Many
have wondered if the Fed is ignorant to the problems their policy
prescriptions cause, or if they've just resigned to walking society down
the path to destruction knowingly. It increasingly looks like the
latter. Indeed, the Fed may very well understand that its "lower for
longer" policy is leading the economy and global markets straight into
disaster. However, as the same time, the central bank - feeling trapped
after 10 years of unprecedented stimulus which if undone would result in
a historic crash - is backed into a corner and has no choice but to
accept this growing risk, as the world's punch drunk central bankers
continue to try at all costs to keep the bloated economic "expansion"
going.
Indeed, the Fed itself acknowledges this risk, because according to
the minutes of the FOMC policymaking meeting from March 19 and March 20.
"A few participants observed that the appropriate path for policy,
insofar as it implied lower interest rates for longer periods of time, could lead to greater financial stability risks" the minutes read.
Chairman Powell himself understands very well the risks that he is taking: he has previously pointed out publicly that the last two "expansions" ended in the dot com bubble burst and then the housing bubble burst, according to Bloomberg.
But it is the Fed's willingness to continue down this path, despite
seeing the dangers, that is disturbing. It’s a classic example of
putting a Band-Aid on the problem now at the cost of the future. Holding
rates down while pursuing maximum employment and 2% inflation is a
policy that has proven to lead to disaster.
Tobias Adrian, a senior International Monetary Fund official said: "Easy financial conditions today are good news for downside risks in the short-term but they’re bad news in the medium term."
元IMF職員Tobias Adrianはこう言った:「現在の緩和的金融条件は短期的な相場下落対策には望ましいが、中期的には悪い結末を招く。」
The Fed's dilemma - obvious to everyone but them - is that the neutral rate of interest (i.e. "r star") is simply too low - something we discussed back in 2015 -
so low that, in fact, that instead of keeping the economy at an
equilibrium, it simply encourages more risky behavior by investors.
FEDはジレンマに陥っているーー彼ら以外の誰にも明らかなことだーー中立金利(r star )が低すぎるーーZeroHedgeが2015年に議論したことだがーーこれがここまで低いと経済を均衡維持するだけではなく、投資家がよりリスクを取りやすくなっている。
The neutral rate has continued to fall as a result of rising debt, an
aging population and slower productivity growth. Bloomberg has been using a term
called "FAST-star" instead of "R-star" to denote a rate level that
ensures financial stability. A setting above it stifles risk-taking
while the setting below it encourages excess. The Fed's neutral rate -
"R-star" - falls well below this suggested rate.
The dovish shift by the Fed at the end of the year last year helped
prompt a massive stock market rally, even after raising rates from 2.25%
to 2.5%. So far the S&P 500 index is up 16% in 2019. However, the
one beating the drum the most in favor of dovish policy – President
Donald Trump – continues to complain that rate increases have held back the economy. 昨年暮れのFEDのハト派姿勢転換は巨額の株式ラリーを引き起こした、たとえ金利を2.25%から2.5%に引き上げた後でもラリーとなった。2019年にはS&P500は16%も上昇した。しかしながら、ハト派政策転換を鐘太鼓でもてはやすのはーー他ならぬDonald Trump大統領だーー彼はいまでも金利引き上げが景気後退を引き起こすと愚痴を言う。
Yet some policymakers at last month's FOMC meeting believe that risks
can be offset by, drumroll, "counter-cyclical macro prudential policy
tools, combined with regulatory and supervisory measures." This is the
same tool and measures that failed to spot the last two financial crises
until both were well underway.
Additionally, there is another problem
to this thinking: even in a best case scenario, the Fed has a limited
set of tools. This was even acknowledged by Fed Vice Chairman for
Supervision Randal Quarles during a March 29 speech.
Meanwhile, Powell has said that he doesn't see a high risk of
financial instability at this point, a comment that may soon be proven
to be as accurate as Ben Bernanke's assertion that "subprime was
contained" prior to the housing crisis. Powell instead argues that the
Fed tries to keep the system safe by requiring large banks to hold
excess capital and undergo stress tests.
And at some points, Fed presidents have sounded open to the idea of
using higher interest rates to cull the markets a little bit. For
instance, New York Fed President John Williams said in October "that the
central bank’s rate increases would help reduce risk-taking in
financial markets, though he added that was not their principal
purpose."
