Since the start of QE infinity, central bankers have been baffled by the lack of pass-through form monetary policy measures into inflation. The short answer is monetary easing has generated inflation in asset prices, not in consumer goods. In part, this is due to technology and globalization, which improved the supply of goods. However, we also know that quantitative easing benefited mostly asset-owners and large firms, which have a reduced incentive to invest or grow vs SMEs, for example. The result has been a reinforced gap between large and small firms, and lower productivity growth.
Today, policy is shifting. We are closer to helicopter money, in the form of fiscal measures aimed at everyone, not only owners of stocks and bonds. In an interview with Peter Rohner at FUW, we discuss the potential for higher inflation and the consequences for markets.
Click here to read the original article, published on September 8, 2020.