A quiet revolution in central banking is gathering speed, as the Federal Reserve ploughs ever deeper into the brave new world of unorthodox monetary policy and other central banks ponder how far they might have to follow.
The world’s central banks have already undergone dramatic changes since the start of the credit crisis more than a year ago. They have cut interest rates with unprecedented rapidity – in some cases to historic lows – and have increased bank reserves massively to meet heightened private sector demand for liquidity.
Brave New World?
Unorthodox monetary policy?
Dramatic changes?
Last time I checked, cutting interest rates, bailing out big companies, and "injecting liquidity into the market" are the Standard Operating Procedure. I'm pretty sure they did it in the 1930s... and the 1960s... and the 70s... and the 90s...
That's where all of America's money has gone (spent the last of it during the dot.com crash), and it's where Australia's budget surplus is going now.
The only thing different this time is that they're doing MORE of it... and they're making it worse.
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