President of Pento Portfolio Strategies – Michael is a well-established specialist in the “Austrian School” of economics. A regular on CNBC, Bloomberg, Fox Business, King World News and other national media outlets and his market analysis can be read in most major financial publications
Unleashing Of QQE And Global Economic Meltdown
The Keynesian elite gathered in Davos Switzerland this past week to pontificate on global economic issues and to strategize the engineering of The Fourth Industrial Revolution. This new so called “revolution” includes a discussion on the future of Artificial Intelligence. Judging by the comments coming from most of the list of attendees, it seems obvious the intelligence on display was indeed faux. But the most important takeaway from this venue was that central bankers have made it clear to the markets that the level and duration of quantitative counterfeiting know no bounds…
European Central Bank (ECB) President, Mario Draghi, used the platform to assure investors he’ll do whatever further is needed to reach his absurd inflation goal: “We’ve plenty of instruments,” said Draghi. “We have the determination, and the willingness and the capacity of the Governing Council, to act and deploy these instruments.”
Central bankers love to use words like instruments and tools to describe the methods and strategies available to them because it makes what they actually do appear less primitive. But truth be told, the only instrument or tool central banks have is the impious power to create money and credit by decree.
Japan Unleashes QQE On The World
Not to be outdone by the Europeans, Japan’s chief money printer, Haruhiko Kuroda, appeared downright giddy from monetary intoxication when discussing what he refers to as his QQE — Quantitative and Qualitative Monetary Easing program. As if adding that additional “Q” somehow makes it more palatable and effective than the generic form of Quantitative Easing.
When asked by a reporter if the Bank of Japan (BOJ) had more room to ease, Kuroda glibly chuckled that the BOJ has “only” purchased 33% of all existing Government Bonds and conveyed the willingness to monetize every available sovereign debt note issued by the insolvent government of Japan.
And since Mr. Kuroda thinks destroying his nation’s currency is funny, he certainly has a lot more than Mr. Draghi to laugh about. The ECB’s balance sheet stands at roughly 25% of the Eurozone’s Gross Domestic Product; while the BOJ boasts a whopping 78% of Japan’s GDP.
Europe’s Chief Counterfeiter
Turning back to Europe’s Chief Counterfeiter Mario Draghi, he has been buying 60 billion euros a month worth of European sovereign debt and has been doing so for quite some time. The total goal had been to add 1.2 trillion euros ($1.4 t) to the ECB’s balance sheet; taking the total up to 3.3 trillion euros. However, that 60 billion euro per month QE program was extended until March 2017 less than 60 days ago. But now, less than two months from expanding the program, he is still not satisfied with rate of euro dilution and told the markets he’s ready to do more!
It is becoming obvious to the worldwide investment community that these central bankers will not quit printing money until inflation becomes an intrinsic and sustainable aspect of the global economy.
QQE And Economic Meltdown
Therefore, since the obvious result would be a complete collapse in equity and bond prices—which would lead to an unprecedented economic meltdown—the BOJ has unwittingly become trapped into an endless QQE program.
Indeed, the entire global real estate, equity and bond markets have become completely addicted to perpetual and ever-increasing quantities of QE and ZIRP. It is no accident that the US stock market began its topping process once QE ended in October 2014. The US equity market also has become reliant on ZIRP and QE to move higher.
Asset prices and economies have become wards of central banks and their endless ability to increase the rate of money creation. Therefore, since the global elites have placed all their faith in the fiat confetti spewed out by central banks, investors would be wise to increase their exposure to the only genuine form of money there ever was…gold. READ MORE...