Wonder where all that liquidity has gone that central banks are pumping into system with abusively-low interest rates & why or how that has not caused price levels to rise?
Well, it is creating the mother-of-all-bubbles in the market for government-issued debt!
Never before has so much money been thrown for so long on such bad bets by so many people. At least not since the mortgage-debt bubble created by cheap-credit policies & political perfidy….
Commercial banks are queuing up to borrow from central banks at extremely-low interest rates to then lend to governments at higher rates. All this at with zero risk (supposedly).
In Europe, guarantees are allowing the Greek government to borrow more. In the US, California & the federal government are able to sell more debt as in Japan with its ever-growing mountain of public-sector debt that now towers over its annual GDP.
It appears that the madness will not stop until the public-sector bubble bursts. Stand by for politicians to blame private-sector actors for this gloomy end!