You read it here first: invest in equities – you can't lose!
Forecasting is a mug's game at the best of times so one's success in this field should be treated in the same way as one's failures: with a wry smile. And this week's headline in The Times – U.S. Fed rates pledge pushes the S&P to a record high – raised just such a smile! If readers will indulge me, I'll refer them first back to my CNBC post of 20 November 2013 where I stated: invest in equities – you can't lose!
And so it has proved. Equity markets are being sustained on central bank action, and with those dove's doves Janet Yellen and Messrs Carney and Draghi making clear that they will only contemplate even a miniscule tightening of very loose monetary policy when they are firmly convinced that we are back to a strong and stable economic outlook, equity investors continue to act as if they have nothing to lose.
And why shouldn't they? If markets go up, they win. If they go down, central banks repeat again how they won't do anything unless they are convinced the "recovery" is here to stay, and on such utterances markets resume their upward trajectory. So again investors win. It's a no-brainer.
This week the markets were reacting to comments at the Jackson Hole meeting of central bankers, where Ms Yellen said that interest rates would remain low until there were more signs of improvement in the labor market.
Read MoreHow low can they go? Traders eyeing global rates
Er…just how many more signs? Unemployment is lower in the U.S. (and in the U.K. and northern EU, for that matter) now than it was in 2009 or 2012. Shall we wait until we have full employment? The "new normal" isn't lower rates of GDP growth, it's the public sector underwriting the private sector – a dangerous and insidious new role for central banks that has not been debated sufficiently in depth and has no formal mandate.
And of course the central banks don't mean "low" interest rates, they mean "zero" interest rates. Even assuming that the top of the next rates cycle reaches 3.5 percent, which is at the higher end of most analysts' predictions, that would still be a pretty low interest rate by historical standards.
We have nothing to fear except fear itself: never a more accurate saying than it is today about Western central banks. They are obsessed with not moving an inch away from easy monetary policy until they are 100 percent sure the economy is back to strong and stable growth. And I bet anyone a tray of cream cakes that when they have decided that that point has arrived, we will be only a quarter or two away from the next bust.
Read MoreA 60% correction ahead? Two experts think so
Governments must really love these new "independent" central banks.
Professor Moorad Choudhry is at the Department of Mathematical Sciences, Brunel University and author of The Principles of Banking (John Wiley & Sons 2012).