of net cuts by emerging market bankers, according to a Reuters report. In fact, it has become a race to the bottom regarding interest rate cuts around the world.

Negative-yielding bonds, could never happen without mob bosses like the European Central Bank’s (ECB) President Mario Draghi propagating that discouraging people from keeping money in the bank will stimulate economic growth. How is an economy being grown without capital?

And where does capital come from if not resulting from savings? When it comes to economics, saving is the cornerstone at the genesis of all capital allocations, and capital formation, it is the root source of all economic growth.

Draghi recently called negative rates a “necessity,” as though discouraging saving brings the much-needed discipline or the much sought after relief. Given the gargantuan bond bubble that has resulted, it’s anybody’s guess how it could be either.

 With his term as ECB president ending soon, Draghi is pulling out all the stops to revitalise the European economy. He’s cutting the central bank’s main deposit rate from -0.4% to -0.5% and he’s launching a fresh round of quantitative easing – a fancy term for manipulating the bond market, which is simply more money printing – starting in November.

Next, his successor, Christine Lagarde, will lead a strategic review in search of still more radical measures, including the ECB possibly depositing money directly into individual bank accounts. Free money for everybody, i.e. giveaway program. A variant of Bernanke’s helicopter money.

It really is time people start to question the mental sanity of these people in charge. It will turn out like Hans Herman Hoppe formulated: these people belong to, “an institution ‘Deep State’, run by gangs of murderers, plunderers and thieves, surrounded by willing executioners, propagandists, sycophants, crooks, liars, clowns, charlatans, dupes and useful idiots—an institution that dirties and taints everything it touches.”

His thesis has been strengthened, as is known Lagarde has a criminal record, which the media fails to report on, she is a corrupt official who was involved in financial fraud and she has a proven criminal record.

Is the Eurozone in danger? Of course it is, as financial fraud is rampant at the highest levels of political and economic decision-making. A senior official in high office with a criminal record can easily be manipulated. As long as she’s in office, this will affect the way she manages the ECB, with potentially devastating impacts on the very fabric of monetary policy.

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