Jan 31, 2020
Welcome to Finance and Fury, The Furious Friday edition
I often wonder – Why the Fed/Central banks continue with polices that create a massive misallocation or resources and are hurting the economy more than helping – well – what If they cant stop or a collapse might follow
Central banks are focusing on inflation – but money printing has resulted in inflation of asset prices – not in consumer economy – no real business growth (despite markets going up) – limited wage growth and affordability issues – a bit of a mess
Situation, where the policy response is to lower interest rates to try to boost CPI through increased ability to spend more and businesses, can increase how much they sell for – i.e. basket of goods goes up – but doesn’t work as the printed money never ends up in the equation, as velocity of spending is needed- if the money is in the financial system through sinking money into investments – then velocity of that under current model and measurement system – velocity is non-existent on those funds
– they directly, and the USA being the economic powerhouse, and indirectly as well – control the economy now
– the bank of commercial banks where if one was suffering liquidity issues – CB would lend to commercial banks –
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