EU economies especially are troubled.
by Stephen Lendman
Since 2009, an ocean of easy money saved American, EU, and Japanese economies from collapse.
Never before historically did the world's largest central banks abandon reason and go "absolutely berserk," according to financial expert Martin Weiss . Earlier ones alone did it.
Four is unprecedented and dangerously reckless. So far they're swimming above water together. Eventually they'll sink when "the money drug stops working." Diminishing returns eventually follow, then perhaps crashes when things spin out of control.
Economic growth already is faltering. Lower or declining growth despite larger money infusions shows trouble gets closer to erupting. As long as printing presses roll, day of reckoning's postponed, but that game only works for so long.
Drug addicts need regular fixes, then bigger ones. They lead to overdoses and death. Economies are similar. What can't go on forever, won't. Trouble awaits excess down the road. The more extreme, the greater the bang. It's coming and will rock the world.
For over two decades, the Bank of Japan (BOJ) printed money "like crazy." In 2008, when crisis erupted, BOJ's balance sheet already was bloated. It totaled 20% of Japan's economy. Now it's about 30%.
Germany's 1920s hyperinflation resulted from similar monetary madness. Easy money in America under Greenspan was bad enough. Bernanke made him look tame. Since 2008, he more than tripled the Fed's balance sheet from about 6% of GDP to 20%, and hasn't quit yet.
The Bank of England (BOE) matched the Fed. Perhaps it feels what's good for the goose is good for the gander. Good for what must be asked? Bankers and corporate giants had a party. Ordinary households were entirely left out. Potentially an unprecedented train wreck approaches.
Since 2011, the European Central Bank (ECB) led the money printing global race. Its balance sheet expanded to almost 30% of GDP for 17 member countries. Each dissimilar from the others, they're paying a collective price.
PIMCO's Mohamed El-Erian sounded an alarm asking what happens if central banks fail? They flooded Western economies and Japan with money irresponsibly. El-Erian believes they "no longer" should keep doing it. Their policies are losing effectiveness. Greater "collateral damage and unintended circumstances" are increasing.
While short-term liquidity infusion effects are clear, longer-term ones raise concerns. Bottom line, says El-Erian, is that "central banks can no longer - indeed, should no longer - carry the bulk of the policy burden."
"Rather, it is a recognition of the declining effectiveness of central bank tools in countering deleveraging forces amid impediments to growth that dominate the outlook." It's also about growing risks too great too ignore. "(S)afe deleveraging" must replace years of monetary madness.
The global system's "Western core" weakened and "multilaterism is challenged." Central banks may have built "expensive bridges to nowhere." Ripple effects from are felt globally. Their "ballooned" balance sheets are dangerously overstretched.