From a recent presentation(.pdf) by Agustín Carstens, Bank of Mexico governor and chairman of the IMF’s International Monetary and Financial Committee, via this item at Wolf Street comes the chart below that, once again, reminds us all how far removed the global financial system is from anything that could be considered “normal”.
Carstens doesn’t oppose recent interest rate and QE policies by central banks, but he is quite concerned about how it all turns out, summing things up rather nicely by noting:
The crux of the matter is that financial risk-taking has been far more responsive to unconventional monetary policies than real risk-taking has been.
This would be less troubling (well, at least a little less troubling) if not for the fact that the world’s most important central bankers in general (and former Fed Chief Bernanke in particular) have never acknowledged that “the reach for yield” even exists.
Images: via Flickr (licence attribution)
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