Central Bank Policies Prop Up Markets and GDP, Masking Economic Weakness
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Stock markets are not an accurate indicator of real economic health and growth, they can be manipulated by monetary policy and capital flows. Japan's economy is weak despite a booming stock market.
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Liquidity pumping by central banks has inflated growth rates and asset prices, creating an asset price inflation. This boosts GDP figures and perceptions of economic strength.
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China shows deflationary trends as falling asset prices reduce liquidity, unlike in the US and Japan where markets boom due to strong liquidity.
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Governments' use of monetary and fiscal tools has created an impression of omnipotence in steering economies via markets.
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Highly valued and overbought markets in the US and Japan are vulnerable to a correction or crash which would cause economic stress.