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2015-09-27

James Grant, ZIRP and Helicopter Money

Central bankers have taken it upon themselves to sponsor great bull markets in the hopes of making people spend more because they will feel richer.
That was the theory.

James Grant, September 26, 2015

Governments through central banks have muscled down money market interest rates to zero and in some cases below zero.

Not content with that, they have implemented what economists chose to call «the portfolio balance channel».

That’s a very fancy phrase meaning higher stock prices in the interest of rising aggregate demand.

That was the theory of the Bernanke Fed and it certainly was the theory of the Chinese communists who sponsored the fly away levitation of the Shanghai A-shares. 

So the world over – and this goes for Europe as well – central bankers have taken it upon themselves to sponsor great bull markets in the hopes of making people spend more because they will feel richer. 

http://www.internetional.se/Grant1992.htm#grant2015sept

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