かつてはときに応じて、FED議長によっては、市場の行き過ぎを抑制するために高金利とすると公言していた。たとえば、New York FED議長 John Williamsの10月の発言はこうだ、「中央銀行が金利を引き上げることで金融市場での過剰なリスクテイクを抑圧するだろう」、ただしそれが一義的な目的ではないということも付け加えた。
But that type of talk has faded since then.
しかしそれ以降こういう発言は消え失せた。
Jonathan Wright, a professor at Johns Hopkins University and a former
Fed economist said: "There doesn’t seem to be the same idea of having
tighter monetary policy so as to lessen the risk of asset bubbles
developing."
In April former Treasury Secretary Lawrence Summers concluded: "There
are reasons for fearing the economic consequences of very low
rates. These include a greater propensity to asset bubbles and
incentives to substantially increase leverage."
Ultimately, the Fed indeed has no choice: either it inflates away the
debt - which is where MMT will come in very handy in a few years as
helicopter money is unleashed under the guise of "QE for the people" -
or it's game over for the status quo anyway. If it means creating the
biggest asset bubble in the process, so be it.
Amazonで買物をしてContrarianJを応援しよう この長文記事をRay Dalioが発表し、ゴールドは$1400から$1420へと急騰しました。GLD保持高に変化はないのでたぶん先物ポジションが進んでいます。 Ray Dalio Warns A "New Paradigm" Is Coming: "Buy Gold, Sell Stocks" by Tyler Durden Wed, 07/17/2019 - 14:44 Authored by Ray Dalio via LinkedIn, One of my investment principles is: 私の投資原則はこういうものだ: Identify the paradigm you’re in, examine if and how it is unsustainable, and visualize how the paradigm shift will transpire when that which is unsustainable stops. 現在のパラダイムを認識し、それがどの程度持続可能かどうか判断する、そしてパラダイムシフトがどのように起きるか、そしてその着地点を思い描く。 Over my roughly 50 years of being a global macro investor, I have observed there to be relatively long of periods (about 10 years) in which the markets and market relationships operate in a certain way (which I call “paradig...
Amazonで買物をしてContrarianJを応援しよう Silver Outperforming Gold 2 Adam Hamilton July 26, 2019 3232 Words Silver has blasted higher in the last couple weeks, far outperforming gold. This is certainly noteworthy, as silver has stunk up the precious-metals joint for years. This deeply-out-of-favor metal may be embarking on a sea-change sentiment shift, finally returning to amplifying gold’s upside. Silver is not only radically undervalued relative to gold, but investors are aggressively buying. Silver’s upside potential is massive. ここ2週シルバーは急騰した、ゴールドを遥かに凌ぐものだ。これは注目すべきことだ、もう何年もシルバーはひどいものだった。この極端に嫌われた金属が大きく心理を買えている、とうとうゴールド上昇を増幅するに至った。シルバーは対ゴールドで極端に過小評価されているだけでなく、投資家は積極的に買い進んでいる。シルバーの潜在上昇力は巨大なものだ。 Silver’s performance in recent years has been brutally bad, repelling all but the most fanatical contrarians. Historically silver prices have been mostly ...
How Are Gold And Money Supply Related? by Tyler Durden Sun, 06/14/2020 - 13:00 Authored by Mike Shedlock via MishTalk, M2 Money Supply is surging. Will gold follow? M2マネーサプライが急増している。ゴールドはこれを追従するだろうか? Let's investigate an alleged relationship between gold and M2, a measure of money supply in the US. よく言われるM2(米国のマネーサプライ指標)とゴールドの関係について調べてみよう。 "There’s a clear correlation between the annual growth rate in M2 money supply and the price of the yellow metal. " 「M2の年率増加速度とゴールド価格の間には明らかな相関がある。」 Clear Correlation? 明らかな相関? The Tweet claims something different than my lead chart depicts. So let's investigate the above idea in other time frames. このツイートの主張は私が示す最初のチャートが示すものとは異なる。というわけでこのtweetの主張を別の時間フレームで見てみよう。 Gold vs Rate of Change in M2 Money Supply ゴールド vs M2マネーサプライの変化率 If we look at longer time frames, the rate of increase in M2 theory falls flat on its face....