Stocks: Why the end of ‘extend and pretend’ is coming

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The conclusion of the era where central banks "extend and pretend" about the state of the global economy is on its way in the third quarter, as central banks start to unwind stimulus programs, according to a contrarian economist.

"The market is realizing that interest rates and everyone related to the interest rate cycle are in a vacuum where nothing is happening," Steen Jakobsen, chief economist of Saxo Bank, told CNBC Friday.

"On the other hand, real companies like Cisco, Walmart are indicating that the real world looks far more bleak."

He highlighted the problems for small and medium-sized businesses in gaining access to credit, and argued that, for a real recovery to begin, they have to be able to invest to create new jobs.

Three of the developed world's most influential banks: the U.S. Federal Reserve, European Central Bank and the Bank of England have embarked on large injections of liquidity into the market in recent years, which have been credited with staving off a global economic depression.

(Read more: Euro zone recession ending, but what has changed?)

This may have stopped other necessary economic reforms taking place, according to Jakobsen, who dismissed some of the positive economic data which has been released recently.

"The participation rate (in the U.S.) is depressed. Jobless (figures) are likely to be flat to slightly negative," he said.

"The surveys are what is high and that's merely asking a person whether they think things are bad or good."

The Fed is widely believed to be planning a new operation known as "tapering" to begin the winding down of its stimulus package next month.

(Read more: Worst case for Fed taper: mere market 'indigestion'?)

Jakobsen argued that this "is remarkably misinterpreted by the market".

"The fiscal deficit is now at a size which makes it around 100 percent of the Fed tapering. Mathematically they need to reduce it. What is left is that the growth will disappoint," he added.

"Bernanke wants to do more, not less. Whoever becomes Fed chairman next, they will be doves. The only way this game will change is for this experiment to fail."

-By CNBC's Catherine Boyle, follow her on Twitter @cboylecnbc