VECKA 13
Fredag
29
Mars
BT-annons
2020-05-15
photo


Money creation
Guru corner, väl valda citat.

GURU CORNER
AUD/USD broke above 0.65 after recovering from a setback in global optimism last week. The resilience in global equities may continue to provide steam to the Australian dollar which (as we highlighted in recent publications) is well poised to keep leading the pack, if sentiment continues to improve, due to a number of factors: a) low domestic contagion, b) not too-dovish central bank (Reserve Bank of Australia has kept tapering), c) resilience in iron ore prices and Chinese demand.

In a world of scarcity, there are no solutions, only tradeoffs.

At some point in early April, the official narrative switched form "don't let hospitals get overwhelmed" to "you're locked down for years until there's a vaccine."

Doing things for money does not justify moral condemnation, unless using money to support your family, live up to the agreements you have made, and to try not to burden others justifies moral condemnation.

Governments can increase GDP numbers simply by spending more, and this can reduce debt as a percentage of GDP. But what if we calculate GDP using only private spending?

Reserve Bank Credit (or the sum total of the Fed’s interest-bearing assets) rose to $6.664 trillion, up $66 billion from last week’s reading. While that sequential increase is well below the $146 billion rise seen a week ago, the three-month annualized growth rate jumped to 511% from 446% on April 29. Since August, Reserve Bank Credit is up a cool 79%.

More money creation doesn't necessarily mean higher consumer prices. But, if production is falling while consumers use their stimulus checks to buy food and clothing, we could see noticeable price inflation.

The oil industry became one of the main areas of malinvestment in the years of massive liquidity and low yields. This perpetuated excess capacity and kept inefficient companies unnecessarily alive. 

 
Göran Högberg

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