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His argument is that economies that rely too heavily on monetary policy are unsustainable. Furthermore, he is suggesting that we are nearing a tipping point wh
by endswapper 10y ago
His argument is that economies that rely too heavily on monetary policy are unsustainable.
Furthermore, he is suggesting that we are nearing a tipping point when there is abundant competition for meager returns that should be temporary. The traditional roles and functions of the bond market in economies around the world have been perverted by policy.
At some point investors will exhaust the risk threshold in bond markets, and arguably, tap less traditional markets like Bitcoin simply because they are a counterpoint to the bond markets.
- michaelchisari 10y agoHow are economies that literally have no monetary policy a better alternative, though?
- jbarham 10y agoQuoting from the article: "At some point investors – leery and indeed weary of receiving negative or near zero returns on their money, may at the margin desert the standard financial complex, for higher returning or better yet, less risky alternatives."
- endswapper 10y agoI'd argue that they are not. It's more about the proper measure. Monetary policy is a tool attempting to hit a moving target.
- mattnewton 10y ago> Monetary policy is a tool attempting to hit a moving target By sweeping the ice in front of the economy-puck with a toothbrush. There is an effect, just a lot of other stuff has a big effect too...
- WalterBright 10y agoThe US had no monetary policy for the first 100 years of its existence, going from subsistence farming to superpower.
- enraged_camel 10y agoNitpick: the US did not become a superpower until World War 1, when it dramatically expanded the size of government and the military.
- thesimpsons1022 10y agoeven then, it's true super power status was achieved after ww2 when we did have the Fed. not a nitpick, it is a central part of his false premise.
- cinquemb 10y agoHow much of such super power status was derived from Fed itself vs a system that was able to distribute and allocate resources more efficiency than the time before? One could argue that the Fed (and other central banking institutions), compared to times before was that more efficient system, but idealistically, efficient systems are not bounded by the present situation, just temporarily constrained by such. And as people like Bill Gross (who cofounded PIMPCO) are starting to publicly state in some form another, is loosing its effectiveness when it comes to managing resource allocation beyond the state we are at. There are a whole host of human endeavors that are not undertaken (think infrastructure investments) because its more profitable in the short term for large institutions to use their near zero interest credit lines on financial markets, but in the long term are blinded to opportunities that can only come from more efficiency in sectors like energy/mining/transportation.
- thesimpsons1022 10y agoi never made that claim. not sure why all of a sudden you're changing the subject. I was simply responding to the claim of " The US had no monetary policy for the first 100 years of its existence, going from subsistence farming to superpower. "
- cinquemb 10y ago
- EdHominem 10y agofwiw, gold doesn't have an economic policy either. But the difference is that with fiat, "no policy" means they'll do whatever they want in the future. With cryptocurrency no policy is more like an unbreakable policy of no tampering.
- empath75 10y agoJust like any other commodity.
- usgroup 10y agoAlmost. I think his argument is that investors will exhaust the risk threshold in all markets. Presently the bond crowd has hit the equity markets, however at some point the music has to stop and he doubts they'll have fixed the underlying growth problem by the time it does.