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The Magic Money Tree And Social Poison

An editorial in the Times of London by Philip Aldrick. “In a Blackrock Investment Institute paper last month, three top central bankers argued for ‘magic money tree’ policies to respond to the next downturn. Under their ‘monetary-financed fiscal facility,’central banks print money that the government can hand out to the public through tax rebates or spend on infrastructure, education or whatever they fancy.”

“The authors, including Philipp Hildebrand, the former Swiss central bank governor, Stanley Fischer, former vice-chairman at the US Federal Reserve, and Jean Boivin, the Bank of Canada’s deputy governor, call this ‘going direct.’ If it sounds familiar that’s because ‘it is as old as the first case of hyperinflation . . . examples include the Weimar Republic in the 1920s as well as Argentina and Zimbabwe,’ they write. The difference this time is that there would be ‘a credible coordination framework’ between the government and the central bank.”

“But do we want these policies? Who knows what social poison they contain? It’s well established that QE deepens wealth inequality and studies show it weighs on productivity, hitting incomes. A poll by the Resolution Foundation think tank found that only a third of politicians would support QE in future, suggesting it lacks democratic consent. And that’s before any Japanese quasi-socialist tweaks or magic money tree economics.”

“Not enough attention is given to the consequences of central bank policies. If it had been with QE in 2009, perhaps the asset rich would have borne more of the pain and the years of austerity have been different. How can a government oppose nationalisations or Zimbabwe-style monetary financing, if that is what its central bank is doing?”

“Blackrock is right. Unprecedented measures will be needed in the coming downturn but not by the central banks. They need to say ‘enough’ and hand responsibility to politicians, where it belongs. Not distort the world any further.”

The Nikkei Asian Review. “Investors and fund managers worldwide are coming to grips with a growing phenomenon: a huge and rapidly expanding pile of negative-yielding debt. The global stock of bonds with negative yields has doubled since the beginning of the year to around $17 trillion. Investors are snapping up such debt even though they are guaranteed to suffer a loss if they hold it to maturity, betting on further rises in bond prices.”

“Speculation is swirling that central banks will further ease their already super-loose monetary policies in response to signs of economic downturns. In Europe, one bank is even letting homebuyers take out mortgages at a negative rate, which basically means it is willing to pay customers to borrow money. This is fueling concern about a new asset price bubble in the region.”

“Now, a quarter of the world’s investment-grade debt securities bear subzero yields. Negative-yielding bonds are proliferating especially in Europe and Japan, where the central banks have pushed down their rates below zero. Swiss government bonds, for example, now have negative yields all the way out to 2064, 45 years down the road.”

“In Europe, financial institutions can raise funds at negative costs. And in August, Jyske Bank, Denmark’s third-largest bank, started offering a 10-year fixed-rate mortgage with an interest rate of -0.5%, becoming the world’s first bank to pay money to mortgage borrowers. ‘Right now we have a historic remortgaging on house owners’ debt,’ said Mikkel Hoegh, housing economist at the bank.”

“Negative borrowing costs are fueling a housing boom in Denmark. The housing price index compiled by Statistics Denmark, the government statistics agency, rose to an all-time high of 116.1 in the first quarter of 2019, using 2015 as a base of 100. If rising house prices stimulate speculative housing investment, the risk of a bubble will increase.”

“But the world economy is beginning to falter despite the extremely easy money environment that has been in place since the global financial crisis that started in 2008. This has cast doubt on the conventional wisdom that low interest rates are the answer.”

The Sydney Morning Herald in Australia. “Australian economist Stephen Koukoulas had just taken up a position with TD Securities in London in 2007. The office overlooked a branch of Newcastle-based bank Northern Rock. Around the middle of the year, one of TD’s foreign exchange dealers couldn’t contain his surprise as a queue hundreds of metres long formed out of the Northern Rock branch’s door.”

“‘What the fook!’ he exclaimed in a heavy Geordie accent. Nervous deposit holders were trying to get their savings out.”

“Even though the terms ‘global financial crisis’ and ‘great recession’ were more than a year from being coined, events playing out at that bank branch were enough to convince Koukoulas that the world economy was in real trouble.”

“A decade on from the depths of the crisis, the Australian economy has recorded its worst result in 10 years – a paltry 1.4 per cent gross domestic product growth in 2018-19. Per person, GDP shrank for the first time since the global recession. The question being posed in boardrooms, cabinet meetings and lounge rooms now: Is it time to panic?”

“Combined with reducing underemployment, which is currently north of 13 per cent, the RBA wants hundreds of thousands more Australians in work or working more hours than the government is forecasting. The RBA’s decision to cut official interest rates in June and July, some within the government have argued, should have happened earlier. Others believe the RBA should go even further and take rates to zero if not lower.”

“But RBA governor Philip Lowe has openly called on politicians to do their part to boost economies. In a speech in the US state of Wyoming just a fortnight ago, Lowe said the benefits of ever-lower interest rates were almost at an end. Good quality infrastructure spending and productivity-enhancing economic reforms were needed to get economies motoring again.”

“‘Monetary policy can’t drive long-term growth, but the other policy levers can. Relying on monetary policy risks further increases in asset prices in a slowing economy, which is an uncomfortable combination,’ he said. ‘And a failure to meet community expectations could lead to a political response that undercuts the credibility of central banks and undermines their effectiveness. It is hard to predict exactly how this might work out, but the answer is not well.'”

From CNBC TV on India. “The prevailing economic slowdown in the country might not be a short ‘soft patch’ and could be attributed to a combination of structural and cyclical factors, the Reserve Bank of India’s former governor YV Reddy said. While stating that it is difficult to diagnose the nature of India’s economic slump, the RBI, in its 2018-19 annual report, said that it could be a soft patch mutating into a cyclical downturn.”

“‘When you tie up with tier-II countries you may be able to withstand the crisis. In a way, finance will now be a sub-set of economic issues and economic issues will be a sub-set of political issues, unlike in the past,’ said Reddy, adding that before 2008, finance was leading and now politics is going to lead.”

“‘Tension between nationalism and globalisation will only intensify rather than reduce in the near future,’ said Reddy.”

This Post Has 64 Comments
  1. ‘‘Monetary policy can’t drive long-term growth… Relying on monetary policy risks further increases in asset prices in a slowing economy, which is an uncomfortable combination’

    So why do it?

    ‘And a failure to meet community expectations could lead to a political response’

    ‘‘Tension between nationalism and globalisation will only intensify rather than reduce in the near future’

    Get used to it central bankers, your days are near an end.

    1. ‘‘Monetary policy can’t drive long-term growth… Relying on monetary policy risks further increases in asset prices in a slowing economy, which is an uncomfortable combination’

      “So why do it?”

      Because, as was was stated, it causes further increases in asset prices in a slowing economy.

      Asset price increases create wealth. Wealth creation is considered to be a good thing, thus an increase in asset prices is considered to be a good thing.

      Creating wealth in a slowing economy is considered to be a good thing.

      “And a failure to meet community expectations could lead to a political response”.

      A political response = Something extremely unpleasant for those people who are currently running things.

      Oh, and what is with this statement: “Monetary policy can’t drive long-term growth”. Bahahahahahaha … “long term” in the political world means until the next election. Making it to the next election is what these politicians live by, it is what drives them.

      1. “Wealth creation is considered to be a good thing, thus an increase in asset prices is considered to be a good thing.”

        Not only does wealth get created, but those who matter the most, the people who own the most assets, stand to benefit disproportionately from the wealth created due to asset price inflation.

        How could the situation possibly get any better?

  2. ‘The authors, including Philipp Hildebrand, the former Swiss central bank governor, Stanley Fischer, former vice-chairman at the US Federal Reserve, and Jean Boivin, the Bank of Canada’s deputy governor, call this ‘going direct.’ If it sounds familiar that’s because ‘it is as old as the first case of hyperinflation . . . examples include the Weimar Republic in the 1920s as well as Argentina and Zimbabwe,’ they write’

    I’ve said for over a decade that we have to consider the idea that central bankers are idiots.

    Everything is rosy! Meanwhile these people are behind the scenes preparing for crater. I have lots of crater to post but found this and thought it too important to delay.

    1. Central bankers are more than idiots.

      They are also self confessed leftist political hacks.

      Gee…can’t understand this nationalism thing…

    2. “But do we want these policies? Who knows what social poison they contain? It’s well established that QE deepens wealth inequality and studies show it weighs on productivity, hitting incomes.”

      “Not enough attention is given to the consequences of central bank policies.”

