The central banks’ “extraordinary” and “non-conventional” measures are now more than a decade old and they are still going strong.
If initially they were only supposed to last for a few years after the financial crisis of 2007-2009 until things “went back to normal”, this expectation was quietly dropped once it became clear that the extraordinary had become ordinary.
But as these measures continue, their toxic side effects are increasing. They may in fact be contributing to the sluggishness of the world economy and to the lack of productive investment, rather than counteracting them.
It seems that nothing can break the bond rally — or deflate the bond bubble, as critics would say. Inflows into bond funds have hit a record this year, in tandem with record high bond prices, but how long can the euphoria last?
The snow has melted and it’s time to make plans for the future again. And like every spring, those plans are likely to include what has become known as “reflation” — inflation increasing again to a level where it can eat away at the mountain of debt the world’s big economies have to deal with.
Will consumer price inflation, rather than inflation in asset prices like property and securities, finally take off? There have been two interesting points of view last week on this issue.
The report is about the “intergenerational transmission of poverty in the UK & EU,” an issue that is becoming more and more obvious as inequality rises following the measures taken to mitigate the effects of the financial crisis on capital markets.