El-Erian on Covid-19 policy risks, ‘zombie’ markets and central bank capture
We have seen massive interventions by the US Federal Reserve in the past few weeks to underpin financial markets. The Fed’s balance sheet has already spiked past $6 trillion. It is now buying corporate bonds and offering a paraphernalia of liquidity instruments. What has the Fed got right? What has it got wrong? And what more might need to be done?
What the Fed has gotten absolutely right is understanding the need to counter market failures that could ‘reverse-contaminate’ an already damaged
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