12th Edition of The "In Gold We Trust" Report: Implications Of The End Of QE

However, this year central banks will turn from net buyers of into net sellers of securities. The consequences of this turn of the tide in monetary policy – the implementation of which has already begun in the US, with the euro area set to follow suit soon – could be quite dramatic, as the monetary stimulant applied in an attempt to prevent a relapse into crisis conditions in the post-Lehman era had numerous side effects.

For one thing, the medicine enticed the patient to indulge in a da capo of the global debt accumulation orgy. Mario Draghi’s “whatever it takes” policy was supposed to buy time for Southern European countries to implement structural reforms and reduce their indebtedness – that was the theory, anyway. In practice extremely low interest rates were an irresistible incentive to pile up even greater mountains of debt.

 

 

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