This may seem a relatively minor episode. I am wondering however whether it could be far more important than it looks.
Are we beginning to reach the limit of multiple QEs?Switzerland and Britain are now at currency war
The Bank of England is straining every sinew to drive down sterling with quantitative easing, and what happens?
The Swiss National Bank trumps Threadneedle Street with an outright blitz of Gilt purchases. They just print it, and buy.
The Swiss and UK central banks are effectively fighting a "low intensity" currency war against each other. It has come to this.
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One awaits with curiosity to see what will happen when Japan – fifteen times the size – kicks in with its own nuclear plans to drive down the yen, and Asia follows suit.
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"Everybody is trying to weaken their currency at the same time. The Swiss have got away with it and now the Japanese want to try. The Scandinavians are pulling their hair out. The Turks are cutting rates even though the economy is overheating, and putting in credit controls instead because they don’t want the currency to rise."
"Policymakers are doing things that if you had suggested four years ago they would have put you in a straitjacket and thrown you in a cell. I don’t rule out anything any longer in this market. Desperate times lead to desperate acts," (David Bloom, currency chief at HSBC) said.
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Much of the world needs a lower currency and a higher interest rate structure to right the ship. But they can’t all have lower currencies.
I'm beginning to wonder whether we could be nearing the end game for all these monetary acts of desperation.
Shadowstats' John William put the date for incipient US hyperinflation at 2014. In reality of course nobody can't know for sure. And US$ may not be the first currency to enter the HI phase.
Lots of questions... no possible certain answer... BGBH!
(*)(*) Buy gold, be happy
