Already have an account? log in
This article is FREE for you
Create a free account and join institutional investors, analysts and strategists from the world's largest banks
By submitting your email address you agree to receive communication by email
It Was All A Dream…
On Thursday, the ECB confirmed the end of net asset purchases and the timing leaves something to be
OR, subscribe now for unlimited access
By submitting your email address you agree to receive communication by email
By submitting your email address you agree to receive communication by email
QE has always been “quantitative failure”, from its conception. Any easing in financial conditions that it brought to the world was through expectations management (Draghi’s expertise, judging by his sycophantic fanboys). That is not to denounce its brilliance: the swap of toxic assets from bank’s balance sheets with non-toxic securities was a stroke of financial genius, because it sterilized the balance sheets of banks. But this portfolio sterilization never achieved its end goal, which was to rekindle the flow of credit in the real economy (as opposed to the financial economy) by allowing banks to swap their non-toxic CB securities for risky loans.
The real failure is central banks’ insistence on QE as the only acceptable measure to ease monetary conditions, something they never truly achieved (just looking at funding markets like the eurodollar market over the past 10 years is indicative of this). As a European I find it hard to sympathize with the gilets jaunes or the 5 Star Movement but their anger at technocrats’ incrementalism is the logical reaction to a lost decade for Europe’s non-asset-owning classes.