Can't see the obvious that monetary policy is failing to create Growth as the IMF and Others continue to Downgrade Global Growth Forcasts even after furiously implementing Record Low Interst Rates and in many case Negative Rates and QE.
So Rufus please confirm that "YOU" believe that Central Bank policy is working to create and sustain Global Growth and will lead to another boom.
Yes Rufus it is going rather smashingly isn't it!
Nice of you though to agree that Skammy is talking shit again.............
Is it affective? LOL
Well Well Well.............Been Faultering?
What was your argument again Dufus?
The countries that matter most to us are the USA and China. We are seeing inflation in the USA albeit it at low rates, and in Australia, and in China.
Inflation might go a little lower, it may go a little higher, but over time the CB's will achieve an average inflation rate that meets their target. The financial system isn't hocus pocus, magic, or something precious that we dig out of the ground - it's built by governments, banks, and central banks who retain the power to control it, even if understanding that is well beyond you.
Take risks - if you win you will become wealthy, if you lose you will become wise
The countries that matter most to us are the USA and China. We are seeing inflation in the USA albeit it at low rates, and in Australia, and in China.
Inflation might go a little lower, it may go a little higher, but over time the CB's will achieve an average inflation rate that meets their target. The financial system isn't hocus pocus, magic, or something precious that we dig out of the ground - it's built by governments, banks, and central banks who retain the power to control it, even if understanding that is well beyond you.
So your saying that current Monetary Policy Settings are Normal from a Historical Perspective?
Inflation is generally described as something like "a general increase in prices and fall in the purchasing value of money."
In theory you shouldn't need inflation, but in practice it is very difficult (almost impossible) to maintain an exact zero rate of inflation within a sovereign economy / monetary environment, and in fact due to supply/demand and other dynamic economic factors, if left to it's own devices the rate of inflation (or deflation) will tend to move around a lot, and quite unpredictably. So, because (as I will explain below) deflation is bad for promoting economic growth and activity, as is uncertainty around inflationary expectations generally, and additionally, consistently HIGH inflation, or out of control inflation, also wreck economies, it is seen as desirable by most governments / central authorities to target / maintain a low level of inflation, and keep it steady / under control as much as is possible, avoiding swings to higher rates of inflation or a fall into a deflationary cycle.
Deflation is the process whereby the cost of goods, services, labor etc falls over time rather than remains steady or rises. Deflation is generally very bad for promoting economic activity and growth, as in a deflationary environment the value of stored / saved money rise over time rather than falls - so why would you invest capital or spend money now when you can get more goods/services by waiting? Sounds good on the surface but in aggregate this situation is terrible for economic growth and economic activity - it creates a deflationary self-re-enforcing spiral that will cause an economy to contract terminally, reducing employment, earnings, wealth, livings standards, stifling new innovation and productivity improvements and so on.
Ultimately a reasonably steady moderate rate of inflation creates the "sweet spot" for promoting consumer spending / business investment (the later being required for ongoing innovation and productivity gains), economic growth and maximum economic activity in general (high velocity of money), employment prospects, wealth creation prospects, improving livings standards and so on.
So your saying that current Monetary Policy Settings are Normal from a Historical Perspective?
That is YOUR understanding is it not?
Central banks only came into being in the first half of the 20th Century. The "money" that a country had then depended on how much gold they held. The monetary system was completely different.
Exactly what do you call a "normal" monetary policy setting? The one they adopted for the great depression, the one for World War 2, or the one that applied in the seventies when inflation was screaming higher around 16%, or the one after the nineties when they had eventually managed to tame inflation?
You don't know do you. You just mimic what someone else said, who is just as uninformed as you.
Do you know how money is created, do you know the relationship between money and debt?
Take risks - if you win you will become wealthy, if you lose you will become wise
Ultimately a reasonably steady moderate rate of inflation creates the "sweet spot" for promoting consumer spending / business investment (the later being required for ongoing innovation and productivity gains), economic growth and maximum economic activity in general (high velocity of money), employment prospects, wealth creation prospects, improving livings standards and so on.
Property bubbles are great for boosting consumer spending, which promotes business investment. Some would even argue that without a property bubble, Australia would be toast, now that the commodity bubble has run its course.
