Tag Archives: economics

The Monetary Illusion

Global Nominal GDP Growth, as Measured in Dollars, Is Projected to Decline

global-growthMy Comments: It has been argued that Wall Street is corrupt and greedy and doing its best to create further income inequality in this country and across the globe. And that as a result, we should hold Wall Street accountable, send people to jail and reform the system. It’s suggested that only the Democrats can do this if they control Congress and the White House. I’m a liberal, and it’s not that simple.

Wall Street is playing the cards it has been dealt. I’ll agree they have done their level best to get good hands, but the responsibility for this falls on us as voters. If you want a more level playing field, you cannot avoid the voting booth. They say ignorance is bliss, but ignorance in this case will also be painful.

Until recently, during my 50 years as a marginally productive citizen in these United States, I’ve enjoyed an increasing standard of living. I feel that standard is now eroding, and by the time I’ve died, the prospects for my children and grandchildren will be less promising than were my prospects when I was their age. I’ll do my best for them, but I’m running out of time.

March 27, 2015 by Scott Minerd, Guggenheim Partners

The long-term consequences of global QE are likely to permanently impair living standards for generations to come while creating a false illusion of reviving prosperity.

A version of this article first appeared in the Financial Times.

As economic growth returns again to Europe and Japan, the prospect of a synchronous global expansion is taking hold. Or, then again, maybe not. In a recent research piece published by Bank of America Merrill Lynch, global economic growth, as measured in nominal U.S. dollars, is projected to decline in 2015 for the first time since 2009, the height of the financial crisis.

In fact, the prospect of improvement in economic growth is largely a monetary illusion. No one needs to explain how policymakers have made painfully little progress on the structural reforms necessary to increase global productive capacity and stimulate employment and demand. Lacking the political will necessary to address the issues, central bankers have been left to paper over the global malaise with reams of fiat currency.

With politicians lacking the willingness or ability to implement labor and tax reforms, monetary policy has perversely morphed into a new orthodoxy where even central bankers admittedly view it as their job to use their balance sheets as a tool to implement fiscal policy.

One argument is that if central banks were not created to execute fiscal policy, then why require them to maintain any capital at all? Capital is that which is held in reserve to absorb losses. If losses are to be anticipated, then a reasonable inference is that a certain expectation of risk must exist. Therefore, central banks must be expected to take on some risk for policy purposes, which implies a function beyond the creation of a monetary base to maintain price stability.

Global Nominal GDP Growth, as Measured in Dollars, Is Projected to Decline
With a surging U.S. dollar and growth remaining sluggish in much of the world, Bank of America Merrill Lynch forecasts that world output measured in dollars could fall in 2015 for the first time since the financial crisis. Over the past 34 years, this has happened just five times.

What kinds of risk are appropriate for a central bank? Well, the maintenance of a nation’s banking system would plainly be in scope, given the central bank’s role as lender of last resort. The defense of the currency as a store of value and medium of exchange is another appropriate risk. This was the apparent motivation of Mario Draghi, European Central Bank president, for his famous promise to defend the euro at all costs in the summer of 2012. The central bank balance sheet has proven a flexible tool limited in use only by the creativity of central bankers themselves.

In response to those who argue against the metamorphosis of monetary policy into fiscal policy, one need only point toward the impact of quantitative easing (QE) on interest rates. The depressed returns available on fixed-income securities, largely as a result of QE, are acting as a tax on investors, including individual savers, pension funds, and insurance companies.

Essentially, monetary authorities around the globe are levying a tax on investors and providing a subsidy to borrowers. Taxation and subsidies, as well as other wealth transfer payment schemes, have historically fallen within the realm of fiscal policy under the control of the electorate. Under the new monetary orthodoxy, the responsibility for critical aspects of fiscal policy has been surrendered into the hands of appointed officials who have been left to salvage their economies, often under the guise of pursuing monetary order.

The consequences of the new monetary orthodoxy are yet to be fully understood. For the time being, the latest rounds of QE should support continued U.S. dollar strength and limit increases in interest rates. Additionally, risk assets such as highyield debt and global equities should continue to perform strongly.

Rate Hike Rally

USA EconomyMy Comments: Interest rates and where they are going is a relatively hot topic. For those of you with savings accounts and Certificates of Deposit know, the returns you get are anemic at best. But if you need to borrow money for whatever reason, low interest rates are good. Since there is an expectation that interest rates will soon rise, people are scurrying to start projects now, before they start upward.

