Thursday, June 16, 2016

Central Banks policy mistakes

There will be a museum, in future, of Great Central Banking Errors. One of them will be to have introduced negative interest rates - in Europe and also in the other parts of the world, notably in Japan - and the other one, prominently displayed at the entrance of the museum of the Central Banking Policy Mistakes, will be a bust of Mrs. Yellen, a huge bust, because they've slashed the Fed Fund rate to next to zero in December 2008, and by 2010-2011, the economy was actually recovering quite well. That is when they should have increased rates, somewhat. But they waited, Mrs. Yellen, she waited precisely until December 2015, when it was obvious that the economy, and the global economy, was decelerating very badly, and most likely, entering a recession. So, in other words, she is increasing rates, exactly at the time when you shouldn't' be increasing rates.