Russell Napier in 2020…
Q: So basically what you’re saying is that central banks in the past ten years never succeeded in getting commercial banks to lend. This is why governments are taking over, and they won’t let go of that tool anymore?
A: Exactly. Don’t forget: These are politicians. We know what mess most of the global economy is in today. Debt to GDP levels in most of the industrialized world are way too high, even before the effects of Covid-19. We know debt will have to go down. For a politician, inflation is the cheapest way out of this mess. They have found a way to gain control of the money supply and to create inflation. Remember, a credit guarantee is not fiscal spending, it’s not on the balance sheet of the state, as it’s only a contingent liability. So if you are an elected politician, you have found a cheap way of funding an economic recovery and then green projects. Politically, this is incredibly powerful.