The Central Banks Will Rule the World

themoneygps (69)in #dtube • 6 years ago

Global stocks have benefitted from central bank intervention. In fact, without it, there would most certainly have been a depression which would look similar to the 1930’s. Temporary measures were put in place as central banks printed more money in an instant, than had ever been printed before in all history. We didn’t have to worry about the after-effects because this was only due to an emergency and would soon be taken away. Years passed and there was no indication of stocks slowing down but also no indication of these temporary measures going away. They seemed permanent.

Like an addict, the markets have been hooked on the simulus. $15 trillion worth of money has been printed by the global central banks from the Financial Crisis onward. There have been no real calculations of how many secret bailouts happened but going by these numbers, it is huge by any measure. Those in favor of central bank intervention have suggested that the amount of money injected by central banks is miniscule compared to the total amount of money in circulation. Of course this is absolutely correct. But $15 trillion added in just a few years is still quite a lot of money.

Regardless, isn’t it odd that if this supposed small amount of money can’t be pulled away from the financial system without causing trouble to the markets? Take 2018 as a perfect example. It was the first year that there was a minor contraction in global balance sheets. 93% of assets were in the negative as a result. As soon as central banks committed to more easy money, stock went higher.

But I warn you, as the old saying goes, “Be careful what you wish for”. Those holding onto their miniscule amount of investments hope and pray that the central banks maintain their market intervention to ensure that their assets, whether directly, or through their 401k’s, or even the value of their over-inflated house price, remain artificially propped up. These people believe that there is no downside risk to this absolutely dangerous policy. You must realize there are several layers of risk.

First, there has been no successful example of government intervention. Every single currency ever in history that has been debased, has failed. The one which has been hailed as the only example, is actually nothing but. Just look at the failure that Japan is. A stock market that over the years has been declining. There are upward swings along the way, but has never been able to rise back up to its previous high. What an obvious failure.

More importantly though, central banks are now being given permission by the public to print money out of thin air and buy assets. This is an incredibly unwise policy. A foreign institution purchasing assets within the country, whether that comes in the form of corporations stocks, their debt, toxic so-called assets, or anything else. It’s a mistake. And only a fool would encourage this reckless madness to continue.

Easy money is not beneficial and will ultimately create the demise of the currency. The central banks will be left holding onto the assets. They didn’t even need to fight the people for it. The middle class will disappear as we are left with monolithic, multinational conglomerates controlling everything with central banks owning the assets of every country.

Go ahead, beg the Fed for more QE.