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World seeing ‘greatest monetary policy experiment in history’ - Rothschild
British
banker Jacob Rothschild © Leon NEAL / AFP
RT,
16
August, 2016
Low
interest rates, negative yields on government debt and quantitative
easing are part of the biggest financial experiment in world history,
and the consequences are yet unknown, says RIT Capital Partners
Chairman Lord Rothschild.
“The
six months under review have seen central bankers continuing what is
surely the greatest experiment in monetary policy in the history of
the world. We are therefore in uncharted waters and it is impossible
to predict the unintended consequences of very low interest rates,
with some 30 percent of global government debt at negative yields,
combined with quantitative easing on a massive
scale,” Rothschild writes in
the company's semi-annual financial report.
The
banker notes this policy has led to a rapid growth of stock markets -
US stocks have grown threefold since 2008 - with investments growing
and volatility remaining low.
However,
the real sector of economy didn’t enjoy such a profit, as “growth
remains anemic, with weak demand and deflation in many parts of the
developed world,” according
to Rothschild.
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The
billionaire underlined that many risks remain for the global economy
with the deteriorating geopolitical situation. Among those risks
Rothschild included Britain's vote to leave the European Union, the
US presidential election, and China's slowing economic growth.
Another risk is global terrorism, which Rothschild says is a
consequence of the continuing conflict in the Middle East.
According
to a Bank of America Merrill Lynch report in June, interest rates in
developed countries, in particular America’s 0.5 percent, are now
at the lowest level in 5,000 years. In their battle against
deflation, countries such as Sweden, Switzerland or Japan have even
turned to negative key lending rates.
Evan Bleker
Interest rates are the lowest in 5000 years! One strong reason to be a net net investor.
Another
woe is negative yields on government bonds. In June, 10-year German
government bonds dipped below 0 percent for the first time in
history. Janus Capital has estimated that global yields are the
lowest in 500 years, and the total amount of such bonds is $10
trillion.
The investment group’s lead portfolio manager, Bill Gross, is calling it a “supernova that will explode one day.”
The investment group’s lead portfolio manager, Bill Gross, is calling it a “supernova that will explode one day.”
Janus Capital
Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day
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