On Thursday afternoon, in a stark warning of what's to come, San Francisco Fed President John Williams confirmed our suspicions when he said that to fight the next recession, global central bankers will be forced to come up with a whole new toolkit of "solutions", as simply cutting interest rates won't well, cut it anymore, and in addition to more QE and forward guidance - both of which were used widely in the last recession - the Fed may have to use negative interest rates, as well as untried tools including so-called price-level targeting or nominal-income targeting.

[This] is a tacit admission that as a result of the aging workforce and the dramatic slack which still remains in the labor force, the US central bank will have to take drastic steps to preserve social order and cohesion.

According to Williams', Reuters reports, central bankers should take this moment of "relative economic calm" to rethink their approach to monetary policy. Others have echoed Williams' implicit admission that as a result of 9 years of Fed attempts to stimulate the economy - yet merely ending up with the biggest asset bubble in history - the US finds itself in a dead economic end, such as Chicago Fed Bank President Charles Evans, who recently urged a strategy review at the Fed, but Williams' call for a worldwide review is considerably more ambitious.

...Meanwhile, the idea of Fed targeting, or funding, "income" is hardly new: back in July, Deutsche Bank was the first institution to admit that the Fed has created "universal basic income for the rich"...

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