Last Wednesday was a hinge point in history. The United States decided to drop all pretence of being interested in leading – or even being part of – a coordinated global policy response to the most serious economic crisis in more than 70 years.
Up until now, the rest of the world has been willing to tolerate unprecedented money-printing by the US – and the UK for that matter. QE has been used to help various financial institutions avoid facing up to their losses, while covertly recapitalising Western banks that are, to all intents and purposes, insolvent. Money-printing has also pumped up equity prices. After the latest Fed-induced "sugar rush", the FTSE global all-share index hit a two-year high.
With QE money having been used to purchase Treasury bills and gilts, as well as dodgy mortgage-backed securities, it has also allowed certain governments to keep spending.
Who cares if yields on sovereign IOUs have been artificially depressed (for now) by the weight of freshly-created money. Implementing spending cuts is a far, far harder proposition than announcing yet another "Keynesian" fiscal boost.
So, in other words, QE has benefited some pretty formidable interest groups – insolvent banks, public sector unions and cowardly politicians. No wonder us long-standing critics of the policy have been dismissed as "inflation nutters" and "cranks".
But, in recent weeks, something has changed. Big players such as China, Brazil – and Germany too – think the US has gone far too far and are now saying so.