The limits of easy money
- The fuel for the rally comes neither from rates, nor from fundamentals, nor from central bank liquidity
- It stems from a mix of fiscal stimulus being channelled into fund flows and financial sector leveraging
- The resultant mix of too much money chasing too few assets both suppresses risk premia and postpones credit events – to a point
- But it remains critically dependent on the continued credibility of the borrowers and the system
