Rebalanced Right Into Dual Circulation By (Lack Of) Global Growth Prospects

The Federal Reserve is the current contender for taking the crown from the Japanese. Central bankers, in particular, are like hoarders; they never throw any policy idea away. It doesn’t matter how many times it fails, or how spectacularly. Japanese policymakers have stuck with QE for now double-digit attempts without anything to show for it.

Instead, whichever thing gets rebranded. It’s easy just to give it a different name and treat the public like morons: in 2013 an additional Q was appended to make it QQE, and then in 2016 three more letters were included, YCC, to add to it even more condescending disrespect. Or, as the Japanese have exemplified best, they change up some of its inconsequential details: buying ETF’s rather than JGB’s, as if activity in a different asset class will make a lick of difference from any act of buying.

The Fed over the last year has given Japan a run for its non-monetary money. There was last fall’s not-QE, a clever way of remarketing in true New York style. Then in 2020 all sorts of new assets being targeted for purchase, even though the end result of any and all purchase programs is still just bank reserves (as well as, more importantly to policymakers, glowing press reports on both purchases and the bank reserves they lead to).

Eurodollar University’s Making Sense; Episode 28 (Only 1 Part): Bank Reserves & Brent Johnson

There is now, apparently, a third entrant in the increasingly crowded field for insanity supremacy. Admitting failure is not something any global official entity appears capable of, so, as you should expect, there had to be a Communist entry into the race.

China’s economy slowed – “unexpectedly” – as Euro$ #2 erased any last potential for legitimate global recovery in the wake of the first global financial crisis (dollar shortage). Chinese fortunes were particularly susceptible since the system had been raised from its backward, simplistic agrarian basis through several decades of globalization almost exclusively (financed entirely by a favorable eurodollar system; or, as Western Economists struggled to explain it, “good luck”).

Not only had this vulnerability played the decisive role in Euro$ #3 singling out China and the rest of the EM’s for their monetary beatings, as usual confused policymakers (to which the West yields no monopoly) vowed to do something about it. What they came up with was called “rebalancing.”

No biggie, the Communists declared China would grow itself and in doing so getting the Western media to uncritically swallow the word. Instead of producing the world’s goods – because the world wasn’t demanding more goods from anyone – the Chinese would develop their own internal markets for modern services and the like.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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