Helicopters fly in cash
I blame Mario Draghi. Last July, the head of the European Central Bank said he would do “whatever it takes” to save the euro. Six months or so later, stocks have bounced across the globe, and he’s being applauded as ‘man of the year’ by talking heads around the world. Now all the other policymakers want a piece of the action.
Lord Adair Turner, chairman of the Financial Services Authority, says we shouldn’t dismiss the idea of “helicopter money” – that is, going a step beyond quantitative easing and just creating new money to spend directly.
Bank of England governor-to-be Mark Carney advocates a “flexible inflation targeting framework”, allowing central bankers to ignore inflation when it suits them. In Japan, finance minster Akira Amari said he wants to see the Nikkei 225 hit 13,000 by the end of March – that’s a more-than 15% jump from here. The message is clear: the printing presses will keep on running.
What should an investor do in this sort of environment? The consensus is: get out there and fill your boots.
• Read the full editor’s letter here: Helicopters fly in cash.