Stig Myrseth warns – OBI Online

Helicopter Money, also called monetary financing, is moving into the central bank’s arsenal. In the latest weekly report from Dovre Management memories Investment Director Stig Myrseth that there are Mondays in the bond market and feast on the stock exchange and precious metals when this tool is used.

The Japanese and European Central Bank have both inflation target of two percent . In April, however, inflation stood at -0.3 percent in Japan and 0.2 percent in the eurozone.

– An increasing number believe that the central banks have become impotent and unable to raise inflation. This is reflected among other things in the bond market where ten-year government bonds traded at respectively 0.11 and -0.10 percent in Germany and Japan, writes Myrseth report.

He stressed that no intellectually intact buying long government bonds of such interest if they think of two percent inflation. Today’s government bond yields can be only calculate home if you assume that the last decades of deflation and stagnation in Japan is the new normal in the global economy.

Myrseth will however warn against depreciate fight against deflation as lost. After the financial crisis, politicians have systematically replaced “hawks” with “doves” in central boards. Thanks to this previously taboo monetary policy as quantitative easing, also called money printing and negative interest rates become a reality.

– Have you already used opium and cocaine, the road to heroin much shorter. Evidence indicates that even more powerful lye needed in the eurozone and Japan, and probably it is only a matter of time before the helicopter money is used, writes Myrseth.

The advantages and disadvantages of helicopter money discussed intensely these days. Opponents warn that this would be to open Pandora’s box and that the consequences can quickly become that confidence in the entire paper-based monetary system frays with hyperinflation as a result.

All shows that the same objections were highlighted when QE programs were launched. All predictions of hyperinflation has so far been confounded.

– Personal nor I against the helicopter money may be just what the eurozone and Japan need. Both economies are struggling with weak demand, low capacity utilization and deflation, turn Myrseth firm.