In other words, at one extreme, if the market perceives the policy as a failure, credit risk and demand/supply imbalances are likely to dominate, putting even further downward pressure on yields. At the other extreme, if the policy is perceived as a loss of monetary discipline, inflation expectations would spike, leading to an aggressive re-pricing of yields higher.
Simply said: too little, and the deflationary vortex will swallow all; too much, and yields will explode. DB continues:
A “successful” helicopter drop may therefore be easier said than done given the non-linearities involved: it needs to be big enough for nominal growth expectations to shift higher and small enough to prevent an irreversible dis-anchoring of inflation expectations above the central bank’s target. Either way, the behavior of the latter is the key defining variable both for the policy’s success as well as the asset market reaction.
Which brings us to DB's politically correct conclusion: "under the assumption of policy “success” without fears of hyperinflation, we would conclude that bond yields rise"... the same success which DB also says "will be easier said than done", which then means, drumroll, that the dominant outcome will be one in which "fears" of hyperinflation are justified.
In which case, please go ahead and sell your gold to Goldman: the vampire squid has repeatedly said it will buy everything you have to sell.
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