Perhaps, if you had multiple brain cells, instead of one single, lonley, zombie brain cell, you would be capable of deducing typo's from foreign languages.
Central banks only came into being in the first half of the 20th Century. The "money" that a country had then depended on how much gold they held. The monetary system was completely different.
Exactly what do you call a "normal" monetary policy setting? The one they adopted for the great depression, the one for World War 2, or the one that applied in the seventies when inflation was screaming higher around 16%, or the one after the nineties when they had eventually managed to tame inflation?
You don't know do you. You just mimic what someone else said, who is just as uninformed as you.
Do you know how money is created, do you know the relationship between money and debt?
The story of central banking goes back at least to the seventeenth century, to the founding of the first institution recognized as a central bank, the Swedish Riksbank. Established in 1668 as a joint stock bank, it was chartered to lend the government funds and to act as a clearing house for commerce.
Want to re-evalute your "first half of the 20th century call?
When have interest Rates been Negative in the History of Central Banking?
Why does the US no longer Monitor M3 money supply?
DO you know who Glen Stevens is Dufus? Heres a hint hes NOT Andrew Wilson........
Quote:
What Happened? But then, unfortunately, things got more complicated. As we know, the materialisation of some of the risks that had built up in the financial system, followed by a financial crisis, deep recessions and slow recoveries, has meant that much more has been demanded of central banks in recent years, especially those in the major jurisdictions. This started when unusually large interventions were required to keep money markets functioning in Europe during the second half of 2007. Then, truly extraordinary actions were required in a number of jurisdictions following the failure of Lehman Brothers in September 2008. The complete breakdown of funding between intermediaries, the closure of important segments of the capital markets and the loss of public confidence in major financial institutions were more severe than any previous event over a number of decades. This required very forceful interventions by central banks, and by governments. A potential debt-default spiral had to be averted. Assets had to be liquefied. Private funding that had disappeared had to be replaced, in key instances, by central bank funding. And, not least, public confidence in deposit-taking institutions had to be restored, using guarantees and in some cases public injections of capital. This was not an idiosyncratic event; it was systemic. While the most acute problems were in the North Atlantic countries, the ramifications were global. Such actions, controversial as they were (and still are), were really the only course available to the decision-makers at the time. Lengthy retrospective critical evaluations, carried out in the (relatively) calm years afterwards, are the prerogative of historians, academics, journalists and legislatures. There is of course a lot of hindsight judgement in there, and in some cases not a little unfairness. The fact that they occur, though, marks the unusual territory that central banks and governments were forced to traverse. For this was more than just the injection of liquidity as a response to a brief panic. The threat to real economic activity was so dire that the stance of monetary policy had to be changed aggressively. Economic activity turned down very sharply, all around the world, in the closing months of 2008. Interest rates were slashed and in the major jurisdictions they quickly reached very low levels or, effectively, zero. This wasn't enough either to prevent many countries entering deep recessions or, subsequently, to generate reasonable recoveries. Hence, ‘unconventional’ measures were rolled out to try to provide additional stimulus. Central bank balance sheets, pre-crisis, were typically about 5–10 per cent of national GDP in size. (The Bank of Japan's was already larger than that, as a result of the use of balance sheet measures over the preceding decade.) They have since increased to around 25–30 per cent of GDP, with the Bank of Japan on a path that will take it to around 90 per cent.
Glen calls it EXTRAORDINARY ACTIONS WERE REQUIRED..............Sounds normal to Rufus?
Rufus' Retarded Logic...........
Rufus your just another spastic with no idea.........But i enjoy you trying to convince everyone otherwise.
Want to re-evalute your "first half of the 20th century call?
No I don't. Here is a quote from your link.
Quote:
The Federal Reserve System belongs to a later wave of central banks, which emerged at the turn of the twentieth century. These banks were created primarily to consolidate the various instruments that people were using for currency and to provide financial stability. Many also were created to manage the gold standard, to which most countries adhered.
