Facebook icon LinkedIn icon Twitter icon A A Daniel Lacalle on Why Central Banks are Trapped

 This is something that is not really understood at all.  It is that it is impossible to properly lift interest rates as a tool of monetary policy.  The global population has been paying themselves through asset appreciation driven by cheap money.  It is not going to be possible to collateralize that debt in any form if rates rise even mildly.  We really have to depend on slow capital repayment over decades from cash flow.

This means that we now need an increasing  wage packet and that is also driven by the present reset taking place on pricing in goods and services.   There is natural distortion of course which needs to be countered by establishing a base four hour shift to mop up displaced labor and to tie it to cost of essential services such as base livings.

The central banks are now find it harder to end as well simply because their banks have become too big and this problem is not understood at all.   Recall that 2008  ended with the disappearance of several large banks and a huge contraction in assets rather that a breakup into many smaller banks who could engage in work outs and market support operations all of which would have fueled a brisk recovery...

..

Daniel Lacalle on Why Central Banks are Trapped

07/06/2018Daniel LacalleJeff Deist


Daniel Lacalle joins Jeff Deist to discuss how and why central banks are trapped, stuck with ultra-low interest rates and expansionary policies that produce astonishingly little real growth. This is a hard-hitting and sober look at what rising interest rates will mean, why academics and bankers are so clueless about the monetary side of financial markets, and why Austrians need to offer real-world

https://mises.org/library/daniel-lacalle-why-central-banks-are-trapped