In Lewis Carroll’s classic children’s book, Alice’s Adventures in Wonderland & Through the Looking-Glass, Alice says, “If I had a world of my own, everything would be nonsense. Nothing would be what it is because everything would be what it isn't.” For financial market participants, that world Alice envisioned has become a reality.
After almost two decades of quantitative easing by the world’s major central banks, investors find themselves deep down the rabbit hole. The more than $16 trillion of bond and stock purchases by central banks since the financial crisis alone has artificially boosted asset prices. Although these purchases bolstered confidence in the financial system, they failed to achieve their primary goal, which was to spark faster inflation.
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