Investors should not be misled. Despite the world economic expansion entering a new, more sustainable growth phase, the risk of a major calamity has risen sharply. This isn’t immediately apparent looking at a broad spread of indicators. Financial stability has improved markedly since the GFC. Volatility, to the strange dissatisfaction of policy makers, is low.
Yet, in striving to achieve this outcome, policy makers have inadvertently rendered the world’s monetary system much more fragile. More so than at any other time since Bretton Woods.