How difficult will it be for central banks to normalize monetary policy in practice, and what will be the consequences of such policies for investors assuming that the central banks’ commitment to balance sheet reduction is maintained?
The answer, according to Chris Wood's new Grizzle.com blog, is ominous:
This is uncharted territory.
The only precedent for the scale of the central bank balance sheet expansion of the past nearly 10 years was during World War II, with government debt and government guaranteed assets now accounting for at least as large a share of central bank balance sheets as during World War II.
Clearly, Wood explains, the purpose of such central bank balance sheet expansion in the 1940s was to assist the fiscal authorities in financing a war.
Which made us wonder, what 'war' are authorities financing this time?
The answer is simple - a war against reality!
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