Easy world

Central banks all over the world are cutting rates. According to the chart below, over the last 24 months, central banks have cut 312 times, one cut shy of the absolute maximum that occurred as a response to the 2008 Great Financial Crisis. If the Fed cuts next Wednesday, we will march the prior historical stretch. The major difference is that at the time, the financial world was on the brink of a depression; now, we don’t even have an officially confirmed recession. The Fed, the CBO, the Treasury, amd the IMF, tell us the US and the world economies are in good shape, and that is confirmed by equity indices at all time highs, and a relatively calmed bond market. Why are they cutting rates then? The answer may be related to global debt, which is incredibly high, and to the cost of servicing that debt, which is directly related to official rates. There may be a coordinated effort to increase inflation to deflate the debt. But what will happen if there is a crisis down the road? Will we see negative interest rates again? And QE? Is the plan to have central banks absorb the debt in their books?

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