Historic pumping of new liquidity into the overall global financial system is what has given us our current BUBBLE markets but all this pump priming and asset bubble situation is coming to and END in…2018…creating the environment for a downturn in all our markets.
The original article by Donald Swenson has been edited for length (…) and clarity ([ ]) by munKNEE.com to provide a fast & easy read. For all the latest – and best – financial articles sign up (in the top right corner) for your free bi-weekly Market Intelligence Report newsletter (see sample here) or visit our Facebook page.
Look at these four Central Banks for an example of what has happened:
- The PBOC (China) has pumped in some $5.5 trillion via their QE polices,
- The Bank of Japan – $4.6 trillion,
- The European Central Bank – $5.2 trillion,
- The Federal Reserve Bank of the USA – $4.4 trillion.
Just the above four Central Banks (excluding the Bank of England and all the other less prominent Central Banks) have increased their balance sheets by some $19.7 trillion (all this is measured in nominal dollars for comparison purposes) and, if we think about the multiplier effect where banks use these new funds to increase their own balance sheets the pumping of digital money into our global economy has been beyond anyone’s imagination. The trillions are impossible to measure accurately.
What goes UP eventually comes DOWN. The charts of our Central Banks reveal that this extraordinary elevation of credit and liquidity has reached levels where a reversal in trend must happen…The trend was UP and UP from 2009 to 2017 as our Central Banks experimented with their ability to create money OUT-OF-NOTHING (called QE or Quantitative Easing) but this game is now mostly OVER!…The Central Banks will start tapering in 2018 and then an increase in global interest rates will follow…[With that we will] experience a reversal of trend in:
- crypto currency values,
- real estate prices,
- global stock markets,
- bond markets
- and all our derivative markets will start to wonder if this game can continue.
Enjoy the Holidays! 2018 will be an interesting year IMO. Prepare..[for] serious change soon!