Quantitative easing: Capitalism’s final flurry?

For different reasons (weak demand due to weak wages, crisis response), public and private debt has increased considerably over the past 30 years in OECD countries. Without this debt, the lower growth would have given rise to constantly high unemployment. To make the debt possible, monetary policies have become increasingly expansionary and unconventional: purchases of government bonds, private bonds - including poor-quality ones - control of long-term interest rates. The trend is therefore for central banks to buy more and more of the various financial asset classes, possibly including equities in the future, and for the quantity of money to increase more and more. This inevitably gives rise to an across-the-board moral hazard, leading governments to increase fiscal deficits and investors to buy risky assets in the belief that they are insured by the central bank, leading to constant increases in debt and asset prices. This period of “capitalism of debt and money creation”, which began in the second half of the 1990s, will therefore end in an extreme financial crisis caused by hugely excessive debt and bubbles.