We are nearing the end of the largest
monetary policy experiment of all time, and ascendant nationalism, staggering inequality and a widespread loss of hope amid the younger generation are among its varied fruit.
A growth agenda may be good for equities, but the untethering of
the monetary policy experiment may not be good for equities, and there may be some ambiguity as to what this means for risk assets and portfolios.
Gold - star fund manager Michael Hasenstab of Templeton Global Bond (TPINX) stated that «we are at a pretty rare point in markets where you have huge dislocations... unprecedented and untested
monetary policy experiments creating tremendous amount of volatility.»
Continued attempts to boost employment and real economic output by pursuing evermore quixotic
monetary policy experiments increases the long - term risk of inflation.
Not exact matches
After witnessing unconventional
monetary policies push financial markets to new heights, investors seem to be losing faith in this grand
experiment.
Even so, several financiers and central bankers throughout history tried
experimenting with a fiat currency system, a decision which often led to major imbalances between
monetary and fiscal
policies, and eventually economic depressions.
It is only one consequence of the Fed's
experiment with extraordinary
monetary policy.
These new trends haven't gone unnoticed, with many of these sectors starting to perform well when the Fed officially ended its bond - buying program last October, marking the end of an extraordinary
monetary -
policy experiment.
An interesting thought -
experiment is to assess the likelihood of future interest rates having risen sufficiently to give
monetary policy the headroom necessary to cushion a recession.