Reply to: ZIRP becomes NIRP

[jamesbrown]

DOOMED!!!

Or temporarily BOOMED!!! if you're a dirty, property owning, spekulant, like Jezza.

[AtW]

DOOMED!!!

[PurpleGorilla]

I see things progressing like this:

ZIRP-->NIRP-->F(ecked)IRP

I reckon we're about 6mo-1yr away from FIRP.

Is that when we reach TULIRP?

[jamesbrown]

One thing leads inevitably to another. It's like pulling the wool out of a jumper.

And NIRP if adopted Worldwide will lead to the abolition of cash. ..

(primarily to implement capital controls to prevent liquidity crises when the banks suddenly find everyone naturally wants to withdraw all their cash)

But no doubt they'll try and justify it with the usual BS about needing to track terrorists' financial transactions and "if you have nothing to hide .."

Yep, you have people like Andy Haldane openly arguing for it.

[OwlHoot]

Draghi mentioned "unconventional measures" beyond NIRP.

One thing leads inevitably to another. It's like pulling the wool out of a jumper.

And NIRP if adopted Worldwide will lead to the abolition of cash. ..

(primarily to implement capital controls to prevent liquidity crises when the banks suddenly find everyone naturally wants to withdraw all their cash)

But no doubt they'll try and justify it with the usual BS about needing to track terrorists' financial transactions and "if you have nothing to hide .."

[jamesbrown]

Mummy, mummy pick n' mix, can I have a trillion-penny chew?

[DimPrawn]

Because it only works if you can keep up the confidence trick about QE being moderate and focused. Wheel in the smooth talking theatrics of Old Steady Hand Draghi. Look at the confidence he exudes! He's on top of it! Drama over. Mass unemployment reversed. It's all monetary, no structural or fiscal problems here. Right?

If you start printing money to pay down debts, all assets priced in that currency are immediately exposed as being worthless because the market cannot see the end game, and the currency will be completely debased. We're now on the verge of this confidence trick being exposed as precisely that.

[jamesbrown]

I get that bit. What I don't understand is why not print the money to write off debt? Take RBS. Why did UK PLC buy shares instead of just nationalising the bank (it was bankrupt) and 'print' the debt to cover retail deposits? I am guessing it would highlight 'sound money' isn't sound?

Because it only works if you can keep up the confidence trick about QE being moderate and focused. Wheel in the smooth talking theatrics of Old Steady Hand Draghi. Look at the confidence he exudes! He's on top of it! Drama over. Mass unemployment reversed. It's all monetary, no structural or fiscal problems here. Right?

If you start printing money to pay down debts, all assets priced in that currency are immediately exposed as being worthless because the market cannot see the end game, and the currency will be completely debased. We're now on the verge of this confidence trick being exposed as precisely that.

[The_Equalizer]

It's the banking free money, pump up stocks, pump up EU assets, buy toxic bank bonds in exchange for printed money, type of nonsense.

Most of this money leaks into property and stock markets.

I get that bit. What I don't understand is why not print the money to write off debt? Take RBS. Why did UK PLC buy shares instead of just nationalising the bank (it was bankrupt) and 'print' the debt to cover retail deposits? I am guessing it would highlight 'sound money' isn't sound?

[BrilloPad]

It's the banking free money, pump up stocks, pump up EU assets, buy toxic bank bonds in exchange for printed money, type of nonsense.

Most of this money leaks into property and stock markets.

And the rest ends up in tax havens.

[DimPrawn]

This is where it all becomes a bit hazy for me. Is this mass default on debt/huge job layoff kind of fecked, or buy shot guns/stock food version?

It's the banking free money, pump up stocks, pump up EU assets, buy toxic bank bonds in exchange for printed money, type of nonsense.

Most of this money leaks into property and stock markets.

[OwlHoot]

You'd think. Certainly, it has done so far. However, I don't think they've really grasped the confidence trick they're engaged in. It's a classic emperor/no clothes scenario and, at a certain point (basically now), it dawns on all the proles. Had they accepted the pain back in 2009/10, there's a good chance we'd have killed some of the old zombies, mitigated some of the new zombies (China), and emerged into a new business cycle. As it stands, there's going to be a massive crash in all asset prices (bar gold) at some point in the not too distant future. Perhaps you can make some money along the way, but there's no scenario in which this doesn't end up totally fecked. It's going to make this referendum look like a total waste of time, because the EU won't emerge from another crash.

Absolutely, although not being in the Euro may mean the UK is slightly less exposed. (But obviously we are largely dependent on financial services).

[The_Equalizer]

Perhaps you can make some money along the way, but there's no scenario in which this doesn't end up totally fecked. It's going to make this referendum look like a total waste of time, because the EU won't emerge from another crash.

This is where it all becomes a bit hazy for me. Is this mass default on debt/huge job layoff kind of fecked, or buy shot guns/stock food version?

[jamesbrown]

A lot of this money flood will end up in EU property.

You'd think. Certainly, it has done so far. However, I don't think they've really grasped the confidence trick they're engaged in. It's a classic emperor/no clothes scenario and, at a certain point (basically now), it dawns on all the proles. Had they accepted the pain back in 2009/10, there's a good chance we'd have killed some of the old zombies, mitigated some of the new zombies (China), and emerged into a new business cycle. As it stands, there's going to be a massive crash in all asset prices (bar gold) at some point in the not too distant future. Perhaps you can make some money along the way, but there's no scenario in which this doesn't end up totally fecked. It's going to make this referendum look like a total waste of time, because the EU won't emerge from another crash.

[AtW]

Draghi will soon be launching Euro version of R.I.P. Department