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Alternative Market Briefing

Elliot Associates: global monetary policy distorting asset prices, raising inflationary concerns

Thursday, May 31, 2012

Bailey McCann, Opalesque New York:

The global monetary policy of central banks throughout the world is not only diluting the money supply, but is distorting asset prices of all types according to commentary included in a quarterly report from Elliot Associates obtained by Opalesque. Writing in the report, the firm notes that the broad based monetary expansion ushered in by central banks all over the world is now the primary economic driver of economic activity and is also the key factor determining current asset prices.

So reliant are current asset prices on this policy, the firm argues that there is no way to tell what current prices would be for stocks or bonds if the intervention of central banks was removed. Falling in line with other economic observers, the firm expects to see some form of new economic or political surprise later this year that will have a significant impact on markets.

The debt crisis plaguing the Eurozone was also a key focus point for the firm which took a hard view of austerity measures and their impact. The firm notes that while many countries are being forced to take on austerity measures as the price for remaining in the EU, the broader negative effects of these measures on member state economies may not be worth it.

New frontiers may be opening in the Euro-crisis in line with Elliot's observations, credit ratings agency Moody's announced that it has downgraded 9 Dutch ......................

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