Think about the 1980s for a moment. Both Ronald Reagan and Margaret Thatcher were sworn into office in the United States and in Great Britain and both advocated deregulation and free trade policies, enabling a boom in financial assets in the Western developed markets. The late John Gutfreund and Lewis Ranieri were running Salomon Brothers, and it was the "Greed is Good" era, where the narrative was fed by Michael Milken, Ivan Boesky, Martin Zweig, and the image of the flamboyant and outspoken investment banker in Winchesters and suspenders became synonymous with Wall Street culture - the archetype being Gordon Gekko.
During the days of the late 1990s and the Tech Bubble, the zeigeist and animal spirits of that time were lifted by characters like Henry Blodget, Jack Grumman, Frank Quattrone and Mary Meeker. Back then, the techno-preneurs like Paul Graham, Elon Musk, Peter Thiel and Larry Page were working hard on their projects and startups, and are now successful Venture Capitalists or business owners in their own right.
Then there were the days of the 2000s. The decade between 2000 to 2010 saw 2 huge booms (or bubbles depending on how one views them), one in the US housing market, which led to the collapse in subprime mortgages, and the other, the famous commodity boom. The housing bubble era was fostered by the likes of Louis Cavalier and Abby Joseph Cohen. The emerging markets/commodity boom narrative were led by Jim O'Neil (who coined the term BRICs), Jim Rogers, Marc Faber, T.Boone Pickens, Peter Schiff and Eric Sprott.
Fast forward to the present day, and we get a whole new host of icons in the present cycle. Only this time, they are leading academics and economists, and are running (or advising) various central banks around the world. This new narrative of omnipotence are led by the likes of Paul Krugman, Ben Bernanke, Mark Carney, Haruhiko Kuroda, Janet Yellen and Mario Draghi. These powerful figures have an almost all-encompassing presence and influence in the global financial markets as we speak.
We initially started this decade with the belief that central banks could solve the issue of a lethargic and slow economy since the 2008-2009 global financial crisis. And everyone relied on these leading policy-makers.
Perhaps, the current narrative could be the real truth, and these characters could continue to be the trend guardians. However, the frightening truth is what if the narrative does not play out in the way they expect it to be?
Already, we are seeing some signs of central bankers losing their grips over the markets. In Europe and Japan, the imposition of a negative interest rate policy on deposits park at their respective central banks' facilities have not had the desired effect that policy-makers desire for (perhaps we need more time, but how long more?).
Consider that in both the European continent as well as Japan, both the Euro and the Japanese Yen currencies have been strengthening relative to their trade partners. Additionally, European banks are parking more money at the European Central Bank (ECB) despite them having to pay more on those deposits. In Japan, consumers and households are hoarding cash instead of investing or spending, which is entirely against what the Abe-regime hopes for.
At the same time, the US Federal Reserve seems to be backtracking on its expected path of tightening via hikes in the benchmark Fed Funds rates - perhaps to soften the US dollar and to alleviate concerns of the international community. And the Fed seems to have internal dissent as well, with several more 'hawkish' members of the committee expressing their concerns on a deviation from the central bank's targets.
What and how do we make of this?
It is entirely possible that we are at an inflection point in this decade - that central banks may be facing a 'crisis' and that more people increasingly do not buy the fact that central bankers are really in control.
Some time in the future, we may look back in history and characterize this decade as the "Central Bank Decade"...
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