Tag Archives: central bank balance sheets

Robert Gore Said That? 10/10/18

On Septemeber 30, at Murphy, North Carolina, I addressed the Appalachian Network PATCON, a gathering of very bright people on the cutting edge of preparation for the coming catastrophe. The topic was: “How to Survive an Economic Collapse.”

And the Q & A:

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Market hits new highs on back of Fed announcement, forgetting the Fed is clueless, by Simon Black

Everybody thinks central bankers run the world…right up until markets crash and they can’t do a damn thing about it. From Simon Black at sovereignman.com:

Hallelujah, the US stock market is once again at an all-time high thanks to a little help from our friends at the Federal Reserve.

Every summer, central bank officials from around the world gather in Jackson Hole, Wyoming (which, if you haven’t been, is REALLY spectacular. Jackson Hole, that is, not the Fed conference.)

The event was held last week. And the main event was a speech from the new(ish) Fed Chairman Jerome Powell.

His tone was decidedly ‘dovish’, as the commentators on CNBC will tell you. Dovish is code for “We’re going to keep interest rates low for as long as we can.”

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We Are All Lab Rats In The Largest-Ever Monetary Experiment In Human History, by Chris Martenson

Never before has so much fiat central bank debt been exchanged for so much fiat government debt, among other assets, and all on a global scale. Central bank balance sheets have expanded mightily. Stay tuned for how it all works out. From Chris Martenson at peakprosperity.com:

And how do things usually work out for the rat?

There are ample warning signs that another serious financial crisis is on the way.

These warning signs are being soundly ignored by the majority, though. Perhaps understandably so.

After 10 years of near-constant central bank interventions to prop up markets and make stocks, bonds and real estate rise in price — while also simultaneously hammering commodities to mask the inflationary impact of their money printing from the masses — it’s difficult to imagine that “they” will allow markets to ever fall again.

This is known as the “central bank put”: whenever the markets begin to teeter, the central banks will step in to prop/nudge/cajole the markets back towards the “correct” direction, which is always: Up!

It’s easy in retrospect to see how the central banks have become caught in this trap of their own making, where they’re now responsible for supporting all the markets all the time.

The 2008 crisis really spooked them. Hence their massive money printing spree to “rescue” the system.

But instead of admitting that Great Financial Crisis was the logical result of flawed policies implemented after the 2000 Dot-Com crash (which, in turn, was the result of flawed policies pursued in the 1990’s), the central banks decided after 2008 to double down on their bets — implementing even worse policies.

The Largest-Ever Monetary Experiment In Human History

It’s not hyperbole to say that the monetary experiment conducted over the past ten years by the world’s leading central banks (and its resulting social and political ramifications) is the largest-ever in human history:

(Source)

This global flood of freshly-printed ‘thin air’ money has no parallel in the historical records. All around the world, each of us is part of a grand experiment being conducted without the benefits of either prior experience or controls. Its outcome will be binary: either super-great or spectacularly awful.

If the former, then no worries. We’ll just continue to borrow and spend in ever-greater amounts — forever. Perpetual prosperity for everyone!

But if things hit a breaking point, then you had better be prepared for some truly bad times.

To continue reading: We Are All Lab Rats In The Largest-Ever Monetary Experiment In Human History

Why the Boomers Are Going Broke, by Bill Bonner

It’s hard to accumulate wealth when the value of the supposed store of value is whatever central bankers and politicians say it is. From Bill Bonner at bonnerandpartners.com:

POITOU, FRANCE – We were taken aback on Friday by the ferocity of our dear readers’ comments. [Read more in today’s Mailbag.]

What were they so sore about? we wondered.

Son of Satan

Of course, we are frequently wrong about a great number of things. When connecting the dots, we are bound to draw a few stray lines. And we will no doubt be proven wrong in many of our opinions and predictions.

Will The Donald’s trade war pay off for Americans? We don’t think so.

Will the tax cut really boost the U.S. economy and reduce the deficit? There is no sign of it.

Will Mr. Trump really make America great again? The odds, based on what we’ve seen so far, seem very, very slim.

But what do we know? And we’d be happy to be proven wrong.

What was surprising – to us – was that readers did not write to correct us or help us get the lines in the right place.

Instead, they seemed to suggest that we were a son of Satan, sent to destroy all that the good patriots of the United States of America hold most dear.

In other words, the discussion seems to have hit a religious nerve… like setting fire to a cathedral; the faithful fear their most sacred relics will be incinerated.

We have no remedy for this condition, so we will cheerfully ignore it. Besides, cross readers may be right. And those who have a better idea of how the dots connect are invited to send their thoughts by clicking right here.

Goldilocks Report

So, what do we see today?

What we see is an economy staggering under the weight of phony wars and phony finances.

It took more than 200 years for the country to reach its first $1 trillion in debt; now, it adds that much every 12 months. In addition, the Fed increased the base money supply by roughly 400% over the past decade.

What do you get for that kind of money? The feds got the weakest recovery in history… with no real gains in per-hour wages… and GDP growth rates only half those of the 1950s and ‘60s.

In 1821, John Quincy Adams described American foreign policy: “She goes not abroad in search of monsters to destroy…”

Here we are, nearly 200 years later, and U.S. troops are looking for monsters in every godforsaken sh*thole in the world. And where none can be found… they create one.

To continue reading: Why the Boomers Are Going Broke

$21 Trillion And Rising: How Central Banks Are LBOing The World In One Stunning Chart, by Tyler Durden

Six central banks balance sheets sum to more than 40 percent of global GDP. The world has gone far beyond the point where an additional currency unit of debt pays for itself with more than one currency unit of additional GDP. From Tyler Durden at zerohedge.com:

Back in late 2016, we showed the unprecedented domination of capital markets by central banks using a chart from Citi, which had put together a fascinating slideshow asking simply “Where is the utility in marginal QE” and specifically pointing out that the longer unconventional monetary policy such as QE continues, the bigger its marginal cost, until eventually QE becomes a detriment.

A broad criticism of monetary policy, the presentation carried an amusing footnote: “This presentation does not change any of Citi’s existing, published views on the actual future path of monetary policy. It is merely intended as a contribution to the ongoing debate about the efficacy of available policy tools” –  after all, the last thing the market wanted is the realization that even banks no longer have faith in the central planners.

Incidentally, Citi’s broad critique of global QE took place when central banks owned just over $18 trillion in assets.

Fast forward to today when in its latest update of central bank holdings, Citi shows that as of this moment not only has the total increased by another $3 trillion to a grand total of $21 trillion and rising, but that the big six central banks now own over 40% of global GDP, more than double the 17% they held before the financial crisis less than a decade ago.

Which is remarkable in a world where there is still some confusion about what is behind the “global coordinated recovery”, and where there are deluded people who claim that central banks are now out of the picture.

To continue reading: $21 Trillion And Rising: How Central Banks Are LBOing The World In One Stunning Chart