Stocks

Stocks Will Be Breaking Below The 2009 Lows

By Phoenix Capital Research

Why This Crisis Will Be Worse Than 2008Something absolutely astounding has happened.

Three weeks ago, the head of the Bank of Japan, Haruhiko Kuroda stated that Japan has a “potential growth rate of 0.5% or lower.”

By way of context, remember that the Bank of Japan has been at the forefront for ALL monetary policy for decades. The US Federal Reserve launched its first QE program in 2008. The European Central Bank launched its first QE program in 2015. The Bank of Japan first launched QE back in 2001.

In short, the Bank of Japan has two decades of experience with QE. Indeed, Japan is responsible for the single largest QE program in history, its “Shock and Awe” program launched in April 2014 which equaled over 25% of Japan’s GDP.

Which is why when Kuroda admitted that Japan’s GDP growth “potential” is limited to 0.5% or lower, he was implicitly admitting that QE cannot generate growth.

Remember, Central Bankers speak in half measures. They NEVER admit failure directly. Their primary job is to maintain confidence in the financial system even if it entails lying.

In Central Banker speak, Haruhiko Kuroda has admitted that there is a limit to potential GDP growthregardless of how much QE and Central Bank employs. He has admitted that Central Bankers might not have the tools required to generate growth.

Even more that this, his actions SUPPORT this claim.

Indeed, recently the Bank of Japan announced that it would be implementing Negative Interest Rate Policy or NIRP.

This change in policy was incredible. But what’s even more incredible is the fact that the Bank of Japan did NOT increase its QE program when it announced NIRP.

Put another way, the head of the Bank of Japan announced that QE cannot generate GDP growth, and then DIDN’T increase the Bank of Japan’s QE program when it came time to announce a new policy.

In short, Haruhiko Kuroda’s actions are supporting his words.

This is the single most important development in the monetary world. The head of a MAJOR Central Bank announced that QE cannot create economic growth and then refused to increase his bank’s QE program.

As usual, the markets have yet to adjust. Eventually they will. When they do, the S&P 500 will be below its March 2009 lows.

Another Crisis is coming. Smart investors are preparing now.

The statements, views, and opinions expressed in this article are solely those of the author and do not necessarily represent those of EMerging Equity.


Courtesy of Gains Pains & CapitalPhoenix Capital Research

Discussion

No comments yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow Us On Social Media

Google Translate

Our Discussion Groups

Facebook Group
LinkedIn Group

Follow EMerging Equity on WordPress.com

Our Social Media Readers

Digg
Feedly
%d bloggers like this: