Nouriel Roubini writes:
Ultimately, deleveraging requires the writing down of debt as reflationary policies are not a free lunch and won’t solve the debt overhang problem (Dr. Roubini). Important case study: Japan back into deflationary territory despite huge public debt and QE (Chinn). Rather than a sign of inflation, higher long-term yields may be pointing to higher real interest rates which are compatible with a deflationary environment (BofA). The equilibrium coexistence of zero interest rates, high unemployment, deflation, rising cash balances and excess reserves points to a liquidity trap environment as during the Great Depression and Japan’s lost decade.
When will they be fired?