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Central Banks: Another Stunning Long-Term Chart

  • Written by Syndicated Publisher No Comments Comments
    April 24, 2015

    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)

    About The Author

    As you may have already deduced, this is not your typical financial blog, accompanied by some run-of-the-mill investment newsletter, and I’m not your typical financial writer.

    In fact, I spent my entire working career as an engineer before retiring back in 2007 at the tender young age of 46. Two years prior to that in 2005 I started writing a blog – The Mess That Greenspan Made – mostly just to poke fun at the housing bubble and the policy makers who had led us down that path.

    Details about the investment newsletter and information about the performance of the associated “model portfolio” can be found here and if there are any questions that I can help answer, just send mail to tim@iaconoresearch.com.

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