Consumers are crucial to any recovery

The global economic and financial crisis which has been raging for the past seven years passed another significant milestone on Wednesday when the US central bank, the Federal Reserve, ended its latest bout of bond buying, namely quantitative easing mark 3.

Over most of the past five years, the Federal Reserve has been engaged in three bond-buying programmes, which effectively represents the printing of new money in a desperate attempt to inject liquidity into the US banking system and the general economy. Such policies are highly unorthodox and unusual but are symptomatic of the crisis in which that economy has found itself following the mad financial policies of the noughties which culminated in the implosion of the sub-prime mortgage market in the summer of 2007.

The markets have been nervous about the gradual easing or ‘tapering’ of this programme for some time but its ending should not be seen as a significant source of concern. In fact it should be greeted with a sense of relief because its ending does signify that it has to some extent worked and that the economic recovery is now becoming more sustainable.