But when the Fed finally triggers an increase in the Fed funds rate, what will happen to the economy? Many thanks to Guggenheim Partners for these insights.

Commentary by Scott Minerd, February 26, 2015

In her testimony before Congress this week, Federal Reserve Chair Janet Yellen was keen to escape the bonds of nuance and innuendo the market attaches to Fed language. Her emphasis was clear—the Fed will raise the federal funds rate when economic data support the move, a decision I foresee taking place during its Sept. 16-17 meeting. In the meantime, the period before the Federal Reserve raises rates is historically a great time to invest.

Over the past six tightening periods since 1980, the S&P 500 has returned 23.5 percent on average in the nine months prior to the first rate increase. Assuming the next tightening cycle begins at the Fed’s meeting in September, the nine-month period this time around began in mid-December. Since that time, the S&P 500 is already up more than 7 percent. Currently, a number of indicators, including my favorite, the New York Stock Exchange Cumulative Advance/Decline Line, show that the stock market is improving and can sustain its upward momentum.

The period prior to a rate hike has also been a favorable environment for corporate credit. High-yield bonds and bank loans have outperformed investment-grade bonds on average by 4.0 percent and 1.6 percent, respectively, in the nine months leading up to the start of the last three tightening cycles. Even after the Fed begins to raise rates, tightening of monetary policy does not necessarily lead to an immediate widening of credit spreads. During four of the last five tightening cycles (1983, 1986, 1994 and 2004), default rates continued to fall for nearly the entire tightening period and ultimately ended lower than they were when the Fed started to tighten. In the past four instances where the Fed began raising rates following an extended period of monetary accommodation, high-yield spreads tightened on three occasions. On average, high-yield spreads tightened for nine months after the first Fed rate hike in a cycle.

All of this, combined with positive historical performance prior to past rate hikes, leads me to believe that a positive environment for U.S. equities and credit will continue between now and the first Fed rate hike. Even after the Fed commences on what I expect will be a slow and steady march of tightening, fundamentals can remain constructive, especially for high yield, for some time.

Economic Data Releases
U.S. Home Sales Slow While Prices Accelerate
• January existing home sales fell 4.9 percent, to an annualized pace of 4.82 million homes, a nine-month low.
• New home sales were largely unchanged in January, ticking down from 482,000 homes to 481,000. Sales in the Northeast region plunged 51.6 percent, likely reflecting poor weather.
• The S&P/Case-Shiller 20-City Home Price Index showed a faster annual growth rate in December, rising to 4.46 percent year-over-year, the first acceleration in over a year.
• The FHFA House Price Index rose 0.8 percent in December, the largest gain since May 2013.
• The Conference Board Consumer Confidence Index fell to 96.4 from 103.8 in February, but remained above 2014 levels despite the decline.
• Durable goods orders beat expectations in January, up 2.8 percent. Nondefense capital goods excluding aircraft rose for the first time since August.
• Initial jobless claims increased by 31,000 for the week ending Feb. 21, to 313,000.
• The Consumer Price Index fell into deflation in January, with prices down 0.1 percent from a year ago. However, core prices were stronger than expected, rising 0.2 percent from December and 1.6 percent year over year.

Continued Improvement in Euro Zone, China PMI Expands
• Economic activity strengthened in the euro zone in February according to the preliminary Purchasing Managers Indexes. Manufacturing ticked up to 51.1 from 51.0, and the services PMI rose to the highest since last July at 53.9.
• Euro zone economic confidence rose to 102.1 in February, the highest since last July.
• Germany’s manufacturing PMI was flat in the February preliminary reading, remaining in expansion at 50.9. The services PMI rose to a five-month high of 55.5.
• Germany’s IFO Business Climate Index inched up in February to 106.8 from 106.7. Expectations rose slightly while the current assessment fell.
• Germany’s GfK Consumer Confidence Index increased from 9.3 to 9.7 in the March survey, the highest since 2005.
• February preliminary PMIs in France were mixed, with manufacturing unexpectedly falling to 47.7 from 49.2 and services jumping to the highest since 2011 at 53.4.
• U.K. retail sales were weaker than expected in January, falling 0.3 percent. Sales excluding autos were down 0.7 percent.
• China’s HSBC manufacturing PMI rose back into expansion in February, up to 50.1 from 49.7.

