Weekend Update March 13

By Everett Millman, head content writer at Gainesville Coins, a leading gold and silver distributor. ABSTRACT: While European and Asian markets continued to get a boost from quantitative easing measures, U. S. stocks indices pulled back sharply at midweek. This erased all of equities’ gains in 2015 before stocks staged a considerable recovery by week’s end. The precious metals continued to slide lower on a runaway rally for the U. S. dollar.
GOVERNMENT & POLICY All Signs Lead to Easy Street
On Thursday, South Korea joined the far from exclusive ‘QE Club’ when the Bank of Korea decided to cut its benchmark lending rate by 25 basis points to 1.75%. This brings our tally to no less than 27 different countries of economic entities that have engaged in similar rate-cutting and monetary easing policies over the last year. In alphabetical order, the list of the club members is as follows:
Albania; Australia; Botswana; Canada; China, this March; Denmark, four times, now negative; the eurozone; Egypt; India, this March; Indonesia; Israel; Japan; Kenya; Mexico; New Zealand; Pakistan; Peru; Poland, this March; Romania; Russia; Singapore; Sweden; Switzerland; Thailand, this Wednesday; Turkey, three times; and Uzbekistan.
Many forex analysts have suggested that Malaysia could be the next country to jump on the easing bandwagon. In some of the above cases, central banks have had no choice but to cut their rates in order to remain competitive with their regional rivals. One can see a bit of a Domino Effect taking place as, one after another, the monetary authorities in various nations become ensnared in the ‘race to the bottom’ set into motion by the so-called Currency Wars. To those whose jobs center around making sense of central banks’ behavior, a task that is undoubtedly becoming increasingly difficult, these policies would seem be Faustian bargains: short-term gratification in exchange for long-term doom.

This post was published at Deviant Investor on March 14, 2015.


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