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Central Banks’ Unorthodox Actions Are Cutting Lending

The unintended consequences of financial policy intervention are providing fresh evidence for chaos theory’s idea that the flap of a butterfly’s wings can spark a tornado on the other side of the world.

Five years into the age of deleveraging, financial markets have become addicted to central bank intervention, from the U.S. Federal Reserve to the European Central Bank and beyond, aimed at stimulating growth. Markets anticipate further action, with the Fed, ECB and Bank of England committees meeting on monetary policy this week.