{"id":152,"date":"2010-12-20T11:33:58","date_gmt":"2010-12-20T11:33:58","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=152"},"modified":"2021-02-18T08:55:19","modified_gmt":"2021-02-18T08:55:19","slug":"qe2-money-madness","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness","title":{"rendered":"QE2 Etc\u2026 It’s Money Madness"},"content":{"rendered":"
\"Quantitative<\/a>

Quantitative Easing<\/p><\/div>\n

The massive “printing” of money and supply of virtually-free credit by central banks is destroying the foundations of valuation on which investment choices are based.<\/p>\n

That\u2019s why we are now experiencing such oddities as investors\u2019 buying index-linked bonds to lock in a negative return. That\u2019s why bonds and equities and gold have all been rising together \u2013 they are not offering conflicting forecasts about deflation or inflation, merely rising together on the floodtide of money and credit.<\/p>\n

The policy has been likened by strategist Don Coxe to the battlefield use of heroin for wounded soldiers \u2013 necessary in the short term, but creating a different major problem of weaning patients off the pain-killer before they become addicts, unfit for anything.<\/p>\n

\u201cThere is no historic precedent for such sustained stimulus, which means no one can predict what longer-term damage it will inflict.\u201d<\/p>\n

There is increasing evidence that central bank officials are aware of the serious risks of the policy and are divided, in particular, over the latest bout of massive money \u201cprinting\u201d by the US Federal Reserve.<\/p>\n

The Japanese, who tried it for two decades, know it doesn\u2019t work \u2013 in fact it delays economic recovery by keeping zombie banks and uncompetitive companies in business, penalizing their efficient competitors. In fact they believe in the opposite policy of squeezing credit to prevent bubbles in asset prices.<\/p>\n

Wolfgang Sch\u00e4uble, the German finance minister, says another round of something already tried and seen to fail isn\u2019t going to solve anything. \u201cUS policy is clueless.\u201d<\/p>\n

Senior central bank officials privately concede \u201cthey don\u2019t believe in the policies they have adopted, but don\u2019t dare speak out against them,\u201d Henny Sender reports in the FT.<\/p>\n

\u201cMany economists believe that zero interest rate policies actually discourage spending, since individuals have to save all the more given paltry returns\u201d on their savings. \u201cThat in turn undermines the policies the central bank wishes to support.\u201d<\/p>\n

Even at the top, there is open dissent. Thomas Hoenig, boss of the Kansas City Fed, and a member of the Fed\u2019s policymaking committee, voted against QE2 because of the risk it could lead to future inflation and fuel another boom\/bust cycle.<\/p>\n

He favours a get-tough path to economic recovery, with higher interest rates, removal of \u201cextremely inefficient\u201d subsidies for housing and a \u201cgreatly reduced role\u201d for government in housing finance.<\/p>\n

However, for the next few months, perhaps years, we must assume that the money madness will continue. And make our personal investment decisions accordingly \u2013 while never losing sight of the explosive risks that lie in the future as a consequence of inflating a bubble worse than the last.<\/p>\n

CopyRight \u2013 OnTarget by Martin Spring<\/p>\n","protected":false},"excerpt":{"rendered":"

