Peace, Policy, Economics & The White Knight

Over the past two decades, the path of least resistance for stimulating an economy by policymakers, has been in the form of monetary policy. This overreliance, has brought about an erosion of the monetary policy terrain, the landscape more, and more, resembles a tropical rainforest affected by deforestation. Overuse of the policy lever in the form of reducing the cash rate (federal funds rate) by central banks, has rendered the policy action arguably impotent.

Zero lower nominal bound,  nominal short term rates and the exploration of negative rates, bouts of massive stimulus packages, imprudent government debt to GDP ratios, further household indebtedness, specific asset (equities and realty) inflation and wild booms and busts, to name a few, indicate overuse and abuse of governing and regulatory authority.

Rising populist rhetoric and its kin spread across developed nations, as their citizens become disenfranchised by the ‘Financial Market Villain’, who many see as the culprit to the woes of the people. The message conveyed is one where; government is portrayed as the white knight, deliverer of the people from rebel and anarchic markets.

Now is the time, more than ever, to question and challenge the very beliefs and views that we have held autonomously and sub-consciously regarding; economic and foreign policy in particular.

“Blessed are the peacemakers…” (The Beatitudes)