Friday, October 29, 2010


I have a few good enough calls during the past few years, but I assign one of them to any sort of prescient, brightness or knowledge.? Most of these cases are simply the result I've studied a large part of the history of the market.

? When I said that the housing bubble has been the greatest risk to the markets of capital in 2006, it is largely due to the fact that the action of U.S. House prices was almost completely identical to the residential real estate in the Japan in the 80′s.? When I said, banks were probably a purchase on March 2009 10th it was mostly because I had studied the history of recent declines in class active (Nasdaq dropped by 93% from its peak in 2001 - same exact percentage lower bank sector decline).? When I said, that the rescue plan was likely to have a dummy impact on the recovery of main street, it was almost entirely due to the fact that the Japanese had implemented a similar plan in the 90′s with poor results.? Do not shine.? It is fair to the research.Anyone can the faire.Mais, here we are rethinking the impact of the quantitative easing when we have historical precedent, and in spite of poor outcomes most investors and policymakers seem to say "this time is different."?

? Of course, the theory behind QE revolves around the idea that the Central Bank may reduce interest rates in the long term.? If they can reduce the rate that they can make more attractive asset, they can create an effect of refinancing, they can encourage borrowing/lending and they can relieve pressure on debtors.? It theoretically help stimulate demand comprehensive and sustained recovery.It is that a single problem with any cela.Il is no historical evidence that QE actually works at low interest rates.? I've already highlighted two famous cases - the United States and Japan where interest rates is passed in the borrowing programs remained low and economies remained low.

? An instance that is less well documented, however, is the case of the quantitative easing in the United Kingdom.? The following table shows the duration of the programme and the effect of interest rates:?

? The conclusion is obvious.? Not reduced to a program of quantitative easing interest rates.? In fact, in all three cases I emphasized interest rose to program rates.? It is very important to understand because without the expected interest rates decline, there is simply no argument in favour of this policy.? There is no effect of refinancing, there is no reduced borrowing rates at, there is no fundamental change in the economy.? That is why, after all three cases, economies remain (ed) very weak.EQ is simply an exchange of assets Institute modifies private net financial assets.? It does reduce rates. It does create jobs.It does not increase aggregate demand.

So far, the only thing that QE appears to be is higher drive without being supported by underlying fundamental change in the .c asset prices ' is largely due to the psychological impact of EQ and the lie that QE = "printing money".So far, the psychological impact of QE has backfired on the Fed as inputs have if is past and the American Federal Reserve began inadvertently to reduce the margins of the undertaking if the objective here is to keep the "asset prices higher than they would otherwise be" then the Fed seems to be winning their bataille.Malheureusement, there is evidence showing that there is a fundamental reason why QE would justify such an approach. In fact, the market collapses following the end of all three main historical EQ programs seems to prove that it is bordering ponzi Central Bank and nothing more.

Mr. Bernanke appears to be ignoring the simple historical facts. And those who ignore history are destined to repeat.


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