“The decision by the US Fed to reduce its bank lending rate – ostensibly to counteract a reduction in the producer price index – was probably a seminal development in the history of the world’s economy. If the end result is that this rate reduction gives rise to a continuing fall of the US Dollar index, then inflation within the USA will likely rise strongly, and volumes of transactions will likely fall.

Paradoxically, the cut in interest rates seems likely to have the opposite effect of its stated intent. It seems more likely to give rise to an acceleration of the arrival of recessionary conditions – having bought sufficient time to allow maintenance of the status quo until after the US Presidential Elections….”

More by Brian Bloom.