One of the best minds in international finance, Pimco’s Mohamed El-Erian, has warned the world’s politicians are asking their central banks to do too much.
From the Australian Financial Review, here’s some of what the boss of the world’s biggest bond fund said:
“There is a reason why central banks are not exiting from the major responsibilities they’ve taken.
“They’re doing so using very imperfect tools, but they have no choice.
“Get used to central banks using increasingly imperfect and ineffective tools, which has a lot of side effects.”
Central banks have shouldered a large burden after the financial crisis. For example the US Federal Reserve has spent billions buying its own bonds through a quantitative easing program, and many countries in Europe have required bailing out so they don’t default on their debts.
There’s more here.