The gold standard, which prevailed until 1914, meant that each country defined its currency in terms of a fixed weight of gold. Central banks held large gold reserves to ensure that their notes could be converted into gold, as was required by their charters. When their reserves declined because of a balance of payments deficit or adverse domestic circumstances, they would raise their discount rates (the interest rates at which they would lend money to the other banks). Doing so would raise interest rates more generally, which in turn attracted foreign investment, thereby bringing more gold into the country.
and
Quote:
The Genesis of Modern Central Banking Goals
Before 1914, central banks didn’t attach great weight to the goal of maintaining the domestic economy’s stability. This changed after World War I, when they began to be concerned about employment, real activity, and the price level. The shift reflected a change in the political economy of many countries—suffrage was expanding, labor movements were rising, and restrictions on migration were being set. In the 1920s, the Fed began focussing on both external stability (which meant keeping an eye on gold reserves, because the U.S. was still on the gold standard) and internal stability (which meant keeping an eye on prices, output, and employment). But as long as the gold standard prevailed, external goals dominated.
Unfortunately, the Fed’s monetary policy led to serious problems in the 1920s and 1930s. When it came to managing the nation’s quantity of money, the Fed followed a principle called the real bills doctrine. The doctrine argued that the quantity of money needed in the economy would naturally be supplied so long as Reserve Banks lent funds only when banks presented eligible self-liquidating commercial paper for collateral. One corollary of the real bills doctrine was that the Fed should not permit bank lending to finance stock market speculation, which explains why it followed a tight policy in 1928 to offset the Wall Street boom. The policy led to the beginning of recession in August 1929 and the crash in October. Then, in the face of a series of banking panics between 1930 and 1933, the Fed failed to act as a lender of last resort. As a result, the money supply collapsed, and massive deflation and depression followed. The Fed erred because the real bills doctrine led it to interpret the prevailing low short-term nominal interest rates as a sign of monetary ease, and they believed no banks needed funds because very few member banks came to the discount window.
After the Great Depression, the Federal Reserve System was reorganized. The Banking Acts of 1933 and 1935 shifted power definitively from the Reserve Banks to the Board of Governors. In addition, the Fed was made subservient to the Treasury. The Fed regained its independence from the Treasury in 1951, whereupon it began following a deliberate countercyclical policy under the directorship of William McChesney Martin. During the 1950s this policy was quite successful in ameliorating several recessions and in maintaining low inflation. At the time, the United States and the other advanced countries were part of the Bretton Woods System, under which the U.S. pegged the dollar to gold at $35 per ounce and the other countries pegged to the dollar. The link to gold may have carried over some of the credibility of a nominal anchor and helped to keep inflation low.
The picture changed dramatically in the 1960s when the Fed began following a more activist stabilization policy. In this decade it shifted its priorities from low inflation toward high employment. Possible reasons include the adoption of Keynesian ideas and the belief in the Phillips curve trade-off between inflation and unemployment. The consequence of the shift in policy was the buildup of inflationary pressures from the late 1960s until the end of the 1970s. The causes of the Great Inflation are still being debated, but the era is renowned as one of the low points in Fed history. The restraining influence of the nominal anchor disappeared, and for the next two decades, inflation expectations took off.
The inflation ended with Paul Volcker’s shock therapy from 1979 to 1982, which involved monetary tightening and the raising of policy interest rates to double digits. The Volcker shock led to a sharp recession, but it was successful in breaking the back of high inflation expectations. In the following decades, inflation declined significantly and has stayed low ever since. Since the early 1990s the Fed has followed a policy of implicit inflation targeting, using the federal funds rate as its policy instrument. In many respects, the policy regime currently followed echoes the convertibility principle of the gold standard, in the sense that the public has come to believe in the credibility of the Fed’s commitment to low inflation.
A key force in the history of central banking has been central bank independence. The original central banks were private and independent. They depended on the government to maintain their charters but were otherwise free to choose their own tools and policies. Their goals were constrained by gold convertibility. In the twentieth century, most of these central banks were nationalized and completely lost their independence. Their policies were dictated by the fiscal authorities. The Fed regained its independence after 1951, but its independence is not absolute. It must report to Congress, which ultimately has the power to change the Federal Reserve Act. Other central banks had to wait until the 1990s to regain their independence.
You're too much of an idiot to waste more time with Simon.
Take risks - if you win you will become wealthy, if you lose you will become wise
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