Doug Noland: Do Whatever It Takes to Shock and Awe

Draghi beats "Wall Street" estimates.  Markets rejoice.
I’m not really that old. And I don’t have to think back all that many years to recall when “Fed watchers” would monitor every move of our central bank’s “open-market operations” in hope of discerning subtle changes in monetary policy. Things changed profoundly during the nineties, as a long tradition of conservative central banking principles gave way to “activist” monetary management.
Thursday provided yet another chapter in the fateful evolution of contemporary central banking. In what I’ll call “Do Whatever it Takes to Shock and Awe,” Mario Draghi straggled deeper into the uncharted territory of negative rates, while also announcing a plan to aggressively expand the European Central Bank’s (ECB) balance sheet (create “money”) through the purchase of asset-backed securities (ABS) and covered loans. European stocks and bonds surged on the surprise announcement, as the euro currency was taken out to the woodshed.

This post was published at Prudent Bear


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