“Stimulus today is excessive and credit conditions loose in part because central banks are relaxed towards the risk of CPI inflation. On this they might be right. But they are similarly relaxed over obvious signs of overheating in financial markets, and on this we are sure they are wrong.
The historical precedents we explore below do not bode well. We think it likely that we’re in the foothills of a policy mistake of epic proportion which will have potentially devastating consequences.”