wukan wrote:lochaz-index wrote:slick wrote:lochaz-index wrote:Dow futures dump 1000 points as does the Nikkei. Dax futures down 500 points. It should be a particularly red day for the MIB when the European session kicks off. Will Schengen hold? The agreement may not see light of day when this crisis is over. Fed cuts FFR by 100bps points ahead of schedule in an attempt to stem the bleeding. Not looking good as spreads widen for treasuries and cross currency swaps. Full blown dollar liquidity crisis.
CBs have shown up with a knife to a gunfight...tough luck.
These first world CBs may print themselves into hyperinflation if this keeps up.The sheer number of the money printing liquidity jobs just keep getting bigger to unprecedented levels.I expect this QE to be stepped up aggressively and repo jobs to still continue in their trillions.
I forsee the Fed getting a mandate by Congress to just outright buy stocks and corporate bonds.Its already under discussion behind the scenes.Japanese and Swiss central banks already doing it and I suspect the Fed will join this ludicrous policy and European Central Bank already buys corporate bonds and may join the rest in purchasing Euro stocks.
CBs are chasing the wind here. Buying of stocks is neither here nor there in the grand scheme of things. You can't manufacture a bull market out of thin air or much less so an economic recovery. BoJ has been at it for 20 years with various QE programs yet the Nikkei is more than 50% off its highs. The Japanese economy has been in comatose/collapsing and is literally way worse off than when QE started. The cycle must run to its completion as the market always wins in the end.
The real crisis is what occurs on main street in the form of job layoffs, bankruptcies, deleveraging, credit seize ups etc. Yellen once had the audacity to proclaim that we would never see another recession in our lifetimes. It is simply jaw dropping how much they believed the Keynesian (abenomics) hype about stimulating the economy.
On the other hand restarting economies from zero would be really hard. In worst case scenarios some states may not even survive the bankruptcies. You may need to start from a "Mad max" scenario. Bringing back the social order will be tall order(Somalia is a good example). CBs will keep going even if they have to buy every asset.
A new start is needed even though its painful.This era of central banks just creating fiat from nothing to give to their buddies to buy assets then the lower classes get the fiat last when its already inflated is a corrupt system that benefits only the 1% and is responsible for the large wealth disparity in the world.The nefarious nature of central banking was known in prior centuries and was fought bitterly.Part of the reason of the American revolution in the 1770s to 1790s was to fight against the European central banking establishment that wanted to setup a US central bank and choke the masses under debt.Not known to many is that money is created from debt.The narrative that banks create loans from customer deposits is not entirely true.Banks create money from nothing and lend it out at interest which is sick.Just research on the fractional reserve banking concept it will blow your mind away.US has had 3 central banks.The first was setup in 1791 and scrapped in 1811 when it was realized its creating inflation and debt and just enriching the elites.The establishment then setup a second central bank in 1816 and was disbanded in 1836 after a titanic struggle between then US President Andrew Jackson vs the banking cartel and he disbanded it and paid off all debt owed to that central bank.
Then the Fed was formed in 1913 and has debased the US dollar by 97% since then with its money printing shenanigans to benefit the elites.
Inflation that we are used to as normal is an abnormality created by central banks.In a non central bank dispensation like a gold standard,money value stays static or even appreciates in value over time which is good to maintain the purchasing power for all.By the way the Fed isnt owned by government but owned by member banks like JP Morgan,Citigroup among others and is quasi government-private bankers outfit.The member banks make policy of where interest rates should be and how much money they can print for their own benefit and screw the masses like during the housing bubble where the banks got bailed out and the masses lost massively with their houses being repossessed by the banks.Why didnt they bail out the masses also??
Contrarian Investor and Trader.Advocate of free markets,limited government interference in the economy and sound money