A Deutsche Bank strategist sees financial carnage ahead…
ZeroHedge, July 11, 2017 – Excerpts:
Deutsche strategist [Jim Reid] recapped his bigger picture thoughts “on government bond yields given the sell-off of the last two weeks.” Hardly surprising, he goes along with the consensus, and expects yields to rise as more central banks turn hawkish (for reasons we have discussed on countless occasions, most recently yesterday) although what is interesting is Reid’s take on what happens after the initial reaction, and it’s here that the gloom descends because in a world with 327% debt/GDP…
… higher interest rates are simply unsustainable, the endgame is one: “at some point a government spends big and yields start to rise faster. This could still be many quarters ahead but if and when it does happen central banks might have to intervene and cap nominal yields to avoid carnage in a heavily indebted world. Then we move towards helicopter money…”
“Helicopter money”… as a calculated response to a devastating liquidity vacuum would be a chaotic, after-the-fact reaction to a potentially crippling crisis.
What America needs, now, is powerful, protective insulation from such a liquidity crisis. And that means massive debt elimination at ‘ground level.’
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“He who will not apply new remedies must expect new evils.” – Sir Francis Bacon