So Bank of England’s Andy Haldane admits to the monster central bankers have spawned.
From the Telegraph.co.uk
Andy Haldane, the Bank of England's executive director for financial stability, believes the biggest risk to the global financial system is a "disorderly" bursting of the bond bubble created by quantitative easing.
He told the Treasury Select Committee on Wednesday that bond market had seen “shades of that" in the spike in bond yields around the globe after the US Federal Reserve said it was looking to taper its massive stimulus.
“We have intentionally blown the biggest government bond bubble in history,” he said at hearing on the reappointment of officials to the Financial Policy Committee, created to monitor broad risks to the financial system.
If central bankers acknowledge that withdrawing stimulus would burst the bond bubble and trigger financial instability would they proceed with that? Hardly.
But again continuing to inflate the unsustainable bond bubbles will produce an eventual bust.
Long term US treasury yields, for instance, has been inching higher since the 2nd half of 2012 or even before the FED’s unlimited QE 3.0 as previously discussed. With the FED’s QE 3.0, the rate of increases of bond yields accelerated. So in order not to lose credibility, the FED had to put on the make up and blabber about “tapering” which media reasons backwards.
So if QE today pushes up yields, and withdrawing QE will also drive up yields then both will end up with the same scenario: the bursting of the bond bubble.
Damned if you, damned if you don’t
And the initial hissing of the bond bubble has already been crushing many markets including ASEAN markets. What more of a full scale implosion?
How about the accountability of central bankers for the coming devastation?
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