With the covid crisis, central banks have taken center stage and poured trillions of dollars into stocks and bonds. In the process, monetary policies somehow got mixed up with fiscal policies. A red line was crossed, experts warn.
The covid-19 crisis took us to extremes in terms of monetary policies. Central banks have taken center stage. They have become the tap that governments turn on to meet all the needs of markets and the real economy, in what seem unlimited amounts. The Fed bought not only sovereign bonds, but also corporate bonds, and more importantly, non investment grade bonds, like high yield debt and commercial paper.