Christo

I'm not sure that there will ever come a point when the Fed ceases to monetize, nor the BofE or the ECB or the BofJ for that matter.

For that to happen you would have some one else to buy the bonds, which would require much higher interest rates, and/or a massive reduction in bond issuance, which would require a prudent fiscal policy and a very strong recovery in the economy.

There is no way out here. If rates rise the recovery is dead and the deficit explodes. If spending is cut and taxes increased, the recovery is also dead and the deficit won't fall that way either.

The only way out is for all central banks to keep monetising, create inflation and the illusion of a recovery. Eventually, after say 10 years, the debts are back down to something sensible in relation to assets prices and the nominal size of the economy.

I think the question is, can they manage this in a 1970s stagflation on steroids kind of way or does it get out of control Weimar style? We're quids in here either way but I would prefer the former as I don't fancy living through a totally monetary collapse (but I am accumulating a shoe box full of junk silver coins just in case - is proving difficult as the post man keeps stealing my Ebay deliveries and I just get compensated by Paypal in paper money...damn).

EC