      “Blackrock is right. Unprecedented measures will be needed in the coming downturn but not by the central banks. They need to say ‘enough’ and hand responsibility to politicians, where it belongs. Not distort the world any further.”

      – Negative rates are a symptom of over-indebted nations; normal interest rates can’t be supported without massive defaults. We’re soon reaching the end game and hopefully the era of central banks and their woefully misguided policies based on flawed Keynesian economics as well.

      https://twitter.com/NorthmanTrader/status/1148928430878146560
      Sven Henrich
      ‏Verified account @NorthmanTrader
      Incidentally: Dramatic debt expansion is needed as growth is not occurring organically, but rather debt is used to mask the lack of growth. As a result: Growth is manufactured via debt i.e. an illusion.
      5:14 AM – 10 Jul 2019

      https://twitter.com/jeffdeist/status/1136002761986908161
      Jeff Deist
      ‏ @jeffdeist
      The 4-part Fed mandate:
      1. Maximum employment (cough)
      2. Stable prices (cough)
      3. Prop up asset prices ✔️
      4. Provide permanent source of financing for government spending ✔️
      1:12 PM – 4 Jun 2019

      https://www.ft.com/content/46c4b186-8308-11e9-b592-5fe435b57a3b
      Federal Reserve
      Fed candidate slams bank’s ‘Soviet’ power over markets
      Trump pick Judy Shelton questions if Fed should set interest rates
      James Politi in Washington May 31, 2019

      “In an interview with the Financial Times at the Trump International Hotel in Washington this week, Ms Shelton called on the Fed to “think about whether they are doing more harm than good”. If appointed to the board, she would be “asking tough questions” about its most basic mission, she said.”

      “How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?” Ms Shelton said.

      “If the success of capitalism depends on someone being smart enough to know what the rate should be on everything . . . we’re doomed. We might as well resurrect Gosplan,” she said, referring to the state committee that ran the Soviet Union’s planned economy. Ms Shelton did postdoctoral research on the Soviet economy at Stanford University’s Hoover Institution, and was designated to be the Russia expert on the board of the National Endowment for Democracy.”

      – Central banks are the cause of many of the world’s economic problems today, such as general price inflation and asset bubbles, including “The Everything Bubble”, of which the popping is just getting underway. Machinations with nefarious intent. Currency debasers and debt-enablers all. Unelected and unaccountable; destroying sovereign nations economically and with impunity. The Fed – “Doing more harm than good since 1913.”

      – There are now many well known economists and money managers speaking our against central banks, because they see what’s coming and it’s a direct result of their failed policies. Shut them all down. Drawn and quartered would be too good for them.

  3. “It is hard to predict exactly how this might work out, but the answer is not well.”

    History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

    — Alan Greenspan

    Greenspan said ‘low risk premiums’, but negative yields weren’t even on the radar screen when he said it. So we are flying blind, under the unprecedented, untested policy of central banks deliberately reversing the direction of interest payments from savers to borrowers.

    Good luck on a happy ending!

    1. Business / 08 Sep 2019
      Victor Schramm
      Notes on Negative Interest Rates

      Negative interest rates are changing the way investors think about investing in the developed world. Once considered to be quite literally impossible by such diverse economic thinkers as Ludwig von Mises and John Maynard Keynes, negative interest rates exist and appear to be sticking around for a while.

  4. Phone calls to Congress were running 100-1 against TARP from their constituents. And after failing on the first vote…it sailed right through.

    “the Resolution Foundation think tank found that only a third of politicians would support QE in future, suggesting it lacks democratic consent.”

  5. In stimulus we trust.

    The Financial Times
    Global Economy
    Gloom deepens for global economy
    Weak US jobs and German factory data push central bankers towards launching stimulus
    Tariffs have raised costs for American businesses but not for consumers. That could be about to change
    China is also pressing ahead with its own form of stimulus, announcing on Friday that it would loosen curbs on bank lending as it grappled with the effect of the trade war with the US.
    James Politi and Brendan Greeley in Washington, Don Weinland in Beijing and Sarah Provan in London September 6, 2019

    The slowdown afflicting the world economy showed up in disappointing data on US jobs and German manufacturing on Friday, piling fresh pressure on to central bankers to launch a stimulus push to offset trade tensions and weakening demand.

    The soft data came ahead of policy meetings at the European Central Bank and the Federal Reserve later this month, when investors expect officials in the eurozone and the US to launch new monetary easing to tackle the downturn.

    1. Weak jobs report. Interesting fact is that 25,000 temp gov jobs added in August for the consensus workers that to make this report so in actuality we can take 25k off the 130k they reported

      1. Why would we do that? Employed is employed, they will be working to the end of the census. August numbers historically get adjusted up, the model tends to consistently underestimate.

    2. Merkel let the Green Party set the energy agenda in Germany, now the high electricity prices have hurt its competitiveness and the green energy jobs are disappearing particularly in the wind turbine industries.

      1. competitiveness

        The math is simple. It uses more energy to produce renewables than they deliver. Hard to make a sustainable profit doing that.

  6. Negative interest rates. Savers destroyed. Houses priced in the stratosphere so that the average family cannot afford. Importation of 3rd world immigrants in record numbers. Wages falling. Companies buying back thier own stock with cheap money and shipping jobs overseas. Etc.

    But politicians can’t understand…

    ““Tension between nationalism and globalisation will only intensify rather than reduce in the near future,’ said Reddy.”

    1. There’s only one path forward….. rising rates to market levels.

      As one of our more astute contributors so eloquently put it, “It’s time to get these interest rates back in to the normal range of 12%-15% and get these tariffs firmly in place and get this economy going again.”

      He’s right.

      Dunedin, FL Housing Prices Crater 8% YOY As Gulf Coast Floods With Excess Empty And Defaulted Houses

      https://www.movoto.com/dunedin-fl/market-trends/

        1. …. and interest rates were at market levels….. accelerating the economy and creating jobs like only market level rates can.

        2. I could totally get on board with a policy to replace the income tax with tariffs. As any honest economist could tell you, taxing domestic labor on the margin has the natural consequence of reducing domestic labor supply, employment, and production. Why this is commonly accepted as a desirable way to raise taxes is a deep mystery to me.

          Replacing the income tax with tariffs is a policy that could help get America back to work, while reducing our reliance on imports and foreign production. Where is the downside?

          1. Where is the downside?

            It may mean we need to :gasp: shrink the government. Think of all the IRS jobs lost!

  7. Zillow: 36 Metro Areas Where High School Grads Can Own a Home

    The data used to compile mortgage affordability is very misleading. What is glaringly absent in these charts is the actual cost of a home! It’s amazing to see how this data is massaged and twisted to pretend as if things are actually affordable. Granted, things are less crazy in these metro areas than the coastal markets, but it’s still nuts that this data is being used to paint a misleading picture while leaving out the elephant in the room: house prices and home price to income.

  8. “It’s well established that QE deepens wealth inequality and studies show it weighs on productivity, hitting incomes.”

    “Not enough attention is given to the consequences of central bank policies. If it had been with QE in 2009, perhaps the asset rich would have borne more of the pain and the years of austerity have been different. How can a government oppose nationalisations or Zimbabwe-style monetary financing, if that is what its central bank is doing?”

    These articles are written as if the intention of QE and all these programs (NIRP, ZIRP, HAMP, etc.) was to truly help the people and the eCONomy as a whole. That was never the goal. They were sold to citizens under that guise, but in private their intentions were made very clear, as Timothy Geithner blurted out that one day behind those closed doors about using citizens as “runway foam” for the banks.

    Until this fact is given the light of day, and the Fed and all central banks are outed as the criminals they truly are, nothing will change. When you think about every action that was taken since the last meltdown, they were all designed to protect the wealthy using the monies of the rest of society, at the expense of society. They made the rich whole on their bad bets, instead of them having to ride them all the way to the poor house, where many would and should have ended up. Instead, the rich became extraordinarily richer while the ordinary people who funded their wealth’s lives have become unbearably expensive.

    And now here we are with the largest asset bubbles the world’s ever seen, with Jerome Powell, the joker at the Fed, telling the world’s elite that everything is rosy, that the consumer is very healthy, meanwhile he’s cutting rates like a fuc**ing Charlatan.

    1. How can a government oppose nationalisations or Zimbabwe-style monetary financing, if that is what its central bank is doing?”

      The bigger question is, why do the sheeple let their central bankers and their oligarch accomplices defraud them through the debasement of the currency and engineered stock market pump & dumps every 8-10 years?

      1. why do the sheeple

        Because changing the system would cause (or carry the risk of) short-term pain, and our citizenry is unwilling to sacrifice in any meaningful way?

