Central bankers have to be realistic about the political environment in which they operate. All the central bank cooperation in the world can’t solve a problem of imbalances, if the politicians don’t decide to cooperate too. And betting the economy on the theory that the politicians just *have* to cooperate is not good central banking.
Central bank policy needs to take into account the possibly of political failure — even when that failure is “unthinkable”.
Synthetic Assets 