According to Harvard Research, at end 2017 price to income in US was 4. Price to rent ratio in Vancouver is 23, 26 in Manhattan and 64.85 in Beijing! Vancouver and Manhattan are really expensive cities to rent in, Beijing is almost 3x more expensive to rent then Vancouver per Income. Price to income in Beijing is 46, US Average is 4. LA has highest one in US at 9.6 then San Jose at 9.5, Beijing is 5x higher then LA which is described as a bubble. Chinese consumers are past the maximum credit they can load up on, now it's slowly turning into default central at the personal level and corporate level mixed with even more QE and even more Inflation, bad bad cocktail is being mixed there https://www.numbeo.com/property-investment/in/Beijing
Hold on here. If RMB devalues, that is doing the job of QE. Why would they need to QE to devalue more when the market is already devaluing RMB? And why would it cause a crisis or deleveraging? QE IS leveraging AS A response to a crisis. This is economics 101. Pick up a textbook.
Although "thin air" is an apt metaphor for creation of money without limit, it's a metaphor that misleads the naive. For what is money in actuality if not buying power, i.e., the ability to readily interchange it with goods, services, and tax obligatins. Therefore, money should be seen, in my opinion, as created out of productivity. When viewed this way, which I believe is the correct way to view fiat money, putting more money in circulation with out a corresponding increase in productivity does not produce any more actual money at all. It simple alters the conversion factor between money and goods and services. Psychologically, however, people may temporarily feel they are richer. It is this temporary feeling that politicians may unwittingly be after. Unfortunately, there is little evidence our politicians understand the true nature of fiat money. What do politicians understand then. Who knows? But we do know that human nature favors putting more money in circulation in ignorance of changes in productivity. When the amount of money in circulation increases relative to productivity, the real cost of existing, fixed-interest debt declines! In our current, debt laden, U.S. economy, we favor this. We should all plan our long range finances accordingly. The thing that may interfere with our long range plans, however, is the lack of enthusiasm with which our trading partners, that have their own fiat currencies, view our plans. It's an interesting observation that the U.S. gets money into the economy by the government spending it into the economy in exchange for goods and services the government desires to purchase. The Government, to pay for these goods and services, then takes money out of the economy by taxing it out -- taxes are therefore one of the things that gives our money value, and one of the things that will cause us to work to gain money. If the government spends more into the economy than it withdraws via taxes and fees, the difference is equal, to the penny, to what we call the deficit. The opposite situation produces what we call a surplus. It isn't possible to create continuous surpluses without destroying the economy. About this, there can be no question. But the question of whether it is possible to create continuous deficits without destroying the currency and the economy is a question I want to avoid.
Swiss Central Bank is a hedge fund... Central banks buying lots of sp 50 at a retarded level in 2019, what do you think is gonna happen when they sell those lots ? I am not complaining, I love it that Central Banks create money so traders can take it from them, but what are the consequences realistically of CB's buying equities ? Judging from the Swiss CB Q3 Holding's, they started selling so I think it's likely to restart eventually, much sooner then later considering narrative playing out https://www.holdingschannel.com/13f/swiss-national-bank-top-holdings/
Logic says don't fight the US treasury especially with Trump and Munchkin in charge. They have been buying any form of a dip in 2019, who knows how many hundreds of billions they have at there disposal just to buy SP Lots off the books, but when ever trend reverses, and who ever has been hoarding those SP indexes starts selling them, with algo's mass sell-off it'll be a crash of the ages. There are too many grenades about to explode worldwide, the weird thing is nothing seems to matter at the moment, Central Banks are buying world market indexes, not that they care about profits or losses, they create money out of thin air direct into equities. Issue is, it doesn't matter how many indexes they buy, company profits don't go up cause of it, consumer debt levels won't decrease, corporate debt won't decrease, nothing on a macro level changes at all from situation we are in, whether CB's buy Indexes or not. If it's to allow friends in Europe and North America to exit situation at high price, I get it but other then that, what's the point of creating a bigger bubble in equities ?
It is QE that brings down interest rates and can result in devaluation, depending on the extent to which the additional money going into reserve accounts just stays in swollen reserve accounts or finds its way into the economy. I am assuming the Chinese Central Bank operates similar to all other Central banks. Quantitative easing forces the wholesale price of money (What in the U.S. we call the Fed Funds Rate) rapidly toward zero. In the U.S., the central bank began paying a small amount of interest on reserve accounts to put a near zero, but positive, floor under interest rates. Then the problem became how to get customers to walk into banks and borrow during a deep recession when everyone was belt tightening and had either lost their jobs or were worried they might. So reserve accounts remained swollen for quite some time. Lowering interest rates, by itself, is a not a very effective tool in a deep recession. What is effective is government spending. So when the private sector deleverages, the public sector must leverage up to compensate. Of course the cost of borrowing is rock bottom during QE! QE in conjunction with stepped up government spending is what the U.S. did so very effectively to prevent a long lasting depression and bring the country out of the depths of its deepest recession since the Great Depression. The U.S. Central Bank's quantitative easing became the model for all other Central banks around the world. Initially there was no inflation associated with QE in the U.S. because the additional money that went into bank reserve accounts just sat there unused! In fact there was some concern at that time about possible deflation.
@piezoe I'm not sure why you are responding to me. We are both saying the same thing. You should reread the premise that @Stockolio is putting forward. RMB devaluation into QE? Makes no sense. Then QE causes a deleveraging? Retarded autistic amoebas couldn't come up with his shit.