Ambrose Evans-Pritchard takes a hatchet to central bankers and governments today for their handling or quantitative easing over the past 13 years.
"Western central banks are guilty of an enormous white lie," he writes, arguing that they pushed the idea that QE could be unwound painlessly.
He noted an ING report saying the Fed is holding a paper loss of $1 trillion and $170B in interest that must be paid to counterparties. The Swiss National Bank has lost $143 billion on its asset holdings.
"One can forgive the original white lie by central banks. They never imagined that QE would drag on for thirteen years, or reach such proportions. What was less forgivable was to keep buying bonds à outrance after the macroeconomic trade-offs had turned toxic and after the broad money supply (M3, M4x) had caught fire, guaranteeing inflation," he writes.
His conclusion is that by overplaying the hand in this period, central banks have now made QE toxic and that it won't be available if/when it's needed.