Something Changed In 2014

For all the talk about the various “tools” in central bankers’ arsenals to influence monetary policy, to manipulate stock markets and to soak up global bonds (they now hold more than a third of the total $54 trillion in in global bonds), the fundamental – and very simple – purpose of any “developed” central bank is one: to restore and boost consumer (and in recent years investor) confidence during times of stress, promoting a vibrant economy in which the velocity of money is high, where commerce and economic transactions are ample, and where inflation (at least in a Keynesian world) is sufficiently high to gradually inflate away the debt burden and reduce the incentive to save. Boost confidence, the thinking goes, and everything else will follow from there.
And while that may historically have been the case, something changed significantly in 2014.
This is obvious from one chart in the latest OECD Economic Outlook report issued earlier today, which shows that while consumer and the all important business confidence do indeed go hand in hand…

This post was published at Zero Hedge on Jun 7, 2017.