Headlines:
1. QE = The PERPETUAL CRUTCH For Financial Markets.
2. Federal Reserve = ALWAYS Moving The Goalposts.
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The Absolute Size Of The Federal Reserve’s Balance Sheet = Does Not Matter Anymore.
All You Need To Know = It Will Grow…Indefinitely…Sometimes At A Slower Pace…But Grow It Will.
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Anyway…What Is The Real Point Of Central Banks Supporting Financial Markets With Broad Asset Purchases?
The Belief…Seems To Be…That Higher Financial Asset Prices Boost Consumer Confidence…Thereby Inducing John Q. Public To Spend…Thus Stimulating The Economy With A Demand Impulse.
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And Generally…That Is True.
So What’s The Problem?
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The Problem = THE CONTEMPORARY GLOBAL ECONOMY LIVES ON A PERMANENT SUPPORT SYSTEM DEPENDENT ON CENTRAL BANK MONEY CREATION…
Yet…THE GLOBAL MONETARY INFRA-STRUCTURE WAS NOT DESIGNED FOR THIS TYPE OF UNRELENTING SUPPORT.
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SEEMINGLY INFINITE MONEY CHASING FINITE FINANCIAL ASSETS
…NECESSARILY DISTORTS RATIONAL PRICE DISCOVERY.
Therefore…INDEFINITELY IRRATIONAL FINANCIAL ASSET PRICES.
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So…Central Bank Monetary Policy Has…No Doubt…Changed.
And Seemingly Changed For The Worse…As
- Endless Money Is Authoratatively + Historically Inexpensive.
- Financial Asset Prices Are Contorted.
- Mounting Sovereign Debt Has Ceased To Be A Legitimate Concern.
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And The Rules Governing Central Bank Power?
They’ve Been Dramatically Expanded + Liberalized…So Much So That The Goal-Posts…Measuring Policy Directive + Execution…Are Dimensionally Limitless.
Hence…As A Central Banker…It’s Almost IMPOSSIBLE NOT TO SPLIT THE UPRIGHTS.
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So…Short Term Interest Rates Remain Pinned At Zero + Equities Continue To Launch Higher.
Legacy Valuation Metrics…Are Now Considered Archaic + Revenue Growth Trumps Profitability.
It Seems…The Primary Barrier To Higher Prices Is That The Markets Are ONLY Open For 6.5 Hours/Day + 252 Days/Year.
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You Might Say… “OK…BUT…WHAT ABOUT RISK?“
I Could Respond… “What Enduring Risk?”
…That Central Banks Will Not Attempt To Quickly Alleviate.
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You See…It’s Actually Happened…
That Odd Thing That Many/Most Market Participants NEVER THOUGHT POSSIBLE…Back In 2009…At The Onset Of QE In The United States.
That Is…QE…THAT RADICAL MONETARY IDEA 10+ YEARS AGO…IS NOW INSTITUTIONALIZED POLICY…ENORMOUSLY APPLIED.
And Is Currently The ONLY REMEDY…To Cure ANY Market Ill…That Central Bankers Care To Administer.
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Apparently Too…QE Can Help To Solve Social Problems Never Prevously Considered …Including Covid-19 + Global Warming.
Because…Central Bankers Now Believe ANY Dramatic Market Volatility Is Faultless + That All Shall Be Bailed Out…Regardless Of Sloppy Capital Management Skills.
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And The Almost Daily…Central Banker Public Relations “Spin” …Intends To Reassure Insecure Market Actors.
“We Will Offer Unlimited Monetary Support To All Global Financial Asset Markets” …
Is The Primary Message…Artistically Shaped In A Variety Of Verbal Cloaks.
Interpretations Below:
“WAH WAH WAH” …Asset Purchases
“WAH WAH WAH” …Covid
“WAH WAH WAH” …Balance Sheet
“WAH WAH WAH” …Flatten The Curve
“WAH WAH WAH” …Forcefully Use Our Tools
“WAH WAH WAH” …Herd Immunity
“WAH WAH WAH” …Average Inflation Targeting
“WAH WAH WAH” …Masks
“WAH WAH WAH” …Quantitative Easing
“WAH WAH WAH” …Pandemic
“WAH WAH WAH” …Whatever Is Necessary
“WAH WAH WAH” …Shelter In Place
“WAH WAH WAH” …Zero Interest Rates
“WAH WAH WAH” …Social Distancing
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Somehow…Charley Brown’s Simple School Teacher…Successfully Penetrated These “Brainiac” Central Bankers With A Basic + Enduring Lesson =
“The Content Of Your Message To The Flock…Is Not Subject To Any Scrutiny…Just Keep Saying It…And Eventually They’ll Adhere.”
Because Untouchable Authority ALWAYS WINS.
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Contact The Author: Dominate@GlobalSlant.com