Yellen’s problem with US felons

My Comments: We are a nation of approximately 316 million people, of which roughly 30% are “youth dependent” and 20% are “elderly dependent”. This leads me to assume that roughly half of us are capable of employment of some kind.

The next assumption is that if the employable number of people is about 158 million, and of those, 13 million have a criminal record, about 8% of the workforce has a red flag somewhere in the system.

Some of these people have limited education and work related skills. A common observation of prison populations is that few of them know how to walk and chew gum at the same time. That’s probably unfair, but I didn’t put them there.

All this means that if you are going to work toward keeping the level of unemployment down and limiting the amount of money thrown at people not now in the work force, we might be better off spending money on the development of employable skills and reducing the penalty for smoking pot. Unless you like building new prisons and make money by managing them.

Edward Luce | February 22, 2015

Some 13m Americans with a criminal record weigh on unemployment rate

When we think of crowded US prisons, we do not usually turn to economists — still less central bankers. Yet America’s steep rate of incarceration must be high on the list of what keeps Janet Yellen up at night.

Markets will be waiting to pounce on the US Federal Reserve chair’s slightest nuance in her congressional testimony this week. Will the central bank lift rates in June or September? The key to her thinking lies in the US labour force participation rate. If it improves, the Fed can keep rates at zero without fear of wage inflation. If it stays put, Ms Yellen may have to end the party far sooner.

Much has been made of the sharp fall in US unemployment in the past few months; it is now at just 5.7 per cent. But if the same number of Americans were active in the labour force today as at the start of the recession in 2007, the jobless rate would be almost 10 per cent. The labour force participation rate — the basis for calculating joblessness — has fallen to 62.8 per cent of adults today from a peak of 67.3 per in 2000.

Some of this fall is the result of changing demographics. The baby boomers are starting to retire. Some of it comes from the expansion of the US disability benefit, which pays millions more people to stay out of work than it used to.

What is often overlooked, however, is the starring role of the US criminal justice system. Critics of America’s willingness to hand out criminal records think of it as a social blight. It is also a crime against the economy. The numbers are staggering. At 2.3m, the US prison population is the highest in the world — close to the combined numbers of people locked up by China and Russia, and more than 10 times those of France, Germany and the UK combined. Think of it as a democratic gulag. It is almost double where it was in 1991. That means the US has millions more ex-convicts than it used to, the large majority of whom are routinely screened out by employers.

But the taint of a criminal past affects a far larger pool of people than felons, who number about 13m. Almost one in three adult Americans, about 75m people, are included on the Federal Bureau of Investigation’s criminal database. Details for roughly half those names are incomplete. To enter the FBI’s list, you need not have been convicted in a court — merely arrested at one time or another.

Most employers carry out background searches on job applicants and screen out those with criminal records. Among those whose applications would instantly be deleted is Bill Gates, the founder of Microsoft, because of a 1977 arrest for a traffic violation. So too would that of George Clooney. He was arrested in 2012 for demonstrating outside the Sudanese embassy in Washington.

During the 1990s the US achieved close to full employment. This coincided with a shift to zero tolerance policing. About half of US states still have a “three strikes and you’re out” automatic jailing rule. But for most employers one strike is enough — and there is a good chance it was misreported. Persuading the FBI to expurgate your record, or amend it, is virtually impossible. That bouncing cheque that you wrote to your landlord in 1997 will probably show up as a “misdemeanour” until your dying day. Names are kept on the FBI’s database for 110 years. Among the
millions defined by labour statistics as “discouraged”, or who have stopped looking for work altogether, a high share had their discouragement thrust upon them.

What can Ms Yellen do about it? Not much directly. A year ago she tried to highlight the stigma of long-term unemployment — employers’ reluctance to hire people who had been out of work a long time. Two of those she cited had criminal records. She was pilloried for having failed to disclose that detail — yet her examples were on the money. She could also demand that questions about criminal records be included in the monthly labour force survey, and in surveys of employer attitudes. The US government gathers a lot of detail about households. It should add criminal records to its questionnaires.

