The devil collects on his deal

Quantitative easing just postponed the pain of the 2008 crisis, says Merryn Somerset Webb. And quantitative tightening could make 2018 look almost rewarding compared to 2019.

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A Faustian monetary pact
(Image credit: ©John Lund/Blend Images LLC)

"Rising interest rates and quantitative tightening (QT) are not the problem. They are the inevitable consequence of the problem. The Federal Reserve made a deal with the devil to postpone the necessary pain when it cut rates to zero and launched QE (quantitative easing). The devil has finally showed up to collect. Welcome to hell!" So said US analyst Peter Schiff in late December, as Fed boss Jerome Powell declined to produce any Christmas cheer for investors and it became clear that, barring a miracle, US stocks were about to see their worst December since 1931. But if Schiff is right that QE just postponed the pain of the 2008 crisis might QT make 2018 look almost rewarding next to 2019?

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.