Central bankers are thinking that they are God. They are also suffering from the God complex. At the same time are they freaking out. The Coronavirus is hitting the economy very hard. So the interest rate was cut. Although several members of the central bank said that future rate cuts will not work. The balance sheet is pumped up to the maximum. Now the unexpected happens. The Coronavirus is hitting every country.
So let’s face it. The economy is doing great. The economy is growing record low unemployment. So what does the emergency rate cut tells you? Wel lit tells you the situation is much worse than they tell you.
The world is full of monetary stimulus. A stimulus that didn’t work in Japan. Is breaking up the Eurozone. Japan is seeing the failures of these policies. With lost generations. So what is likely to happen?
Well, they keep pumping up the bubble. While the supply side of the economy is going down at the moment? Well, they came up with the wrong response. They did so with the .com bubble. All the stimulus went into the real estate market.t which caused the 2008 collapse.
No one will invest anymore. In the Eurozone the there the negative interest rates are not working. There is no increase in borrowing demand.
What will happen when the panic comes to the 14 Trillion in bonds with negative yields? That will cause a massive shortfall.
The panic will cause an implosion on the bond markets. The bond market will dry up and how will we finance the deficit and stimulus programs?