I rarely insert work of another economist here, but the article below, from a source I’ve respected and followed for decades is profound. It attempts to elucidate our current global financial dilemma and the ominous inability of leading monetary authorities to deal with the situation. This moment does not yet appear to be a time for retreating into the unappealing and illusory safety of government bonds. Yet the menu of viable investment solutions appears more challenging than it has been in years. There is always an investment opportunity to be found, and I’m always looking for that opportunity for our clients. READ THE ARTICLE
The Great Inflation Delusion by Edward Yardeni
The Fed, the European Central Bank (ECB), and the Bank of Japan (BOJ) came up with lots of headline-grabbing shock-and-awe programs over the past 10 years in reaction to the Great Financial Crisis. Over time, they seemed to lose their effectiveness and ability to shock or awe.Nevertheless, the US economy had improved sufficiently by 2014 that the Fed terminated Quantitative Easing (QE) in October 2014 and started very gradually to raise interest rates in late 2015. However, by the end of July 2019, the Fed was lowering the federal funds rate again. The ECB terminated its QE at the end of 2018 and was expecting to raise interest rates by mid-2019. However, by July 2019, the ECB signaled that it would most likely lower its deposit rate further into negative territory in September, and that more QE might be ahead. The BOJ has yet to even consider normalizing monetary policy, and continues to expand its balance sheet. By the summer of 2019, the major central banks seem to have run out of new tricks.
The central bankers have been fighting powerful forces of deflation. READ THE ARTICLE
