It’s become increasingly difficult to read any financial news these days without coming across one or (sometime many) more stories detailing how the world is quickly losing faith in central bankers, one of the latest being this offering from The Economist.
WORLD stockmarkets are in bear territory. Gold, a haven in times of turmoil, has had its best start to a year in more than three decades. The cost of insurance against bank default has surged. Talk of recession in America is rising, as is the implied probability that the Federal Reserve, which raised rates only in December, will be forced to take them back below zero.
One fear above all stalks the markets: that the rich world’s weapon against economic weakness no longer works. Ever since the crisis of 2007-08, the task of stimulating demand has fallen to central bankers…
Clearly, Jim Grant of Grant’s Interest Rate Observer put it best in recent years when he concluded, “The price of gold is the reciprocal of the world’s faith in central bankers“, an idea that, surely, more than anything else, is anathema to said central bankers.