It ain’t getting easier for central bankers . . .

Doubts about post-crisis monetary policy are finding their way into the mainstream with increasing regularity. What tipped the balance? Two main things, I think.

First, it’s getting tough to argue that it’s working. After eight long years central banks are still mollycoddling their fragile economies and overall indebtedness keeps on growing. Second, faced with this puzzle, rather than re-examine their premises central banks have tended to double down with policies like NIRP, extending QE to corporate bonds and equities as well as canvassing even more radical moves like banning cash and cranking up the helicopters.

None of it’s a good look. Happily, scrutiny of these various idiocies is becoming ever more common.

Central banks and their intellectual handmaidens have owned this conversation for a long time. The weakness of their underlying rationale went mostly unexamined because of the deeply embedded belief that they had a handle on things. Until very recently, the internal contradictions and lack of an endgame never seemed to be considered, except by a heterodox fringe.

So what are these internal contradictions? Read the rest of this entry »