Since 2008 central banks around the world became a real catastrophe to the real sector. Governments changed their focus from the real economy to the money economy. But the problem is that central banks can't provide growth in a long-term, of course, they can inject money into the economy, but it works only in a short-term. Look at Europe: no one cares about the manufacturers, no one cares about farmers - all that they do is just raising and lowering (mostly lowering) interest rates. The real problem is much deeper, they need to make reforms, they need innovations. But no one cares, let's just cut interest rates. How far can it go? Honestly, I'm waiting for the next financial crisis, because the system did not learn its lessons. They cure non-financial problems with only financial manipulations.
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The problem with the central banks.
- Thread starter felixbocharov
- Start date
Haha, if there's one thing they do care about in Europe, it's farmers, especially the French ones. Common Agricultural Policy is more than 40% of the EU's annual budget.
central bankers and the politicians believe that central bankers can repeal the fluctuations of the business cycle. they can repress for it for a short period of time. but eventually, hopefully after the next election, the balloon busts and the down cycle is magnified way beyond what it would have been had the government not mucked up the economy with low interest rates and deficit spending,Since 2008 central banks around the world became a real catastrophe to the real sector. Governments changed their focus from the real economy to the money economy. But the problem is that central banks can't provide growth in a long-term, of course, they can inject money into the economy, but it works only in a short-term. Look at Europe: no one cares about the manufacturers, no one cares about farmers - all that they do is just raising and lowering (mostly lowering) interest rates. The real problem is much deeper, they need to make reforms, they need innovations. But no one cares, let's just cut interest rates. How far can it go? Honestly, I'm waiting for the next financial crisis, because the system did not learn its lessons. They cure non-financial problems with only financial manipulations.
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Haha, if there's one thing they do care about in Europe, it's farmers, especially the French ones. Common Agricultural Policy is more than 40% of the EU's annual budget.
Where the hell have you been? LOL. Welcome back.
Thank you... I've been busy w/stuff, is all.Where the hell have you been? LOL. Welcome back.
they cure nothing. they kick the can down the road. they exacerbate the problem. they are nothing but engines of inflation. they are hand maidens of the politicos. they enable their excesses by creating inflation to extinguish the excess debt created by the political class.They cure non-financial problems with only financial manipulations.
Given the lunacy that's out there, I wouldn't be at all surprised to learn that climate change is being laid to the Central Banks holding interest rates too low...
Actually low interest rates were one of the key drivers behind the shale boom. Energy companies are highly rate sensitive and most of the marginal drillers out there could never have stayed solvent without low rates and others desperately searching for yield and lending to them. I think you accidentally stepped into that pile piezoe.
I thought the shale boom was, generally, a good thing for the US of A. Energy independence and all that jazz, innit?Actually low interest rates were one of the key drivers behind the shale boom. Energy companies are highly rate sensitive and most of the marginal drillers out there could never have stayed solvent without low rates and others desperately searching for yield and lending to them. I think you accidentally stepped into that pile piezoe.
Also, don't low interest rates help solar and other "clean energy" producers even more? For instance, based on the numbers I have seen, while the aggregate net debt of US oil and gas producers doubled between 2010 and 2015 (from $81bn to $169bn), the solar project debt financing more than tripled between 2014 and 2015 (from $1.5bn to $5bn).
I thought the shale boom was, generally, a good thing for the US of A. Energy independence and all that jazz, innit?
Also, don't low interest rates help solar and other "clean energy" producers even more? For instance, based on the numbers I have seen, while the aggregate net debt of US oil and gas producers doubled between 2010 and 2015 (from $81bn to $169bn), the solar project debt financing more than tripled between 2014 and 2015 (from $1.5bn to $5bn).
No. Renewables benefit far more from subsidies and all that jazz. We do have a co2 mandate that has to be met by 2020 or 2025 whichever it is. So there are huge incentives to lending to that sector and it will only grow regardless of where rates are. Btw, I'm not arguing against the shale boom, just saying there are residual effects to everything.