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<\/figure>\n\n\n\nAnd savers, or their asset managers, their pension funds or savings funds, like their life insurers, have sought to obtain a sufficient return. They have thus been encouraged to buy increasingly risky assets (drastically lowering risk premiums), increasingly long-term assets (thus taking on more and more liquidity risks), etc. The balance sheets of many economic players have thus become fragile both on the assets and liabilities side.<\/p>\n\n\n\n
Furthermore, very accommodative monetary policies that persist for too long de facto increase wealth inequalities, further enriching those who already have some, and making real estate and the stock market less accessible to others. Finally, with all these e\ufb00ects combined, it is reasonable to think that they have ultimately contributed to the slowdown, to the languishing of the economy, by having notably allowed the development of “zombie” companies (which, with normal interest rates, would have experienced negative results).<\/p>\n\n\n\n
This overall poor allocation of capital has very probably contributed to decreasing productivity gains. Furthermore, interest rates that are too low for too long may have, as in Germany for example, contributed to the rise in savings rates and not to their decline, contrary to the precepts of standard economic theory. A population with a declining demographic may indeed want to save more to prepare for its retirement, no longer being able to count sufficiently on the return on its “normal” savings. The high level of indebtedness of many players also sooner or later weighs on their investment capacity. All of these factors then lead to a structural slowdown in growth and not its support .<\/p>\n\n\n\n
To conclude, it is difficult to exit quantitative easing policies once they have been used for too long. Thus the policies have developed asymmetrical characteristics which could be worrying. Among other things, this asymmetry can provide markets with free options to protect them on the downside while allowing them to play the upside with very limited risk. The consequent fragility accentuated in the financial structures of agents, both in the assets of balance sheets, which include highly valued or overval ued stocks and real estate, and in their liabilities, which have levels of debt to GDP rarely reached, rightly enco urages central banks to be very cautious in their balance sheet reduction (“quantitative tightening”). Reducing the balance sheet of issuing institutions too quickly or too intensely could indeed lead to major financial and economic crises. This is why we can consider that liquidity in central bank money will only be withdrawn – as at present – very cautiously. In fact, very probably, the opposite path will never fully reach its end. Furtherm ore, we are in an unprecedented realm since the experience of “quantitative tightening” is a historical first. The fight against the sudden return of in\ufb02ation these last years has been successful thanks to conventional monetary policy e\ufb00ects (raising their pol icy rates) , without acting discretionarily on their balance sheet size, but driving their l ow-key reduction.<\/p>\n\n\n\n
Ultimately, it seems that we can affirm, based on a retrospective analysis, that quantitative easing policies have very favorable e\ufb00ects when it comes to healing a violent financial and economic crisis by trying to contain systemic risk, that is to say, to prevent a catastrophic chain of events. However, if it is also useful to use them to stimulate growth and in\ufb02ation, if we continue to use them, even when growth has returned, and, moreover, if the target in\ufb02ation no longer corresponds to structural in\ufb02ation, this may seem to entail more dangers than benefits. We have not yet seen all the economic and financial consequences that such a policy pursued for too long can induce. Let us bet that, barring new violent crises, and across cycles, central banks will seek to sustainably maintain interest rates at levels roughly equal to nominal growth rates. All things considered, and in order to be able to use it again in case of proven need, the unconventional monetary policy should remain unconventional.<\/p>\n\n\n\n