Might Want To Take Note

It sounds like a movie or novel title, The Shock of Brexit. It could be, but it isn't.

It's an overreaction to something that needed to and should've happened and is likely to continue to happen as people learn that pitfalls of globalization and absentee landlord  rule. This won't stop the scaremongers of the world like Goldman Sachs or the antsy-panttsy horde of central bankers who mistakenly think they can magically price market rates with their profligate monetary policies.

As if things weren't already out of  control with global ZIRP and NIRP, central bankers hardly ever fail to disappoint and in the process reveal they're incompetence. The Bank of England earlier this week issued another chapter in what could be called their let-it-all-hang-out monetary policy.

After waiting a while to see what would happen, we're now starting to find out. The UK pound been getting hammered and domestic prices are on the rise to offset some of the cost of imports consumers are being hit with. Importers and foreign companies find themselves in a bind.

The WSJ reports: Be prepared for another interest-rate cut before the end of the year.That’s the message from Ben Broadbent, Bank of England deputy governor for monetary policy, who said the Brexit vote has likely hurt the economy’s capacity to produce goods and services. While Broadbent said he’s minded to vote for another rate cut this year, he cautioned that central-bank stimulus and easier tax-and-spending policy can only do so much to support the economy.

Markets had priced in easing, but not such a big-bang approach,writes Richard Barley in his Heard on the Street column. Unlike other central banks, the BOE on Thursday overwhelmed markets by pulling every stimulus lever available to counteract the shock of Brexit—and making clear they could yet be pulled harder. But this effort, while prudent for now, is further exposing the risks of aggressive monetary policy.

In the U.S. one big insurance company just announced a big cutback owing to losses from the artificially-butchered interest rates. Banks aren't happy. Retirement and pension  firms will further  have to retrench or take on more risk for less or zero return. 

With growth slowing and prices rising it's a decent chance for stagflation to show up. It's also the longer it goes on threatens any underlying faith people may have left In the fiat money system these central banker are struggling so hard to preserve. Fiat money is their lamented credential to the printing press room.

Let it all hang out policies smack of desperation not quiet confidence. As an investor you might want to take note.