The European Central Bank (ECB) did it again yesterday, cutting rates further and confirming its bond-buying program. Absolutely determined, Mario Draghi shows that he is really doing everything he can to create inflation and avoid a recession. Hardly anyone believes in a positive effect on the real economy. What Next Month's Monetary Policy Will Look Like, Why Tokenization Can Both Generate and Fight Financial Bubbles, and What Crypto Trojans Will Play in Monetary Policy in the Future.
The increase in share indices in recent years is mainly due to the low interest rates. Due to the expansionary monetary policy of the central banks, the ratio between the risk of an investment and its potential return hardly corresponds to a price fundamentally justified by the market economy. The prices and prices of equities, bonds and real estate do not rise because of their economic attractiveness, but because of the prevailing investment crisis.
It is becoming increasingly difficult to find suitable investments that meet the investment criteria and objectives of investors. For example, insurance companies are barely able to guarantee the promised guaranteed interest rate for life insurance. This fact shows that we are already struggling with high inflation. However, this does not take place in the real economy, but almost exclusively in the financial sector.
Central bank policy based on the Japanese model
There has been a veritable competition in the quest for inflation. The combination of export advantages and devaluation of own debts is extremely attractive for highly indebted states. USA, Europe, China and Japan are competing for the maximum devaluation. Where the journey goes, shows the debt world champion Japan. Although not absolute, but relative to its own GDP, Japan has the highest national debt worldwide, at almost 240 percent of its own GDP.
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