Repricing – Financial Markets – Week 1

When QE Stops:

Starting in 2011 enormous amounts of money have been pumped into the world economy. The balance sheets of central banks around the world have increased by four times to around $14T.

Never before in the economic history of the world have we seen Quantitative Easing (QE) on this scale, much less the removal of QE on this scale. In the past when a country has used QE, one of three things happened when the QE ended:

  1. The economy collapsed;
  2. That country defaulted on all of its bonds;
  3. Or both.

This increased risk will eventually be “repriced” into all financial assets.