“In a world where debt overhang holds growth back for years” what could happen to the safety of “safe assets”?

Sir, David Oakley writes about the possibility that “QE will only properly end when all the bonds purchased mature”. And “For fund managers, it means government bonds may have a more lasting appeal as yields remain lower for longer because of an underlying demand for safe assets in a world where the debt overhang holds growth back for years.” “We are the QE generation, and it is quite a burden” February 1.

But a more relevant question could be: “in a world where the debt overhang holds growth back for years” what could happen to the safety of those “safe assets”?

Here we are with central banks sitting on a great portion of sovereign bonds they cannot retire without affecting the market too much; while at the same time they fix the risk-weight of these bonds, for the purpose of the capital requirements for banks, at zero percent, while that of those who are the only ones who could help growth, the private sector, has a risk weight of 100 percent. Is that not an example of sheer human lunacy that has us begging urgently for some artificial intelligence to bail us out?

@PerKurowski ©