Central Banks – the monopoly board of illusions

The slow economic normalisation under way since the global financial crisis has been running hand in hand with another process. The travestying of orthodox monetary policy. Each stage of economic disappointment is met with calls for more action. Extraordinary monetary policy has consequently become ever more extraordinary. Mispricing asset prices has become central bankers’ primary conduit. That has transformed low interest rates into negative ones and stock market bubbles into attractive yield plays. But one monetary taboo remains: helicopter money. In reality, this is more of the same, QE without the commercial bank intermediary and false notion that balance sheet expansion was temporary. But the investment implications are more serious. It demotes central banks back to government department level and undermines the last vestiges of fiat money credibility.

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