Central banks, led by the Fed, have been “successful” this year, at generating fantastic new speculative froth especially in credit and equity markets.
It is not at all obvious that this grown froth will help smother present recessionary forces, in the global economy. If these win through, then asset markets for equity and credit will surely not sustain giddy heights.
Legarde at one end, and Powell at the other of the euro-dollar axis, means that powerful monetary inflation will continue, camouflaged still by digitalization. But both these central bank chiefs will face ultimately a hostile political environment.
In Europe, the German Right is likely to gain new effectiveness in tackling the ECB. In the US, Powell’s past history as private equity baron will weigh against him, in the next crash where P/E bust will surely feature big.
Dr. Brendan Brown
For the Paper: MonetaryScenarios