Nomi Prins: The Volatility / Quantitative Easing Dance of Doom

[marmar]

The Volatility / Quantitative Easing Dance of Doom
Saturday, March 14, 2015 at 6:42PM


The battle between the ‘haves’ and ‘have-nots’ of global financial policy is escalating to the point where the ‘haves’ might start to sweat – a tiny little. This phase of heightened volatility in the markets is a harbinger of the inevitable meltdown that will follow the grand plastering-over of a systemically fraudulent global financial system. It’s like a sputtering gas tank signaling an approach to ‘empty’.

Obscene amounts of central bank liquidity applauded by government leaders that have protected the political-financial establishment with failed oversight and lack of foresight, have coalesced to form one of the most unequal, unstable economic environments in modern history. The ongoing availability of cheap capital for big bank solvency, growth and leverage purposes, as well as stock and bond market propulsion has fostered a false sense of economic security that bears little resemblance to most personal realities.

We are entering the seventh year of US initiated zero-interest-rate policy. Biblically, Joseph only gathered wheat for seven years before seven years of famine. Quantitative easing, or central bank bond buying from banks and the governments that sustain them, has enjoyed its longest period of existence ever. If these policies were about fortifying economic conditions from the ground up, fostering equality as a force for future stability, they would have worked by now. We would have moved on from them sooner.

But they aren’t. Never were. Never will be. They were designed to aid big banks and capital markets, to provide cover to feeble leadership. They are policies of capital creation, dispersion and global reallocation. The markets have acted accordingly.

.......(snip).......

Retail sales are down because people have no extra money and can’t take on excess debt through credit cards forever. They aren’t governments or central banks that can print when they want to, or big private banks that can summon such assistance at will. .................(more)

http://www.nomiprins.com/thoughts/2015/3/14/the-volatility-quantitative-easing-dance-of-doom.html

[GoneFishin]

1. I would like to see a calculation of how much money middle Americans have missed out on due

to receiving 0% interest on their savings. I know the amounts are modest compared to other sources of income, but it is one more of the many ways that wealth transfer is occurring from average working stiffs into the pockets of the banks who get money cheaper than ever before, but have passed none of that cheap money onto their credit card or student loan "customers".

I believe firmly that these lower interest rates are substantially about forcing people to abandon conventional bank savings accounts and driving them into the stock market where their savings can be skimmed by Wall Street.

Judging from the mounding credit card debt and student load debt in America there is clearly money to be made by loaning out money at reasonable rates like, say 4 to 9%. But when the banks get money for free no average person is going to be able to put their savings to work toward that end.

[on point]

2. Interesting question, but perhaps not much. It is about 'real' rate and not 'named' rate

The nominal rate of interest may be 5 %, but if inflation is 4.5% then real rate of interest is .5%.

Same if interest rate is 1%, and inflation is .05. Real interest is .5%

There are questions of course about what are inflation is, because a lot of things people buy don't seem to get counted well, like healthcare and education.

And the inflation rate is massive for stocks and commodities, because we basically have the wealthy bidding up assets with their excess capital. eg Stock market is not really rising, but is being inflated with excess capital, that should really be taxed away instead.

[marmar]

3. pm kick

:kick: