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Ultra low interest rates and the failure of policy to "lean against" the build-up of financial imbalances are in danger of making the global economy permanently unstable, the Bank for International Settlements has warned.   In its annual report, the Swiss-based "bank of central banks" spelled out the risks of relying too heavily on monetary policy to stimulate the economy. The BIS warned that central banks including the Bank of England and US Federal Reserve could keep monetary policy loose for too long, with potentially damaging consequences.   "The prospects for a bumpy exit together with other factors suggest that the predominant risk is that central banks will find themselves behind the curve, exiting too late or too slowly," the BIS said on Sunday.  It added that a "persistent easing bias" by fiscal, monetary and prudential policymakers had lulled governments "into a false sense of security" that delayed needed consolidation and created a risk that instability could "entrench itself" in the system. "Policy does not lean against the booms but eases aggressively and persistently during busts," the BIS said. "This induces a downward bias in interest rates and an upward bias in debt levels, which in turn makes it hard to raise rates without damaging the economy – a debt trap.

"Systemic financial crises do not become less frequent or intense, private and public debts continue to grow, the economy fails to climb onto a stronger sustainable path, and monetary and fiscal policies run out of ammunition. Over time, policies lose their effectiveness and may end up fostering the very conditions they seek to prevent." ... I've been saying this all along. If you lend money without charge then it mean the money can be borrowed for the most inefficient of businesses. It doesn't weed out the wrongfulness meaning the customer doesn't get what he wants and does get what he doesn't want. With higher rates the dead wood goes and money is employed more efficiently with less waste. That means less work, bigger houses, more food on your plate. Who could possibly argue with that?... The truth is, the 'Ponzi Scheme' that is the worlds current monetary system is fast reaching its point of collapse. And were it not for the consistently low interest rates, well, then the system would have already collapsed.  The criminals who are running the show know this, as do those who are paid to misinform at the likes of the Telegraph.  Historically, debt based monetary systems have had an average life span of around 40 years.  And seeing as all currencies came off a gold backing in 1971. We are now of course fast running out of time. The likes of the Chinese, the Indians, and the Russians know this, which is precisely why they are now attempting to get rid of all of their paper holdings.  Purchasing tangible assets such as the precious metals wherever possible. Just remember folks, whoever is left holding the paper at the end of the game is the loser. For that paper will then have 'no value' at all.