Fear of Inflation and sterilisation

Martin Armstrong writes…..
There is a major confrontation where central banks have expanded the money supply to “stimulate” inflation. Governments are obsessed with enforcing laws against tax evasion and it is destroying the world economy and creating massive deflation.

Therefore, in the ’30s, Milton’s criticism of the Fed was justified because there was no massive hunt for taxes from the fiscal side. Today, we have the fiscal policies hunting capital resulting in a contraction economically (declining in investment) while you have QE just funding the government – not the private sector. It is a different set of circumstances today v 1930s.

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One Comment

  1. Looking at the buyback surge in US, the fiscal terrorism theory is debunked. Companies have cash – just not spending on capex/labor. Maybe markets have become so dominant that managers so focused on market outcomes (and their ESOPs) – at cost of everyone else! The GDP equation has to match. If govt is spending like crazy (US) but GDP growth moderating – either consumption is declining (not really) or investment is (yes). Another surprise in US sharp rise in net imports despite the country becoming more and more energy independent led by shale!

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