She ought also to give a pat on the back to the Ban the Box movement, which persuades employers to remove questions about criminal records from screening forms. The information is disclosed at a later stage in the interview process, by which time companies are likelier to see your plus points. Ban the Box has been adopted by a few big companies, including Walmart, the retailer, which last week announced it would raise hourly wages. Ms Yellen should also give a thumbs up to the Redeem Act — a bill sponsored by Cory Booker, the Democratic senator, and Rand Paul, the Republican senator. The law would allow Americans to expunge non-violent crimes from the records. She might also try to shame the FBI into maintaining accurate data.

None of these steps alone would expand the US labour market in time to alter the Fed’s calculations. But together they would help lower a big structural barrier to US growth. Ending the three strikes rule would have a more lasting impact. It would also make America fairer. Ms Yellen has the biggest economic bully pulpit in the world. She should spell out the hidden costs of America’s tendency to criminalise.

The Glass Ceiling on Rates

200+year interest ratesMy Comments: I’ve recently shared this chart with you that shows the historical ups and downs on interest rates in this country going back 224 years. They have been trending down since 1981, a long time. Right now they are nearly zero.

When this happened in the past, they began an upward climb until they reached the point where the rate stifled economic growth and a downward trend began. The economy is now growing and with the debt-to-GDP ratio at historic highs, the Fed doesn’t have much room to maneuver on the federal funds rate. But they will inevitably start to rise, probably this year, raising the next questions: how high and how fast.

February 19, 2015 by Scott Minerd @ Guggenheim Partners

The release recently of the minutes from the Federal Reserve’s Jan. 28 meeting sparked a frantic hunt for fresh clues about the timing and pacing of a federal funds rate hike. The question no one seems to be asking is once the Fed commences down the road of raising rates, how far will they ultimately go? Based on research we’ve conducted on the impact of higher rates on the U.S. debt burden, it appears the terminal value for the fed funds rate—the point at which the Fed stops tightening in a cycle—is around 2.5 to 3 percent, a lot lower than many people expect.

In the near-term, the stage is clearly set for the Fed to begin what it has been referring to as “policy normalization.” While consensus may be growing that the first of the coming rate increases will commence in June, I think the Fed will likely be more cautious and begin its “liftoff” in September. After that, the Fed is likely to raise rates by 25 basis points every other meeting. Practically, this means the overnight rate should be in the 50- to 75-basis-point range by the start of 2016.

Longer term, the Fed will likely continue to tighten at a steady pace until it nears the terminal rate in the cycle, which I believe will occur toward the end of 2017 or early 2018 in the range of 2.5 to 3 percent. Supporting such a ceiling on the fed funds rate is research that shows a close historical relationship between the debt-to-GDP ratio in the economy and the terminal fed funds rate.

At 233 percent, the amount of debt as a share of GDP, excluding the financial sector, is among the highest since data became available in 1947. Given this level of debt in the economy today, and assuming the same pace of leverage expansion for the upcoming rate hike cycle as that during the 2004-2006 cycle, a terminal rate around 2.5 percent is where the economy is likely to begin to slow to an extent that forces an end to the tightening cycle. Knowing that policymakers typically overshoot, 3 percent would be in the cards as a possible terminal fed funds rate, which is within the standard error of estimate for the model. A recession typically occurs about a year after we reach the terminal rate, so if this tightening cycle plays out as I suspect, the U.S. economy won’t face its next recession until 2018 or 2019.

Why is the end of a Fed tightening cycle a concern today? Well, the yield curve generally flattens substantially by the end of a tightening cycle. In other words, 10-year Treasuries typically trade very close to the overnight rate (maybe 25 basis points higher). Therefore, understanding the economic constraints and terminal rate value of the upcoming “normalization” process can provide long-term investors with insights into the potential ceiling on 10-year Treasury yields, as well. In this case, if our view of the terminal fed funds rate is correct at 2.5 to 3 percent, then the end of the cycle in 2017 or early 2018 could see a ceiling for the 10-year note around 2.75 to 3.25 percent—a level much lower than many investors may be anticipating.

When Patience Disappears

Interest-rates-1790-2012My Comments: We’ve talked extensively about the likelihood of a market correction, if not a crash, coming in the near future, maybe this year. What many have not talked about are the implications of a rise in interest rates.

This is going to happen, given that they’ve been on a downward trend for twenty plus years and can’t go much lower, if at all. If you want folks like me who manage your money to anticipate these things to avoid chaos and help you make money, you should at least be aware of some of the variables. Here’s an articulate overview.