The massive “printing” of money and supply of virtually-free credit by central banks is destroying the foundations of valuation on which investment choices are based. That\u2019s why we are now experiencing such oddities as investors\u2019 buying index-linked bonds to lock in a negative return. That\u2019s why bonds and equities and gold have all been rising together \u2013 they are not offering conflicting forecasts about deflation or inflation, merely rising together on the floodtide of money and credit.<\/p>\n","protected":false},"author":1,"featured_media":709,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"amazonpipp_noncename":"","amazon-product-isactive":"","amazon-product-single-asin":"","amazon-product-content-location":"1","amazon-product-content-hook-override":"2","amazon-product-excerpt-hook-override":"3","amazon-product-singular-only":"","amazon-product-amazon-desc":"","amazon-product-show-gallery":"","amazon-product-show-features":"","amazon-product-newwindow":"2","amazon-product-show-list-price":"","amazon-product-show-used-price":"","amazon-product-show-saved-amt":"","amazon-product-timestamp":"","amazon-product-new-title":"","amazon-product-use-cartURL":"","amazon_featured_post_meta_key":"","_amazon_featured_alt":"","amazon-product-template":"default","footnotes":""},"categories":[8,3,9],"tags":[31,10,14],"class_list":["post-152","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-investments","category-news","tag-credit","tag-inflation","tag-money","has_thumb"],"yoast_head":"QE2 Etc\u2026 It's Money Madness - TheBizSense Views<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"QE2 Etc\u2026 It's Money Madness - TheBizSense Views\" \/>\n<meta property=\"og:description\" content=\"The massive “printing” of money and supply of virtually-free credit by central banks is destroying the foundations of valuation on which investment choices are based. That\u2019s why we are now experiencing such oddities as investors\u2019 buying index-linked bonds to lock in a negative return. That\u2019s why bonds and equities and gold have all been rising together \u2013 they are not offering conflicting forecasts about deflation or inflation, merely rising together on the floodtide of money and credit.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness\" \/>\n<meta property=\"og:site_name\" content=\"TheBizSense Views\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/www.facebook.com\/TheBizSense\" \/>\n<meta property=\"article:published_time\" content=\"2010-12-20T11:33:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-02-18T08:55:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"600\" \/>\n\t<meta property=\"og:image:height\" content=\"400\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"bizadmin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"bizadmin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness\"},\"author\":{\"name\":\"bizadmin\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\"},\"headline\":\"QE2 Etc\u2026 It’s Money Madness\",\"datePublished\":\"2010-12-20T11:33:58+00:00\",\"dateModified\":\"2021-02-18T08:55:19+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness\"},\"wordCount\":460,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2013\\\/08\\\/print.money_.600.jpg\",\"keywords\":[\"credit\",\"Inflation\",\"Money\"],\"articleSection\":[\"Featured\",\"Investments\",\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness\",\"name\":\"QE2 Etc\u2026 It's Money Madness - TheBizSense Views\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2013\\\/08\\\/print.money_.600.jpg\",\"datePublished\":\"2010-12-20T11:33:58+00:00\",\"dateModified\":\"2021-02-18T08:55:19+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/investments\\\/qe2-money-madness#primaryimage\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2013\\\/08\\\/print.money_.600.jpg\",\"contentUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2013\\\/08\\\/print.money_.600.jpg\",\"width\":600,\"height\":400,\"caption\":\"Quantitative Easing\"},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#website\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/\",\"name\":\"TheBizSense Views\",\"description\":\"Business Viewpoints and Forecasting\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\",\"name\":\"bizadmin\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/author\\\/bizadmin\"}]}<\/script>","yoast_head_json":{"title":"QE2 Etc\u2026 It's Money Madness - TheBizSense Views","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness","og_locale":"en_US","og_type":"article","og_title":"QE2 Etc\u2026 It's Money Madness - TheBizSense Views","og_description":"The massive “printing” of money and supply of virtually-free credit by central banks is destroying the foundations of valuation on which investment choices are based. That\u2019s why we are now experiencing such oddities as investors\u2019 buying index-linked bonds to lock in a negative return. That\u2019s why bonds and equities and gold have all been rising together \u2013 they are not offering conflicting forecasts about deflation or inflation, merely rising together on the floodtide of money and credit.","og_url":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness","og_site_name":"TheBizSense Views","article_publisher":"http:\/\/www.facebook.com\/TheBizSense","article_published_time":"2010-12-20T11:33:58+00:00","article_modified_time":"2021-02-18T08:55:19+00:00","og_image":[{"width":600,"height":400,"url":"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg","type":"image\/jpeg"}],"author":"bizadmin","twitter_misc":{"Written by":"bizadmin","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#article","isPartOf":{"@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness"},"author":{"name":"bizadmin","@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713"},"headline":"QE2 Etc\u2026 It’s Money Madness","datePublished":"2010-12-20T11:33:58+00:00","dateModified":"2021-02-18T08:55:19+00:00","mainEntityOfPage":{"@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness"},"wordCount":460,"commentCount":0,"image":{"@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#primaryimage"},"thumbnailUrl":"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg","keywords":["credit","Inflation","Money"],"articleSection":["Featured","Investments","News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness","url":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness","name":"QE2 Etc\u2026 It's Money Madness - TheBizSense Views","isPartOf":{"@id":"https:\/\/www.thebizsense.com\/views\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#primaryimage"},"image":{"@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#primaryimage"},"thumbnailUrl":"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg","datePublished":"2010-12-20T11:33:58+00:00","dateModified":"2021-02-18T08:55:19+00:00","author":{"@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.thebizsense.com\/views\/investments\/qe2-money-madness#primaryimage","url":"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg","contentUrl":"https:\/\/www.thebizsense.com\/views\/files\/2013\/08\/print.money_.600.jpg","width":600,"height":400,"caption":"Quantitative Easing"},{"@type":"WebSite","@id":"https:\/\/www.thebizsense.com\/views\/#website","url":"https:\/\/www.thebizsense.com\/views\/","name":"TheBizSense Views","description":"Business Viewpoints and Forecasting","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.thebizsense.com\/views\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713","name":"bizadmin","url":"https:\/\/www.thebizsense.com\/views\/author\/bizadmin"}]}},"_links":{"self":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/comments?post=152"}],"version-history":[{"count":5,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/152\/revisions"}],"predecessor-version":[{"id":927,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/152\/revisions\/927"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/media\/709"}],"wp:attachment":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/media?parent=152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/categories?post=152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/tags?post=152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}