I can see that you and I are both unified in our belief that trickle down economics does not work. Then why are you for Keynesianism as practiced by Obama's Federal Reserve? QE and ZIRP are the mother of all trickle down economics. It has done nothing but enrich the 1% and impoverish the 99%.
It's posts like the one that you just made that make me realize how clueless people are. On the one hand you have the right instincts, but on the other hand your Obama and this Federal Reserve have sold you snake oil and you believe them that they are helping the 99% when nothing could be further from the truth. If the 99% were doing so well, why do you have so much massive unemployment among them? Why are more of the 99% than ever before in history on food stamps and welfare? Why do you have fast food workers up in arms to raise the minimum wage? Why are fast food workers increasingly the prime bread winners for their families, instead of fast food being mostly for teenage workers? Why have wages stagnated for the 99%, while the richest 1% have seen massive gains in their wealth and income?
We agree that trickle down doesn't work. Then stop voting for people like Obama and stop supporting this Federal Reserve and stop supporting Keynesianisms' QE and ZIRP. They all are supporting the mother of all trickle down economic policies right now and I agree with you, they do NOT work.
At times like these, it pays to get a little perspective. Exactly what about this global financial environment seems normal to you? This is one giant time bomb ticking and read to blow up.
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Debt Rattle Jul 1 2014: Lowest Rates in 500 Years
We all know that interest rates are at an ultra low level, whether it’s the rate on our savings accounts, our mortgages (though those are quite a bit higher, quelle surprise), central bank rates or yields on government bonds. All this, plus a watershed of global QEs, have led to stock exchanges at highs that have nothing at all to do anymore with the performance of the real economies they’re supposed to represent – and historically did.
Add to that that on stock exchanges, trading volumes are as ultra low as interest rates are, and from what trading is left, a substantial part is machines, i.e. high frequency, and we have a pretty clear idea of just how distorted our picture of our economies have become. We no longer have a clue what really happens, since we don’t know what is worth what. Share prices tell us nothing about a company’s performance, since any strength that is does appear to have left may as well stem from cheap credit borrowed at those same ultra low rates and used for stock buybacks and other purely financial moves.
Still, wouldn’t it be nice to know, from a historical perspective, exactly how low have interest rates become? I saw a nice example today on Dutch business channel RTL-Z. The yield on the 10-year bond in Holland was 1.476% today. Which is not just the lowest the Dutch paid in the past 25 years:
But even in the past 500 years:
You wouldn’t even expect to see such rates in even the most buzzing or otherwise extreme economies, let alone in one that’s as anemic, other than in stock markets, as ours are today. To wit: purchasing managers indices (PMIs) in Europe all fell again today. Perhaps we need to recognize that today’s economy is indeed a very extreme one.
And if you get the feeling from what’s going on that in order for the central banks to be able put lipstick on their pig, they have to kill it in the process, you’re not far off at all. They’ve largely killed bond markets, and not much is left of equity either, as we saw yesterday. The only thing that keeps the zombie pig going is debt, and more debt.
But we shouldn’t forget that the financial world, which can be made to – seem to – show “healthy” growth this way, demands more growth each year, that it’s an exponential growth rate we’re talking about. And that, even central banks cannot deliver. Not for long. |