Commentary by Scott Minerd / February 13, 2015

Advance notice of the timing of a rate hike by the Federal Reserve may hinge on the removal of just one word, warns St. Louis Fed President Bullard.

Market observers keen to anticipate the Federal Reserve’s next move are wise to follow the trail of verbal breadcrumbs laid down by St. Louis Fed President James Bullard, a policymaker I hold in high regard. When Fed policy seems uncertain or even inert, Dr. Bullard’s public statements have historically been a Rosetta stone for deciphering the Fed’s next move.

For example, in July 2010, Bullard wrote in a report ominously titled “Seven Faces of the Peril” that it was evident the Fed’s first round of quantitative easing had not been sufficient to stimulate the economy. In the report, which was widely picked up by the financial press, Bullard warned about the specter of deflation in the U.S. economy, and that the U.S. was “closer to a Japanese-style outcome today than at any time in recent history.”

That summer, months ahead of any Fed decision to proceed with QE2, it was Bullard who began a drumbeat of steady public messages about the necessity of a second round of easing. By August, the Fed was not talking about whether it should implement a new round of QE, but how. In November 2010, the Fed announced its plan to buy $600 billion of Treasury securities by the end of the second quarter of 2011. If you followed Bullard, you were expecting it.

While Bullard is not a voting member of the Federal Open Market Committee this time around, I still view him as an important policy mouthpiece. That is why it was so interesting when he underscored Fed Chair Janet Yellen’s comments at a press conference following the committee’s Dec. 16-17 meeting in an interview with Bloomberg, saying that the disappearance of a specific word—“patient”— from the Fed’s statement may be code that a rate increase will come within the next two FOMC meetings. He reiterated the point in a subsequent speech, saying “I would take [“patient”] out to provide optionality for the following meeting…To have this kind of patient language is probably a little too strong given the way I see the data.” When Bullard, the man who told us months in advance to expect QE2, goes to great length to describe when the Fed will raise rates, I tend to pay attention.

While Bullard says the Fed could raise rates by June or July (and I wouldn’t rule that out), I think the likelihood is closer to September and that the central bank will likely raise rates twice this year. Whenever “lift off” actually occurs, we’ve long been anticipating that this day would come. It is a particularly interesting time for investors to consider increasing fixed-income exposure to high quality, floating-rate asset classes, such as leveraged loans and asset-backed securities. The good news is there is still time to prepare for when the Fed finally runs out of patience.

Border Security Is Not An Immigration Cure-All

My Comments: Many of you know that I am a documented alien who in 1959 was granted US citizenship. Hopefully, this gives me some right to comment on the immigration issues facing us today.

While I’m not an admirer of the Mexican political system, I do accept that if you achieve the status of President, you are probably intelligent and articulate. The ideas that flow from this article makes sense as we attempt to modernize the current archaic rules.

By David Sirota February 13, 2015

With the opening of the new Congress, Republican lawmakers have been promising a renewed focus on border security as a supposed cure-all for America’s broken immigration system. Left unaddressed, though, is a simple question: How does border security address the status of millions of undocumented immigrants currently in the United States?

The answer is that it probably won’t, according to a person who knows a thing or two about immigration: Felipe Calderon.

In a recent interview, the former Mexican president told me that he believes the crackdown on undocumented immigration combined with intensified border security has prompted large numbers of undocumented Mexican laborers to remain in the U.S. permanently — even as many prefer to go home — out of fear they will never be able to return.

Calderon, who was president from 2006 to 2012, characterized the primary motive of undocumented Mexican immigrants as economic. Many, he said, are simply seeking to stay in the U.S. for a few years to earn money before returning home with cash to build houses and support families. But, he added, the American border crackdown has made the crossing so treacherous and expensive, many unauthorized immigrants already in the U.S. are staying put.

“Many of them are currently trapped,” Calderon told me. “There are a lot of these people [who] want to be in Mexico eight months every year, but they are unable to go there, because if they cross the border, they will never be able to cross back again.”

Calderon said he believes U.S. lawmakers should consider adding provisions to proposed immigration legislation that would permit “temporary work in a massive way,” but without giving immigrants automatic citizenship.

“I don’t believe that most of the Mexican workers looking for a job in the United States are wanting to be American citizens,” he continued. “They are looking for an opportunity to get economic benefits and actually thinking when they are leaving [Mexico] what will be the way in which they can go back to their own home.”

