In case you haven’t been watching the news, it’s pretty clear that the Federal Reserve and central banks all over the world are in the pockets of politicians. Stephen King, an economist with HSBC, published a recent commentary examining this problem:
“There are less obvious effects that also warrant greater scrutiny. Quantitative easing may make it easier for governments to raise funds cheaply; but, by increasing the net present value of pension funds’ future liabilities, it creates problems for those funds already running deficits. That, in turn, means either bigger pension contributions for workers; lower prospective pension benefits; or, in the case of some public sector pensions, tax increases or spending cuts to make the numbers add up. Meanwhile, some of the biggest beneficiaries of QE are those already asset-rich and relatively old who prefer to sit on their windfall gains rather than spend them.
Put another way, monetary policy is doing more to redistribute income and wealth than to trigger a rebound in economic activity. Central bankers are making decisions that are more political than economic.”
Central Banks Are Making Political Decisions
In case you haven’t been watching the news, it’s pretty clear that the Federal Reserve and central banks all over the world are in the pockets of politicians. Stephen King, an economist with HSBC, published a recent commentary examining this problem:
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