If ‘It Sounds, Looks And Smells Like Debt Monetization’, It’s A Duck.

If ‘It Sounds, Looks And Smells Like Debt Monetization’, It’s A Duck.

Even as risk assets remain broadly supported by ostensibly upbeat trade headlines and the prospect of another coordinated reflation effort from global central banks, concerns about the capacity of monetary policy to respond to any meaningful downturn continue to pervade the market narrative. Indeed, that's the irony of risk assets rallying on the "epic" dovish pivot from developed market central banks and the credit creation "binge" in China - this nascent reflation effort has added a sense of
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4 thoughts on “If ‘It Sounds, Looks And Smells Like Debt Monetization’, It’s A Duck.

  1. My head is spinning. If governments keep overspending, and central banks keep printing money to monetize the debts, why do we not see inflation and rising long bond rates?

    1. w2j2, Remember in the calculation that they assume the consumer will make perfect substitutions. For example, if steak prices jump then you would trade down to pork chops and that is what gets added in.
      The SA

  2. I think we aren’t seeing inflation because of the way it is calculated and also because the cost of capital is so low many marginal companies are left to produce. Finally, the structural shift to technology (low or zero marginal cost and the inherent productivity enhancing nature (theoretically) and from older higher cost workers to younger lower cost workers.

    But consumer inflation is understated (seeing my monthly bills) and asset price inflation is very high (stocks, bonds, housing, art, vintage cars, etc).

    We are all getting screwed and it only will get worse sadly.

  3. All those Subpar “Bonds” we bought in June of 2015, with 3x leverage against the Future;s’ market are performing quite well, I believe the payout is now 250,000,000 per bond.

    This is called “Old Math” Ladie;s’ and Gentlemen.

    Read “Euler”

    Read “Leonhard Euler”


    stay in touch


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