Fed sends ever more powerful and destructive tremors through the global credit system
Few can withstand the shock of vanishing dollar liquidity, down $4 trillion since April.
ECB is buying Italian and Spanish debt systematically in order to hold down yields – i.e., to fund budget deficits – despite eurozone inflation near 10pc.
Those arguing that Brexit is in tatters, or that a humiliated Britain should rejoin the EU, have forgotten how long it took Europe to resolve its festering debt crisis from 2009 to 2015, and how much damage was done by a dysfunctional currency union that remains unreformed to this day.
Euro mandarins got there in the end, after replacing two elected leaders along the way with technocrats, and after forcing the capitulation of Greece’s Syriza government by cutting off Target2 flows to Greek commercial banks (illegally) and deliberately precipitating the financial collapse of a member state.
The chief cause of perma-slump following the global financial crisis was premature fiscal austerity at a time of large output gaps and at a time when the broken banking system was still shrinking its balance sheet.
Central banks had to step in with zero rates and QE to compensate.
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