In response to an FT article by Paul Marshall on 22nd September 2015, entitled 'Central Banks have made the rich richer'
"QE had clear wealth effects, which could have been offset by fiscal measures. All political parties should acknowledge this. So should those of us who want free markets to retain their legitimacy"
Free markets? Retain legitimacy? That ship has already sailed. It was launched by Mr Greenspan's first 'put' and is now drifting around rudderless on a sea of easy money and central banking hubris. There is not an 'honest' price or interest rate to be found anywhere. You'd have more chance of finding an honest politician or a central banker with the foggiest idea of how the real world works.
Helicopter money? It will come, probably in 2016 when the Fed gives up all pretence of ever being able to raise rates without bringing the house down, but none of that will create a return to free markets. It will simply delay the inevitable - the market needs to clear. We will not get out of this with above trend growth, and they all know that. So there are three possibilities:
2. Deflationary collapse
3. A reset and restructure of the debt and the global monetary system
One way or the other, we will arrive at number three. But governments and Central Banks will never go there voluntarily. They will be forced there by crisis, quite possibly by the onset of a deflationary depression (which in my view we are already in the early stages of). The CBs will eventually respond with a massive dose of QE and helicopter money, in an attempt to create inflation.
Then after that? I don't know how it pans out. The only things I am clear about are these:
a) Forty years of progressive debt accumulation, facilitated by central planners and irresponsible governments, is what got us here
b) Growth will not return until the market has cleared the debt. This will free up resources for profitable companies and projects - I.E. Ones that do not require ZIRP in order to continue their zombie like existence
c) We will not have a return to free markets until Ponzi monetary policy and tooth fairy economics are thoroughly discredited, along with the the half baked academics, irresponsible politicians and crony capitalists who hide behind them.