The effects of the stimulus policy

Banks fail to expand lending and stimulate the real economy in the desired pace. And there is no reason to be blamed for the low success rate of monetary policy because they should be focused on viable investment projects or lending to creditworthy population. On the contrary, artificial stimulus create the risk of inefficient and excessive lending, as happened with shale oil in the US, or the money goes to the owners of assets as financial instruments.

Shares gained a lot of quantitative easing. The indices in the US and Europe reached record levels, as price growth is related to any new initiative of the central banks. It could be argued how this relationship is only direct, but certainly the incentives of the ECB and the Fed positively influence mood of investors. The direct effect is only on the market for government bonds. Central banks were active buyers of securities and commercial banks and investors followed them because they have no significant alternatives to buying or lending.

We should not blame the banks in Europe that they are not aggressive lending, especially in the years of the European debt crisis when there was too much uncertainty in the financial system and lending to companies. The problem is that the ECB used the same logic again and again, risking further to decrease banks' profits and raise bond prices higher. Bloomberg reported that the government bonds of developed countries with negative yields exceed 7 trillion. This means that governments can spend without worrying about how they will service their debts. At the same time savings will lose their value.