Charlatanism: Quantity vs Quality?

Today, we quote liberally from another excellent piece Inflationism by Martin @ Macronomics, then Natter and muse accordingly.

"We have also recently advocated our readers to go for quality (Investment Grade) rather than quantity high yield given rising dispersion. We continue to view rising dispersion as a sign of cracks in credit markets and not as a sign of overall strength.... 

Apropos and extending our titled theme... 

The contemporary Post-Keynesian monetary economic school of Neo-Chartalism, advocates government deficit spending to yield full employment... Chartalists, who argue that nations who issue debt denominated in their own fiat currency need never default, because they can print money to pay off the debt similar to what we are hearing these days from the MMT supporters."

We Nattered...  

Martin - As always not good, but excellent.  From the fallout and current morass, the uninitiated might think that you have misspelled CHARLATANISM, and rightly so.  

With regard to profligate spending, the resulting debt and economic morass, Aricool astutely commented....

Very interesting tour de force on the ills of modern financialism in CBs. Thanks.  Apparently, the end game of Japanification is apparently "sideways" on average, a boom for the uber rich, but flush down the toilet for lower half of the population.

and helped to get a glimpse of said flush down the toilet by pointing in the direction of a BBC article titled "Why some Japanese pensioners want to go to jail"....

"In a remarkably law-abiding society, a rapidly growing proportion of crimes is carried about by over-65s. In 1997 this age group accounted for about one in 20 convictions but 20 years later the figure had grown to more than one in five - a rate that far outstrips the growth of the over-65s as a proportion of the population (though they now make up more than a quarter of the total)." - Why some Japanese pensioners want to go to jail - BBC

We forwarded said article to a long time denizen of Japan, whose response was... 

"I saw the article you referenced about Japanese pensioners and I think that situation is only likely to get worse over the coming decades."  

The culprit behind the fate of those elder Japanese? The Japanese government, corporate and BOJ policy viz. the Charlatanism we refer to.  Following through...  

"This is a market that rewards cowardice – holdings of stable income-earning assets like credit and real estate – more than it rewards bravery. I continue to believe that carry will be king in 2019 as the Fed keeps interest rates low." -David Goldman, Asia Times

Said cowardice spurred by central bank NIRP and ZIRP rates is exemplified by a dearth of Type 1 durable real economic investment involving GDP and PCE transactions, new business and capex investment.  Concomitant with a surfeit of Type 2 financialism wrought with non-GDP/PCE, transfer payments (mortgages), money shuffling and asset speculation (stocks, bonds, RE).   

Our previous Natterings on the above subject of import are required reading: 2015: The Transactional Velocity Effect Of Speculation And Financialism and the 2018 followup: The Nature of Transactional Velocity? Moving West and not unrelated...

"Speculation is only a word covering the making of money out of the manipulation of prices, instead of supplying goods and services." -  Henry Ford

Along those lines, said qualitative transactional imbalances can only result in the arrest of monetary velocity and economic malaise.  Sadly, many quantitative negative side effects are occurring, including the swelling ranks of unfortunate pensioners.

So while some central banks have decided that in order to acquire the resources they required, have printed notes for the balance to paraphrase Keynes, their inflationism policies, all of this, ultimately, stokes leverage as borrowers and lenders become increasingly desensitized to risk…careful what you wish for indeed.

With regard to the central banks and their CHARLATANISM, as we have Nattered in the past... is it that voodoo that you do so well?  Perhaps nobody knows how monetary policy works, because as practiced, it can't, doesn't and never did?

At the end of the day, transacting is a conscious choice in which many, due to self interest, will make seemingly rational decisions, which ultimately have a deleterious socioeconomic effect.  

Bottom line, transactions are driven by human nature, and the principles driving transactions need to change from quantity to QUALITY.  Apropos in the context of our theme and title, we think.