4105084: 33rd After-Work Lecture: Built To Fail - How Flaws in The Global Monetary System Produce Deflation

Description

• A capital exodus from EM, particularly China, tightens monetary policy given their exchange rate targeting regimes.
• Such tightening depresses global growth and inflation and pushes real rates of interest higher in the developed world.
• As savers and not central bankers have to buy US Treasuries then US corporate bonds and equities are sold pushing up the cost of capital.
• The prospects of debt default rise as deflation takes hold and real rates of interest rise in the emerging and developed world.
• A credit crisis when policy interest rates are so low means a major bear market for global equities.