Central bankers, most of them versed in the history of the Great Depression and deflation, haven’t been exactly reading from the same hymnal for the past few years. There are signs, though, that this might be changing.
Perhaps it is merely a coincidence, but the U.S., with the most activist central bank and after more than five years of quantitative easing and a zero interest rate policy, has the best looking economy in the developed world. Europe, where Germanic austerity and central-bank timidity prevails, looks the worst. Japan is somewhere in the middle, both in terms of its economic recovery and QE.
Preliminary results of these grand monetary experiments are now in and the results are clear: More monetary stimulus equals a strongest economic recovery.
Hey, maybe this isn’t a coincidence after all?
Although the U.S.’s recovery hasn’t been ideal, it is far better than what we see in Europe and Japan. Sure, it has been slow, unevenly distributed, with soft spots and blemishes. But it is a recovery nonetheless, one that is the envy of the developed world . . .