(2 March, 2012 – Global) There are rumblings in the world economy that the scale of money printing in the West is so massive it could cause ‘monetary anarchy’.As major central banks including the European Central Bank offer cheap loans to ease a temporary burden, it also becomes a familiar scene when generous monetary policy lead to higher oil prices.
Crude oil, fuelled also this time by Middle East tensions – has jumped 15 percent this year.
As a result, riskier assets such as equities are already coming off New Year highs. Rising emerging market currencies are forcing some central banks there to intervene.
The scale of money creation since the onset of the global credit shock can be seen in the size of central banks’ balance sheet expansion.
Kicking off its second bout of quantitative easing in late 2010, so-called QE2, the Federal Reserve announced a US$600 billion program to buy bonds.
The Bank of Japan raised its asset buying and lending scheme to 55 trillion yen in October 2010 and spent a record 8 trillion yen to the currency’s ascent, pumping more cash in the process.
Also in October, the Bank of England expanded the size of its asset purchase programme to £275 billion. Last month, it raised it again to £325 billion.