Calderon argued American political groups opposed to undocumented immigration — the kind that have backed statutes to toughen immigration enforcement — are prompting those already in the U.S. to stay and seek citizenship, even if that was not their initial goal.

“The American society, even the more conservative people, are getting exactly the contrary results that they were looking for,” he said. “In other words, anti-immigration laws are provoking millions of people living in the States that are unable to go back to their own countries. And they start to think, ‘Well if I need to stay here, it is better to do that all the way.’”

The narrow focus on border security is not just a Republican obsession. Indeed, last month, Obama pledged his administration is “going to be much more aggressive at the border in ensuring that people come through the system legally.” Those promises don’t seem like empty rhetoric — after all, Obama has deported record numbers of undocumented immigrants.

Of course, few quibble with the idea of basic border security that guarantees orderly transit into and out of the United States. The problem, though, is what Calderon alludes to: A singular obsession with border security may end up further complicating all the questions surrounding immigration.

That has consequences not just for public officials and campaign operatives trying to navigate the politics of such questions, but more importantly for the millions of immigrant families still caught in a dysfunctional system.

David Sirota is a senior writer at the International Business Times and the best-selling author of the books Hostile Takeover, The Uprising and Back to Our Future.

7 Quick Points On Europe

europeMy Comments: My purpose with this post is to confuse you. Yes, that’s right, to confuse you. That’s because even though I claim to be a financial professional of almost 40 years duration, I’m confused. And I don’t want to feel alone.

This came across my inbox inside a newsfeed I look at daily which suggests it’s not that esoteric. The title itself lends it credibilty. That’s because most of us are interested in making our money grow and that Europe’s financial state over the next several months is critical. But it may just be an example of an economist talking to himself.

It’s not too long so I ask you to read it and let me know, if you can, just what it means. Thanks.

Ben Hunt, Epsilon Theory / Jan. 28, 2015

#1) Here are the most relevant recent notes for an Epsilon Theory perspective on the underlying political and market risks in Europe: “The Red King” (July 14, 2014) and “Now There’s Something You Don’t See Every Day, Chauncey” (Dec. 16, 2014).

#2) Markets reacted positively to last Thursday’s announcement because Draghi doubled the amount of QE that he leaked to the press on Wednesday. Financial media pegged QE at 600 billion euros on Wednesday and 1.2 trillion euros on Thursday. Once again, Draghi played the Narrative game like a maestro.

#3) This is NOT open-ended QE. Sorry, but the Narrative game doesn’t work like this. If you mention a target date (September 2016), then that becomes the Schelling focal point, no matter how much you try to walk that back by saying it’s open-ended.

#4) Risk-sharing, or the lack thereof, matters. Draghi won approval of a doubled QE target by minimizing the mutualization of QE risk among EU countries. 80% of the bond-buying will be done by national central banks, and Germany will only buy German government bonds, France will only buy French bonds, etc. That’s important for two reasons. First, if Italy or Spain goes off the rails, then the Bundesbank’s balance sheet isn’t immediately crippled.

Second, this is why German bonds are rallying just as hard (harder, really) than periphery bonds. It’s also why US bonds are rallying so hard, because you can’t maintain a huge spread between the only risk-free rates left in the world.

#5) Market complacency on Greece is a mistake. Not because Greece itself is a huge systemic threat, but because the same political dynamics in Greece are coming soon to Italy. Greece is Bear Stearns. Italy is Lehman.

#6) In tail-risk trades as in comedy, timing is everything. Even if you think that it’s an attractively asymmetric risk/reward profile to bet on a Euro crisis (and I do), this is a heavily negative carry trade. If you don’t know what the phrase “negative carry trade” means, then please don’t make this bet. If you do know what it means, then you know that you either have to play a lot of hands to make the odds work out for you (and the nature of systemic crises makes that impossible) or you have to be spot-on with your timing.

#7) In a fundamentals-driven market you need to look at fund flows; in a Narrative-driven market you need to look at Narrative flows. With Draghi’s announcement last Thursday, there is no longer a marginal provider of market-supportive monetary policy Narrative. Or to put this in game theoretic terms, the 2nd derivative of the Narrative of Central Bank Omnipotence just flipped negative. We’ve shifted from an accelerating Narrative flow to a decelerating Narrative flow, and that inflection point in profoundly important in game-playing. The long grey slide of the Entropic Ending begins.