Eight years of unconventional monetary policy, NIRP, ZIRP, QE, and asset bubbles as far as the eye can see, but where is that all important product of successful monetary policy - at least in a conventional Keynesian sense, where a steady increase in the cost of living and the loss of purchasing power is defined as success - namely inflation?
For the answer we go to Deutsche Bank's "Inflation Sensation" global inflation monitor. According to DB "it includes more than 150 time series covering consumer prices, producer prices, inflation surveys and wages across the G10. It uses PCA analysis to provide a global snapshot of where different countries stand on inflation."
Here is DB's finding verbally:
At a global level, our monitor remains a “sea of blue”. Little progress has been made in generating inflation in recent months. The most notable downward price pressures are in the Euro-area, Switzerland, New Zealand and Australia.
And in graphic terms, here is the full G-10
Or as Deutsche puts it: "a sea of blue."
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But why? Why this grand failure to achieve the central bankers' only goal? One simple reason: they have been unable to create wage inflation: without rising wages there is no pickup in end demand, and instead what central banks create are bubbles after asset bubbles.
Per Deutsche: "Wage developments are striking across the G10. While there are tentative signs of producer and consumer price disinflation bottoming in some countries, wage growth remains particularly weak."
That a mild way of putting it, because one look at global wage inflation, or the lack thereof, and it all becomes immediately clear.
Presenting Exhibit 1, and only:
And that is why central banks have failed. However, nearly a decade later, they continue to mask their inability to boost wages and living standards for everyone, but making the life of the 1% better than ever, and where they have certainly succeeded, is to reflate the S&P500 back to within a few percentage points of its all time high.