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Who Said It? Name the Public Official Behind This Quote
The answer may surprise you.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Can you try and guess which public official said the following quote? The answer may shock you.

"By partially replacing term funding in the form of more expensive bank bonds, the [redacted] can create a scarcity of investible assets, which will result in lower yields and easier market funding conditions even for banks that have not taken part in the operations."

If I hadn't have known the answer I would have guessed this was Ben Bernanke speaking, at some point in history.

In fact, of the dozen or so people I asked, every single one guessed a prominent US monetary policy official. Former or current Fed Chairs Ben Bernanke, Alan Greenspan, or Janet Yellen were common responses. Also suggested were Tim Geithner and Hank Paulson. 



The statement in question was spoken yesterday by Peter Praet, the chief economist at the ECB who's considered the mouthpiece for the bank's president Mario Draghi.

My main point is that you could have assigned the quote to any US Fed official shortly before he or she embarked on an asset purchase program. The goal of quantitative easing is to lower real rates to the point where there is a real cost for every investor class to hold a deposit (cash). Therefore, it creates a scarcity of every financial asset on the planet because holding any asset becomes the same as holding cash.

The takeaway is this: I think, if need be, the ECB will figure out a way to move forward with full-blown QE. Either that or they will increase the supply of long-term loans to lower the funding cost even further. Will it "work"? I am extremely doubtful, but I believe there's a very good chance that European assets will appreciate while the ECB is trying to synthetically create inflation. Never before in history has a major central bank in a developed market felt the need to set a negative deposit rate, and that shows how serious and committed the ECB is to achieving its goal.

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Who Said It? Name the Public Official Behind This Quote
The answer may surprise you.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Can you try and guess which public official said the following quote? The answer may shock you.

"By partially replacing term funding in the form of more expensive bank bonds, the [redacted] can create a scarcity of investible assets, which will result in lower yields and easier market funding conditions even for banks that have not taken part in the operations."

If I hadn't have known the answer I would have guessed this was Ben Bernanke speaking, at some point in history.

In fact, of the dozen or so people I asked, every single one guessed a prominent US monetary policy official. Former or current Fed Chairs Ben Bernanke, Alan Greenspan, or Janet Yellen were common responses. Also suggested were Tim Geithner and Hank Paulson. 



The statement in question was spoken yesterday by Peter Praet, the chief economist at the ECB who's considered the mouthpiece for the bank's president Mario Draghi.

My main point is that you could have assigned the quote to any US Fed official shortly before he or she embarked on an asset purchase program. The goal of quantitative easing is to lower real rates to the point where there is a real cost for every investor class to hold a deposit (cash). Therefore, it creates a scarcity of every financial asset on the planet because holding any asset becomes the same as holding cash.

The takeaway is this: I think, if need be, the ECB will figure out a way to move forward with full-blown QE. Either that or they will increase the supply of long-term loans to lower the funding cost even further. Will it "work"? I am extremely doubtful, but I believe there's a very good chance that European assets will appreciate while the ECB is trying to synthetically create inflation. Never before in history has a major central bank in a developed market felt the need to set a negative deposit rate, and that shows how serious and committed the ECB is to achieving its goal.

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

More From Michael Sedacca
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Who Said It? Name the Public Official Behind This Quote
The answer may surprise you.
Michael Sedacca    

This article was originally posted on the Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Can you try and guess which public official said the following quote? The answer may shock you.

"By partially replacing term funding in the form of more expensive bank bonds, the [redacted] can create a scarcity of investible assets, which will result in lower yields and easier market funding conditions even for banks that have not taken part in the operations."

If I hadn't have known the answer I would have guessed this was Ben Bernanke speaking, at some point in history.

In fact, of the dozen or so people I asked, every single one guessed a prominent US monetary policy official. Former or current Fed Chairs Ben Bernanke, Alan Greenspan, or Janet Yellen were common responses. Also suggested were Tim Geithner and Hank Paulson. 



The statement in question was spoken yesterday by Peter Praet, the chief economist at the ECB who's considered the mouthpiece for the bank's president Mario Draghi.

My main point is that you could have assigned the quote to any US Fed official shortly before he or she embarked on an asset purchase program. The goal of quantitative easing is to lower real rates to the point where there is a real cost for every investor class to hold a deposit (cash). Therefore, it creates a scarcity of every financial asset on the planet because holding any asset becomes the same as holding cash.

The takeaway is this: I think, if need be, the ECB will figure out a way to move forward with full-blown QE. Either that or they will increase the supply of long-term loans to lower the funding cost even further. Will it "work"? I am extremely doubtful, but I believe there's a very good chance that European assets will appreciate while the ECB is trying to synthetically create inflation. Never before in history has a major central bank in a developed market felt the need to set a negative deposit rate, and that shows how serious and committed the ECB is to achieving its goal.

Twitter: @MichaelSedacca

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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