Central Banks board Money Helicopter
April 15, 2016
History repeats itself in Greece as a deal between lenders and Greece on a reform package nears. It would unlock new loans and pave the way for debt relief talks which are now within reach according to the European Commission’s Vice President. The target for a 3.5% of GDP budget surplus by 2018 is within reach according to Mr Dombrovskis, who was speaking to Reuters yesterday picketing on the periphery of the IMF meetings in Washington.
The IMF conversely have the exact opposite view. Christine Lagarde has questioned the numbers, saying Greek debt numbers don’t add up. Given that Greece is in exactly the same position it was several years ago and if anything a worse one, it is hard not to agree. “Currently, as envisaged, the debt is not sustainable and what is required is a debt operation.”
Fortunately for everyone a plan is brewing as the super central bankers come to the rescue, in the form of helicopter money. Which In essence is throwing wads of cash from a great height for the public to pick up and spend in Dixons. There are of course alternative terms for this form of “people’s QE” namely a means of debasing an already unstable global fiat money base. But in for a penny in for a pound. Mario Draghi was seen nodding away at these suggestions like Churchill with a brand new bone, so expect to see this pretty soon.
It would seem that history really is repeating itself, potentially to disastrous effect, as central bankers continue to not learn from their mistakes preferring the approach if in doubt throw the proverbial at it. As the pressure gauge rises and fear mounts and the debt cliff gets deeper central bankers are scrabbling about to do something or at least appear to. So they have gone back to their school text books and picked Milton Friedman to take accountability for the inevitable outcome of dumping a load more cash into the already saturated money base. The pretence continues.
There is next to nothing to report from the BoE announcements yesterday as Mr Carney deftly avoids the state of the UK and global economy instead talking about climate change. Best diversion tactic in the book and as brits if there is one thing we love talking about it is the weather.
Trying to end on a positive note Chinese GDP data came out in line with expectations, Industrial production and retails sales both outperformed. But the pessimists might say that these figures are fabricated, even more worryingly the Chinese Stats Office don’t believe them saying that the downward pressure on the economy cannot be underestimated adding that any good news is propped up by unsustainable policy measures. Begging the question when does a medicine become a drug?
Today announcements are thin on the ground, with US sentiment numbers being the highlight.
Have a great weekend.