QE will only lead to more QE argues Hugh Hendry in his latest monthly note (via @nictrades).
In a sense, the macro outcome hangs on one’s interpretation of quantitative easing. It is my assertion that monetary easing represents an enormous change to the benign policy which has driven global growth for the past 15 years. I equate the easing program with Roosevelt’s devaluation of the dollar in 1931 (that year keeps reappearing). By this I mean it could mark the moment when modern American policy makers rejected globalisation. It is a direct attempt to address and remove the free rider (or mercantilist) problem associated with managing the dollar as a public international good.
This chart explains how it works.
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