2019-04-26, 15:04
Hur centralbanker har lyckats fördärva en fri marknad och dess följdverkningar.
The Great Financial Unknown is now upon us. After 10 years of Quantitative Easing, the European Central Bank (ECB) in Europe owns 40% of the national debts in the EU and it can neither sell them nor stop buying without creating a Panic in Interest Rates. Likewise, the Bank of Japan (BoJ) owns between 70% and 80% of the ETF bond market in Japan. The Bank of Japan confirmed it is ending free market determination of interest rates for the municipal level and that they “will not require any procedures such as auction as the method of determining lending conditions.”
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The statement at the end of the announcement on the last page on its monetary policy has left traders in shock. This appears that the BoJ realizes that it now effectively has destroyed its bond market and realizes that there is not only the end of a free market, but there is a contagion of surrounding lack of liquidity.
- - -
Both the ECB and the BoJ are completely trapped. They have destroyed their respective bond markets meaning they can no longer even tolerate a free market with respect to interest rates. They cannot stop buying government debt for there is no bid at these rates. We are far beyond every economic theory ever contemplated. How we deal with this government-created financial crisis will be extremely interesting.
(www.armstrongeconomics.com - Bank of Japan and the Bond Crisis/)
The Great Financial Unknown is now upon us. After 10 years of Quantitative Easing, the European Central Bank (ECB) in Europe owns 40% of the national debts in the EU and it can neither sell them nor stop buying without creating a Panic in Interest Rates. Likewise, the Bank of Japan (BoJ) owns between 70% and 80% of the ETF bond market in Japan. The Bank of Japan confirmed it is ending free market determination of interest rates for the municipal level and that they “will not require any procedures such as auction as the method of determining lending conditions.”
- - -
The statement at the end of the announcement on the last page on its monetary policy has left traders in shock. This appears that the BoJ realizes that it now effectively has destroyed its bond market and realizes that there is not only the end of a free market, but there is a contagion of surrounding lack of liquidity.
- - -
Both the ECB and the BoJ are completely trapped. They have destroyed their respective bond markets meaning they can no longer even tolerate a free market with respect to interest rates. They cannot stop buying government debt for there is no bid at these rates. We are far beyond every economic theory ever contemplated. How we deal with this government-created financial crisis will be extremely interesting.
(www.armstrongeconomics.com - Bank of Japan and the Bond Crisis/)
”Jag kanske ogillar din åsikt men jag försvarar med näbbar och klor din rätt att uttala den.”