VelocityShares 3x Inverse Natural Gas (DGAZ) is one of the generated profits from the losses in the UNG fund. Few mainstream commentators are understanding the seriousness of the economic and monetary situation. It is one of the V-shaped rapid return to normality towards a more prolonged recovery phase. The liquidity crisis is developed in US money markets five months before the virus hit America has been forgotten. Rising gold price is a standing testament to a deeper crisis comprised of contracting bank credit. Central banks are trying to rescue the economy and fund government deficits. It is keeping the market bubble inflated.
Central Banks View The Current Situation
The bank is undertaking a £200bn program of quantitative easing that is amounting to two-thirds of Britain’s expected funding requirement relating to the coronavirus. There are satisfy the following policy objectives:
- Stabilize financial markets are buying £50-60bn of gilts every month, in common with actions of other central banks in their markets. DGAZ at https://www.webull.com/quote/nysearca-dgaz suggests the economy is expected to be on the way to recovery by late-July.
- Extra government debt is absorbed and to smooth the profile of overall government borrowing. This will be enabled the bank to keep gilt yields low, and those of corporate bonds as well.
- It is addressing counterfactual issues that can be expected to arise if the Bank did not do QE. Presumably, other than disrupted markets, Bailey was referring to fears of deflation in the absence of the monetary stimulus.
Issues of credit
- Central banks have placed the blame for irrational behavior in the private sector. The banks are obviously the cause of credit cycles. These are seen to be merely responding to changing business conditions and must be discouraged, in their interests, from making the situation worse at a time of periodic crisis.
- But central bankers are playing their part in credit instability by encouraging banks to extend credit to stimulate the economy in the first place. That fact alone it is making nearly impossible for them to accept the consequences of their monetary policies.
- Central bankers are including Andrew Bailey that is not only looking at bank credit through the wrong end of the telescope but also does not see a credit crisis in the making.
- This is amounting to ignorance that explains why they believe that the coronavirus is simply a one-off hit, and after a short period, everything can return to normal, so long as the recovery is properly managed.
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