“Every drop in policy rates, every drop in reserve or margin requirements, every QE, every sovereign equity purchase degrades the financial system and increases destructive leverage.”   – Bill Gross, Janus Capital

“The signposts have fallen, unblazed trails lie before us.” – Carl Jung

In our post-Lehman era, central banks have gone all-in to prevent the still precarious global financial system from collapse while at the same time conveying an air of recovery and return to normalcy. Everything that’s happened since 2008 has been an “out of the air”, invent-as-you-go, global monetary experiment. No one knows what will happen next or where we’re going because it’s never been tried before. Global debt has skyrocketed and quantitative easing is losing its effectiveness. Central bankers, in short, are running out of ammunition just as growth is slowing and the system itself is degraded with increasing imbalance, inequality and fragility. (more…)