Submitted by Tyler Durden on 11/25/2012 - 19:46 Bond Capital Formation Capital Markets Central Banks Global Economy None Reality recovery Ron Paul Totalitarianism Unemployment
Diapason Commodities' Sean Corrigan provides an insightful introduction to the critical importance of a market-set rate of interest and central banks' manipulated effect on the factors of production.
"Fixated with using their illusory ‘wealth effect’ to avoid a full realization of the losses we have all suffered in a boom very much of those same central bankers’ creation - or else cynically trying to achieve the same denial of reality by driving the income-poor into accepting utterly inappropriate levels of financial risk – they are destroying both the integrity and the signalling ability of those same capital markets which are the sine qua non of a free society."
As Ron Paul also confirms in the clip below "with artificial interest rates, we get an artificial economy driven by mal-investment leading to the inevitable bubbles" and while central banks hope for this 'created credit/money' to flow into productive means (Capex), instead it has (in today's case where QE is no longer working) created an investor-class demand for yield - implicitly driving management to forfeit growth-and-investment for buybacks-and-dividends.
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http://www.zerohedge.com/news/2012-11-25/artificial-interest-rates-and-forfeiture-growth-dividends
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