Ilargi: 2016 Is An Easy Year To Predict

"It’s noteworthy when someone who does not see themselves as a finance person to predict that the big story of the upcoming year will be deflation. And that’s more a finance story than a macroeconomic story. It is the result of central banks playing a large role in weakening labor bargaining power, of aggrandizing their role by playing to the fantasy that monetary policy can do more to stimulate growth than it really does, and by backing themselves into the ZIRP/QE corner in their effort, as much as possible, to restore status quo ante in the banking system. Stephen Roach came to similar grim conclusions about how the Fed is choosing to back its way out of ZIRP. However, Roach thinks the Fed might be able to prevent a train wreck if it weans investors of the Greenspan/Bernanke/Yellen put. Even if he were right, I can’t imagine this Fed ever doing that."
By Raúl Ilargi Meijer, editor-in-chief of The Automatic Earth. Originally published at Automatic Earth

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