There’s still a raging debate as to whether QE has inflated asset prices or whether policymakers should care about international developments. This week, we have pieces arguing ‘no’ in both cases.

A Tale of Two Financial Cycles: Domestic and Global (Bank of International Settlement) Big macro thinker Claudio Borio distinguishes between a domestic cycle (local fundamentals-driven, mainly affects property and credit ) and a global cycle (US monetary policy-driven, affects cross-border equity and bonds flows). He believes policymakers should focus on the domestic cycle, not the global cycle. [Bearish bonds]

Are Central Banks Manipulating Asset Prices? (Marginal Revolution) Argues that QE has driven asset prices – the average annual return of the Vanguard Total World Index is 8.9% on average over the period of QE which is in line with the 35-year average. [Bullish equities]

Notes from an Inter-planetary Monetary Anthropologist (Moneyness) JP Koning fantasies a planet “Zed” with a religious craze of setting a minimum interest rate of 2%  on deposits. With the planet’s economy slowing down, its inhabitants enter a debate to justify the need (or need not) for a lower interest rate.

Consumption, Credit, and the Missing Young (Boston Fed) The US now has a record number of young adults without sufficient credit history since the “CARD” Act was introduced in 2009. This portion of the population could drag down consumption growth on a state level. [Bearish US growth]