A key question: What is the limit to central bank balance sheet expansion?

The size of OECD central banks’ balance sheets has increased considerably over the past 10 years. They may now start to increase again in the future, as the Federal Reserve stopped shrinking its balance sheet in October 2019 and there is starting to be talk of resuming quantitative easing in the United States; the ECB is resuming quantitative easing in November 2019; and the Bank of Japan is continuing its own quantitative easing programme. This begs the question as to whether there is a limit to central bank balance sheet expansion : In the past, excess money creation led to inflation, but this is manifestly no longer the case today; One should now therefore fear a loss of confidence in money, flight from money and a rotation by savers (investors) into “real” assets, which normally provide protection against a loss in the value of money (real estate, listed or unlisted equities) , and into safe-haven assets (gold, cryptocurrencies). There are now a few signs in OECD countries that could reveal an incipient flight from money: rising prices in real estate, unlisted equities, gold, bitcoin.