Interest Rates

[malleefarmer]

wonder why australias treasury has a different opinion than most in the world

[fjlip]

How could any country afford a war? We are all broke. Arms stocks are crazy all over the planet, no more required. The young who have always been cannon fodder, would refuse to fight. Economies all so connected and dependent would crash in a war. More money lost from trade than could ever be gained.

[errolanderson]

the only way out of this is a drop in everyone's standard of living which no politician or central banker will ever talk about.

agree war would just make matters worse.

to me, there is a distinct risk of a deflationary recession/depression ahead

easy money is what is turning the wheels of the american economy right now, not real growth.

[mbdog]

dunno Errol...don't think drop in standard of living is a given. Drop in equity/net worth perhaps but target I think is our irrational labour component in cost of goods/equity bubble. Capped-lesser earnings are inevitable due to open/freer trade/competition but the net "standard of living" can certainly go sideways. Convincing the masses to accept less through time, that they are going to be alright in an overall deflationary/competitive environment is going to be the challenge....but I still think everyones going to take an equity haircut. Thats coming...IMO the speed in which it happens is the wildcard. I suspect slow and steady for some time.

[errolanderson]

Equity haircut = drop in standard of living

If economic growth in the U.S. was real without the crutch of the Fed, I would buy into your argument.

[Rareearth]

I think we are on the same page Errol, with some differing terminology or mechanisms. Governments have not a string but a rope pulling or holding the money printers. The govt has stabilized everything through QE, this will continue, because they have no choice ( they can't increase interest rates for reasons in other posts).
The bubbles arn't filling with air it's nitrogen or some other explosive. When this bubble breaks it will creat more destruction than ever in modern economies. What needle breaks the bubble, war, black swan, stock market collapse (computer sell-stop loss triggers) or other unknowns.
- all trade will stop, similar to 2008, while every ones tries to limit risk. Hope this doesn't last too long, 2008 was a small event. Everything that resulted will be magnified many times, the blue print is in place.

[mbdog]

I simply disagree with such a broad statement about standard of living.

[errolanderson]

mbdog . . . society is riding the wave on debt

[mbdog]

yes I agree generally

[wmoebis]

How much increase in int. rates could we stand? Before total collapse.

[errolanderson]

A sniff of a rate rise could certainly spook investors.

Carney (Bank of England) is hinting to raise rates just like he said when he was head of the Bank of Canada. But he never followed through. Maybe more central banker posturing than reality.

[cottonpicken]

Deflation,if they allow it,would collapse the whole thing,every bank would be toast,business would collapse,households collapse governments collapse,its the scariest rabbit hole there is.