The Keynesians Are Turning Off The Money Taps. We're Now 10 Years Out From The GFC, Are You Ready For Its Bigger Brother?

Oh dear.

We're around 8 weeks out from the 10 year mark with respect to the GFC. To note the occasion in an almost choreographed coincidence, the ECB, BoJ & the Fed are communicating their intention to rein in the QE programs and reduce the bond holdings that have kept the global economy on life support for the past decade.

This dynamic has not gone unnoticed with an article released today quoting Citibank’s market strategist Matt King

“As we’ve noted in the past, in recent years asset price moves have displayed a high degree of correlation with central bank liquidity additions. Central bank buying has reduced the net amount of securities (in DM) the market needs to absorb, both this year and last, to near zero; we think this has played a critical role in propping up valuations at elevated levels. Next year looks very different. We project that the private sector will have to absorb c.$1tn of securities – the highest number since 2012. The main driver for this is our anticipated reduction in ECB purchases from €780bn this year to €150bn in 2018. The faster pace of Fed balance sheet reduction we can now expect cements our impression that next year will see a big shift away from the current status quo. Assuming that Fed balance sheet reduction begins in September, the US market will have to absorb a further $450bn of supply in addition to the gap left by the ECB.”

Jason Burack of WallStForMainSt recently interviewed Michael Pento of pentoport.com and he unambiguously states that the Fed is raising rates into a depression.

I look around and I see no evidence of the general public being aware or alarmed about what is looking like an upcoming financial rebalancing of significant proportions.

The linked article above and Michael's comments on the video alone should be sufficient to prompt some basic actions in terms of protecting wealth right now. Please disseminate and stay safe out there!