The IMF\u2019s latest report on slowing growth in the global economy makes it easy for a skeptical reader to connect a few dots regarding the latest round of central bank sponsored malinvestment in general (a word that clearly doesn\u2019t exist in the modern economists\u2019 lexicon) and the shale oil boom\/bust cycle in particular.<\/p>\n
From this Reuters\u00a0story\u00a0we get the following summary about what\u2019s ailing the world::<\/p>\n
\u201cNew factors supporting growth, lower oil prices, but also depreciation of euro and yen, are more than offset by persistent negative forces, including the lingering legacies of the crisis and lower potential growth in many countries,\u201d Olivier Blanchard, the IMF\u2019s chief economist, said in a statement.<\/p>\n
The IMF advised advanced economies to maintain accommodative monetary policies to avoid increasing real interest rates as cheaper oil heightens the risk of deflation.<\/p>\n
If policy rates could not be reduced further, the IMF recommended pursuing an accommodative policy \u201cthrough other means\u201d.<\/p><\/blockquote>\n
Left unsaid was that cheap money gushing from the Federal Reserve in Washington and big banks on Wall Street was a major factor driving the shale oil boom that played a key role in recently plunging energy prices that, now, are raising the specter of world wide deflation that \u2013 you guessed it \u2013 should be countered by even more cheap money.<\/p>\n
Vicious cycle anyone?<\/p>\n
It seems former Bank of England governor Mervyn King is on to something in this\u00a0report\u00a0at the Telegraph when he notes the following:<\/p>\n
We have had the biggest monetary stimulus that the world has ever seen \u2026 The idea that monetary stimulus after six years is the answer doesn\u2019t seem (right) to me.<\/p><\/blockquote>\n
Why is it that central bankers suddenly seem to make much more sense when they are no longer central bankers? King joins suddenly lucid former Fed Chief Alan Greenspan who has recently been famously fond of a barbarous relic and makes you wonder where the heck central bankers still employed by central banks are steering the ship.<\/p>\n","protected":false},"excerpt":{"rendered":"
The IMF\u2019s latest report on slowing growth in the global economy makes it easy for a skeptical reader to connect a few dots regarding the latest round of central bank sponsored malinvestment in general (a word that clearly doesn\u2019t exist in the modern economists\u2019 lexicon) and the shale oil boom\/bust… Continue Reading Shale Oil as a Poster Child for Malinvestment<\/span><\/i><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"\nShale Oil as a Poster Child for Malinvestment - The Mess That Greenspan Made<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/timiacono.com\/index.php\/2015\/01\/20\/shale-oil-as-a-poster-child-for-malinvestment\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Shale Oil as a Poster Child for Malinvestment - 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