The central banks have fled the coop and are in Oz. The markets are a bedlam of optimism.
As if unlimited monetary easing was not enough (I guess the zero bound puts a kink in a few models). Yesterday the Bank of Japan's adopted a 2% inflation target (nothing sensational, except the country has been stuck in the mire for two decades...an asset/debt bubble will do that to you) and unlimited asset purchases, joining its compatriots (in monetary crime) at the Fed and the ECB.
The potential for negative unknown and unintended consequences increases. The margin for error has decreased.
The cost of post-GFC bailing is accumulating in the system and at some point will hit a tipping point. The effectiveness of monetary policy is diminishing with each cast of the die.
Until then, party on Garth.
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