Ben Bernanke is still living up to his "Helicopter" nickname. Since 2008, the US Federal Reserve chairman has carpet-bombed the world's biggest economy with more than $3trn (£1.87trn) through three doses of quantitative easing.
Mr Bernanke earned the moniker for an approving nod towards arch-monetarist Milton Friedman's approach of "helicopter drops" for reflating an economy in dire straits. The US economy was on its knees, but for financial markets the party turned out to be wild. The Fed's newly minted cash found its way into shares, bubbling equity markets higher.
Amid plunging yields on US Treasuries, countries at the "not for widows and orphans" end of the bond market, like Rwanda and Mongolia, got debt sales away at ridiculously low rates.
The markets thought the party was coming to an end – but Mr Bernanke always said that tapering QE would depend on the data and he was spooked by recent signals: he doesn't want to make Japan's mistake of withdrawing stimulus too early. So the Fed – for now – is still pumping $85bn a month into the economy, and has downgraded its US growth forecasts for this year and next. Rate-setters are also worried about the near doubling of yields since the tapering talk began in May, and the potential impact of this on mortgage rates.
The US economy is now 4.6 per cent above its pre-recession peak compared with the UK, which still lags 3 per cent below its pre-crash high. It grew at an annual pace of 2.5 per cent in the last quarter, even after payroll tax breaks and sequestration spending cuts ended. But the jobs market is still slow – and discouraged, would-be employees dropping out of the workforce are bringing down the headline jobless rate. Inflation remains below the Fed's target, giving further room for more stimulus. Mr Bernanke has nothing to lose by hanging a little longer to check that this recovery is the real deal. It's no time for gambling.Reuse content