So it is a fact.
That we are all subjects of central banking experiments so the central bankers can all leave at the end of their term to write textbooks and their memoirs.
Academics have acknowledged that central banks are caught in a high stake game with results yet known because this is outside the textbook.
The story has taken a turn with new characters in it. Characters, previously the bystanders, have now taken centrestage, starting with Japan and the BOJ.
The New Plot
Fed : Monetary Policy to target unemployment rate of 6.5%.
BOJ : Monetary policy to target inflation rate 2%.
ECB : Austerity.
PBOC : Reform.
I am missing something here. They are all going off tangent and going the Me-First route.
Central banks and governments doing their quick fixes to keep the populace happy and holding off the bad numbers. Only 1 common theme amongst them all. Spend and spend. Print and print. One for all and all for one.
From a WSJ post.
The Bank of Japan‘s more stimulatory stance could be a mixed blessing for Asia, potentially providing productive investment flows into the region but also providing fuel for future asset and debt bubbles.
Combined with massive quantitative easing programs by the U.S. Federal Reserve Board and the Bank of England, and set against a backdrop of historically low interest rates in developed countries, the BOJ decision highlights the magnitude of potential capital flows into emerging Asia.
And that is why I am proud of good old Singapore ! Same government, same policies, same people over the years, sharing our wealth with the world.
Buy SGD today and we promise a guaranteed return of at least 2% against the NEER basket of other currencies (USD, EUR, MYR, IDR, JPY, HKD, THB, TWD, KRW, CNY, AUD, INR, PHP, GBP, CHF), currency to strengthen against all odds ESPECIALLY IF OUR INFLATION IS HIGH. At the same time, our interest rates will GO LOWER with the HIGHER INFLATION which is NOT A LAME BRAIN concept especially if you consider we do not have monetary policy. When SGD strengthens, the authorities have to step in to buy USD against SGD and neutralise it by injecting the SGD back into the system which lowers short end rates to a minimal or negative.
Doesn’t low rates fuel more inflation ? Considering that all the global central banks are printing and the hot money will pour onshore ? Interest rates go lower and lower but the foreigner does not care. Even if you pay him 0% on his bonds/property/stocks, he will still earn 2-3% on the SGD that the country promises for appreciation when he converts his money back.
It has been going on for too long and now locals have ended up with an uncompetitive export economy, highly reliant on cheap foreign workers, unaffordable housing and low birth rates. Foreign investors love it ! More please because the more ineffective they are against inflation, the more their investments will appreciate as the SGD dollar strengthens.
We are in a currency war here. Singapore has set itself up as a sitting duck. But do not worry. Australia is in worse shape. Article coming soon !!
Meanwhile, harken the Singapore Siren’s call, cometh on board, free lunch for all !