Bernanke Hints: Negative Rates, “Purchases Of Private Securities” To Fight Next Recession


Zero Hedge: Nearly a decade after his now laughably idiotic prediction that the Fed could hike rates in “15 minutes if we have to” – which of course it could and it would then promptly crash markets as late 2018 showed which is also why the Fed will never be able to normalize monetary policy ever again

Ahead of his address to the American Economic Association’s annual meeting on Saturday, Bernanke wrote in a blog post that “the new policy tools are effective,” perhaps seeking to reassure himself and other central bankers rather than the population and commercial banks around the globe, which is reeling from an onslaught of populism in response to the historic wealth transfer programs initiated by central banks whose negative rate policies have brought the European financial sector to the edge of the abyss.

“Central bank purchases of longer-term financial assets, popularly known as quantitative easing or QE, have proved an effective tool for easing financial conditions and providing economic stimulus when short rates are at their lower bound. The effectiveness of QE does not depend on its being deployed during a period of market turbulence.”

“Quantitative easing and forward guidance can provide the equivalent of about 3 additional percentage points of short-term rate cuts.” By which he meant that the Fed, which is currently engaging in QE4, can boost markets to even recorded highs, at which point trickle down may finally happen… although it won’t, and instead the rich will get even richer… Read More …

Opinion: Ladies and gentlemen, welcome to the end of capitalism. One could argue that the beginning of the end was 2009 when the Federal Reserve began printing money to bail out the global banking system. For the past decade the banks were busy convincing us that QE1, QE2, and QE3 were only temporary, and that as soon as the global economy stabilized the Fed would raise interest rates and pay off the $4,000,000,000,000 in debt.

As the Beatles song goes “But that was yesterday and yesterdays’ gone.”

From the article:

Just in case it wasn’t clear why the Fed is a socialist’s best friend…

That said, no matter if the Fed has to buy equities first, or cut rates to, say, -10% and threaten to make all paper currency illegal in order to fight future market drops, pardon recessions, longer-term yields will probably spend extended periods of time at zero or below, according to Bernanke, now a Distinguished Fellow at the Brookings Institution in Washington, who appears to realize that reliance on the Fed’s monetary policy has pushed the entire world into a twilight zone of negative real rates, from which there is no escape”.

Today (not) QE is a nifty new tool to make the rich much richer while avoiding the natural course of market expansion and contraction. Recessions are a thing of the past, and it could mean that markets will keep going to nose bleed levels with counterfeit dollars.

The stage is being set for a global meltdown like the world has never seen or will see again (Matthew 24:21). The great Apostle John in Revelation 6:5-6 prophesies the rich (oil and wine) will not feel it at first, but there will be no escape.

Thanks to Vason for sending this article in.