20/3/16: Economic Reality v Central Banking: Vegas-styled Showdown

What’s going wrong with the global monetary policy? Nothing, really, except for the economic reality.
Let me explain. In a forthcoming article I will be highlighting the channels through which monetary policy deployed in recent years (a combination of extremely low lending rates, negative in many cases deposit rates, massive asset purchases or QE) have contributed to increasing markets and economic volatility, whilst achieving preciously nothing in terms of lifting up economic growth.
Here, let’s consider what I shall term the ‘extreme impotency’ of monetary policy in the age of a structural debt crisis.
Lessons from the ECB
Earlier this month, ECB did something remarkable. Prior to its March meeting, the ECB has hyped markets expectations for a dramatic monetary expansion (as pre-flagged here:On the day of the announcement, the ECB actually exceeded markets expectation as I noted here:and de facto threw in the entire kitchen sink of monetary policies at the fire. This had no real effect.
The ECB forced through extraordinary measures:

This post was published at True Economics on March 20, 2016.