Money managers at Reuters conference expect QE forever

Surfing Central Banks in a Benign 'QE Trap'

By Mike Dolan
Reuters
Wednesday, November 27, 2013

LONDON -- The message is sinking in: Economies of the rich world face super-easy money far into the future and central banks are now convinced it's the least of all policy evils.

Despite rumblings of dissent about the financial bubbles and iniquities associated with zero interest rates and money printing, 2013 is ending with a remarkable certainty among global investors that cheap money is around for the long haul.

And the outsize financial market reaction this year to even a suggestion the U.S. Federal Reserve would dial back money printing crystallizes the point for many. And even if the Fed does taper asset buying in 2014, liquidity from the Bank of Japan or European Central Bank could be boosted to offset it. ...

That's not to say money managers are all cheer leading this. Many who spoke at Reuters Investment Outlook summit last week doubted its long-term efficacy and feared its social and political fallout even as waves of cheap cash continue to push stock markets to new records.

Former U.S. Treasury chief Larry Summers, once considered a candidate for the top Fed post, spoke about the prospect of "secular stagnation" in the U.S. economy for years to come -- one where the "natural rate" of interest commensurate with full employment could be minus 2 or 3 percent. ...

... For the full story:

http://www.reuters.com/article/2013/11/27/us-investment-centralbanks-ana...