        1. Because they’re too busy trying to make ends meet and being fed propaganda by the MSM to realize central bankers and their oligarch accomplices are the problem.

          1. If you asked most American citizens what/who the Federal Reserve is, they couldn’t even muster an answer.

      2. 8-10 years is a long time horizon for most people.

        And what are we supposed to do, elect a junior senator to show our anger? More of the same…

  9. Is the U.S. winning the trade war?

    The Financial Times
    US-China trade dispute
    China exports decline as US trade dispute takes toll
    Analysts expected ‘front-loading’ ahead of new sanctions would lead to increase
    Don Weinland in Beijing
    24 minutes ago

    Exports from China fell in August as an intensifying trade dispute with the US took a heavier than expected toll on the country’s manufacturing sector and a forecast temporary increase in orders failed to materialise.

    China’s exports decreased 1 per cent last month compared with a year earlier, according to the customs administration, despite the majority of economists polled by Reuters forecasting an increase. The decline compares with a 3.3 per cent rise in exports year on year in July.

    Goldman Sachs had forecast that there would be a 2 per cent increase in exports in August because it expected buyers of Chinese goods to “front-load” orders before a new round of US tariffs kicked in on September 1.

  10. Pocket Worthy
    A California Dream
    California’s third-largest city by area is an urban-planning disaster, a sprawl of empty grids that aspired to become a megacity—and failed. But as the desert works to reclaim the land, it’s become a mecca of another kind.
    Mental Floss | Rosecrans Baldwin
    Photo by David McNew/Getty Images

    It was June, 2016 in the Mojave desert and the sun was blistering. The land around me was empty, scorched, and flat, dotted by brush and the occasional piece of windswept trash. Judging by the map, the intersection where I’d stopped was a busy crossroads between two major thruways. But when I shifted into park in the middle of the road, no one honked. No one looked at me funny. I hadn’t seen another car in an hour at least.

    It was probably the safest intersection in America to pull over and take a nap.

    According to the map, I was surrounded by cul-de-sacs and neighborhoods. In reality, there was nothing but sand and more sand—and roads. Endless roads. Roads in all directions, marked by white fence posts and the occasional lonely pole. Some were paved. Some were dirt. Some had long ago been reclaimed by the encroaching sand.

    1. Ozymandias
      By Percy Bysshe Shelley

      I met a traveller from an antique land,
      Who said—“Two vast and trunkless legs of stone
      Stand in the desert. . . . Near them, on the sand,
      Half sunk a shattered visage lies, whose frown,
      And wrinkled lip, and sneer of cold command,
      Tell that its sculptor well those passions read
      Which yet survive, stamped on these lifeless things,
      The hand that mocked them, and the heart that fed;
      And on the pedestal, these words appear:
      My name is Ozymandias, King of Kings;
      Look on my Works, ye Mighty, and despair!
      Nothing beside remains. Round the decay
      Of that colossal Wreck, boundless and bare
      The lone and level sands stretch far away.”

    2. (snip)

      “In 1958 Mendelsohn, working with investors, bought 82,000 acres of land in the desert to develop a metropolis. The idea was to build a community that would join the ranks of America’s great cities, even outdo them. Mendelsohn and colleagues drew plans, cut roads. Streets were named after the country’s best universities, its biggest car manufacturers: Stanford, Yale, Pontiac, Cadillac. He built a park in the center of town named Central Park, and even included a man-made lake. When it came time to fill it, he flew in water from New York’s Upper West Side.”

      Say what?

      (another snip)

      “The desert calls to lone dreamers—and those who travel in packs. Each fall for the last couple years, California City has played host to Wasteland Weekend, a festival celebrating dystopian style. It’s a post-apocalyptic Burning Man, and California City’s endless desert roads are the perfect stage. A few thousand people dress up and outfit their cars like they’re auditioning for Mad Max. There are fire dancers, ersatz fashion shows, gladiator fights in the sand. In a way, the same adventurous spirit that sent Mendelsohn into the desert to make something out of nothing is being reincarnated, except the current dreamers wear goat masks.”

      Goat masks. Got it.

      “’It’s a weird place,’ Manaugh told me. ‘There’s nothing to see—but that’s the point. California City rewards people who approach it with an imaginative sense of what it can be.’”

      Whatever.

