Steen Jakobsen Warns “Things Are About To Take A Different Turn In 2015″

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

zerohedge.com / by Tyler Durden on 01/11/2015 13:30

This article is based on an interview conducted by Claudio Grass, the Managing Director of Global Goldbased in Switzerland, with Mr. Steen Jakobsen. Mr. Jakobsen is the Chief Economist and Chief Investment Officer at Saxo Bank, where he has served for a total of 14 years, including two years where he left to act as Chief Investment officer of Limus Capital. He is a renowned economist and trader with more than 25 years of experience in the fields of proprietary trading and alternative investment. The topics covered in the interview range from monetary policy to business cycles and precious metals.

Current monetary policy has made the public more aware and more critical of Policymakers

Mr. Jakobsen previously described the western central banks’ policies of quantitative  easing (QE) as “unconventional”. He has always made an analogy that doing quantitative easing and easy monetary policy is like breaking your arm: putting a cast on it protects the arm from further damage, but keeping the cast in place for 5 years results in a loss of 90% of muscle power which is exactly what quantitative easing does to the economy. He points out that there is no empirical or practical indication of any link between low interest rates and easy monetary policy and the ability to regenerate growth. According to Jakobsen, growth is driven by the optimism and willingness to invest in real people and real jobs. What QE does is simply that the individual gets paid through and by the virtue of quantitative easing with paper money. Bonds can be bought with zero interest and houses are acquired with a yield less than 1.5%. This situation creates bubbles and makes the business cycle worse. Jakobsen argues thisis ironic because this whole exercise from the central bank, of course, is meant to minimize and counter against the downswing in the business cycle.

People are becoming more critical of our current monetary system. In the past six years, central banks have promised us growth within six months’ time. They and the whole monetary and financial system have lost credibility. The banks’ profit to GDP is the highest in history in an economic environment where we have the highest amount of unemployment since WWII. There is something very wrong with the way the system works and this is all due to the overemphasis on trying to minimize the business cycle. The real conclusion of QE can only become visible if we experience the full business cycle. In Jakobsen’s view, we have never been allowed to have a down cycle since 2008. But now, there is finally going to be a down cycle because central planners can’t print more money. As Jakobsen puts it: “Now is the time for the real economy to take over”.

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Thanks to BrotherJohnF