          1. The snowy Tehachapi Mountains are just west of there, so a system of reservoirs was possible. Edwards AFB is due east of there, so government jobs!

  11. ‘Global interest rates are low and may head lower, driven by slowing economies and the U.S.-China trade war. A less appreciated reason for lower rates is a mountain of debt built up during the past decade.’

    ‘Debt owed by governments, businesses and households around the globe is up nearly 50% since before the financial crisis to $246.6 trillion at the beginning of March, according to the Institute of International Finance.’

    ‘The borrowing helped pull economies out of the nasty recession, but left them with high debt burdens that make it harder for policy makers to raise rates. It also makes consumers and businesses more likely to pull back from spending money on new goods if economic conditions weaken.’

    ‘In the U.K., Canada and Australia, central bankers have backtracked from rate increases in the past two years after consumers got bruised more than expected. U.S. consumers, who have borrowed to pay for college, cars and everyday spending, have been less affected because their debt burdens are much lower relative to their incomes.’

    “The world is in a delicate equilibrium,” said Mark Carney, governor of the Bank of England, in a February speech. “The sustainability of debt burdens depends on interest rates remaining low and global trade remaining open.”

    ‘In January, the Fed signaled it was pausing its rate increases after worries grew about the economy, including the housing market, global growth and the impact of the trade war. “The fundamentals for consumers are more worrying than we think,” Mr. Slok said.’

    https://www.wsj.com/articles/high-debt-levels-are-weighing-on-economies-11567935004

    Carney is an asshat. Who asked him about trade policy? Are we supposed to let China steal intellectual property by the billions decade after decade?

    Central bankers talk about their survival like they are a species.

    1. Central bankers talk about their survival like they are a species.

      Central bankers are parasites who are killing off their hosts. So survival might indeed be an issue for them.

  12. We now want to sustain debt burdens? Debt burdens are hardly an endangered species. Sounds like the ultimate kick the can policy, continue to raise debt burdens and force the central banks to continue to lower rates to sustain them. Actually encourage the most irresponsible borrowers, both countries, and individuals to take on more debt. That kick the can down the road policy is going to kick all of us in the can, unless we take the easy way out and die.

    “The sustainability of debt burdens depends on interest rates remaining low and global trade remaining open.”

  13. Farm loan delinquencies are surging as farmers who binged on cheap debt to buy up overpriced farmland are now facing a financial disaster of their own making. Corporate agribusiness companies owned by globalist oligarchs will be waiting in the wings for the avalanche of farm auctions to buy up distressed agricultural lands for a song, replacing family farmers with imported Third World wage slaves to toil on their sprawling plantations.

    https://www.reuters.com/article/us-usa-election-wisconsin-farmers/farm-loan-delinquencies-surge-in-u-s-election-battleground-wisconsin-idUSKCN1VQ2Y1

    1. The Financial Times
      Charts that Matter
      Corporate bonds
      Global bond bull run has reached historic levels
      There are precedents for today’s markets, if you reach back far enough
      Robin Wigglesworth yesterday

      The global bull run that started in 1985 is now one of the most intense in the debt market’s 700-year history, comparable with a deleveraging and economic growth spurt that followed the Napoleonic wars.

      Despite longstanding predictions of the end of the bond bull market that started after former Federal Reserve chair Paul Volcker quashed inflation in the 1980s, government debt has kept rallying this year, taking the average annual fall in yields to 17.4 basis points (0.174 percentage points) over the past 34 years.

      That puts it on the cusp of surpassing the 1873-1909 bull run in length, and makes it the strongest decline in long-term interest rates since 1817-1854, when bond yields declined by 22 bps a year, according to research by Paul Schmelzing, a visiting scholar at the Bank of England.

      Although more than $15tn of bonds now trade with negative yields, the fact that the world has seen comparable, if rare, falls in bond yields, and the long-term nature of the decline since the 12th century, casts doubts over suggestions that the global economy is experiencing something unprecedented, according to Mr Schmelzing.

      “The ‘secular stagnation’ theory is highly questionable against this evidence: the fall in real rates has in fact been continuous for centuries, and recent years merely witnessed a trend-return,” he said.

      The data on global, inflation-adjusted bond yields have been collected by Mr Schmelzing for his upcoming PhD thesis at Harvard. The data were first published by the Bank of England in January 2017 and updated for the Financial Times to include the bond market’s rally since then.

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