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The "Only Chart That Matters", Projected Until 2016
Three weeks ago, in "A Quick Reminder Of The Only Thing That Matters, In One Chart" we did just that, showing the ever greater amount of global liquidity injected by the central banks, thanks to which they have so far successfully masked the accelerating economic collapse of the world, as shown by cratering "benign" inflation expectations to levels not seen since Lehman: hardly a confirmation of economic stability and growth:
... we and quoted none other than JPM that "the current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude and the ECB actions have the potential to make it even more extreme."
We left it off with the "one chart that should put everything in perspective, and explain why the world has reached a plateau of permanent addiction to monetary liquidity injections, and why nothing else matters."
So, with everyone fearing imminent Fed tightening, what does this chart look like in the coming years? For the answer of what the "only chart that matters" projected until 2016 looks like, we go to Barclays, where we find that absolutely nothing is about to change to the slope of the infinitely fungible, globally interconnected, liquidity excess. In fact, as Barclays puts it best, "central bank balance sheet growth will be broadly unchanged in the next 12-15 months." So much about all those fears of a global rate hike cycle...
In fact, the only difference is that if and when the Fed's QE ends and the US balance sheets declines modestly as a % of GDP, both Europe and Japan will take its place at the forefront of the global monetary firehose.
Of course, the assumption here is that once the Fed ends QE in 1 month, and concerns that a US rate hike is imminent, the market won't crash and thus force the Fed to promptly return to what it does best, CTRL-P. In fact, the €64K question is whether the hand off from the Fed to the ECB and BOJ will be smooth enough to avoid a stock market crash between now and the end of 2016. Everything else is semantics.
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The only way the Fed and other CBs will stop a deflationary crash is to print like no tomorrow. Will they do it? Ask Mr Yellen.
and to justify the printing...
a really big WAR...
the elite LOVE war...
why not, they dont have to fight it, just collect the cash...
PRINT! PRINT! PRINT!
Is always the elite's answer. The Fed is the lap dog of the Luciferian puppet-masters. Destruction through over-consumption.
Where is the Honourable Sir John Maynard Keynes? I'd love to shove some paper up his ass and pour molten silver down his throat.
He was cremated so people couldn't defecate on his grave.
What happens in 2016 that makes the status quo not necessary
Hear that giant sucking sound? That is the sound of the status quo imploding.
Great job Tyler's. This is one of the best storys you guys have posted.
Oh and you guys are getting some attention in the "mainstream".
http://money.cnn.com/2014/09/25/investing/zero-hedge-wall-street-blog-fi...
I like this part the most.... Zero Hedge now has 215,000 Twitter followers. No one from the site responded to CNNMoney's requests for comment.
That's because CNN has no readers and no viewers
Guys? That's sexist. The posts may be from red headed women or androgynous entities for all you know
And the charts end in 2016 for a reason. Eventually you'll see the light.
Just remember -- there are no "average looking" red-headed women.
ZH it has been a full day
Why no report on the death of James Traficant?
Traficant = Douche Bag that's why but I will indulge:
Nonetheless, his antique tractor rolled over him while he was trying to park it in his barn. (not a allusion to a sex toy and him btw) wink wink. He wasjust another union loving corrupt lacky
all those union jobs in his district went off shore.
Are you sure it wasn't a nail gun?
Trafficant interview:
https://www.youtube.com/watch?v=z_NMFXuUI94
Old Squirrel-Head finally got "Beamed-Up!"
BouncyTheWonderbunni said......
"Traficant = Douche Bag that's why but I will indulge:
Nonetheless, his antique tractor rolled over him while he was trying to park it in his barn. (not a allusion to a sex toy and him btw) wink wink. He wasjust another union loving corrupt lacky"
Probably......but before then......
"He endeared himself to voters in the early 1980s by defying the courts and going to jail for three nights rather than foreclose on the homes of workers laid off from the city's dying steel industry."
"Yet he often exasperated fellow Democrats by breaking ranks, such as his decision to vote for Republican Dennis Hastert as speaker and his differences with President Bill Clinton on trade and other issues. He denounced Justice Department tactics and belittled Clinton's attorney general, Janet Reno, as a good prospect to run for governor of Beijing."
He may have been a crook.....but he was the Old School Crook who took America seriously.
You probably dont work you stupid fuck. I've worked in both union states and right-to-work states. I know first hand what is to work without worker representation (slave labor). Yeah, get there is union abuse, however, nt even close to the facist gov./corporate abuse.
just read a story on 'armstrong economics'
they have a picture of russian GIRLS wearing t-shirts with anti aircraft missiles on them saying "this is what we think of your sanctions"
Putin has popular support for a war...
for when the girls WANT a fight..
the boys are GOING to fight...
WW3, bitchez!
Mr armstrong also says we rally into 3rd qt 2015 and then kaboom
YEP!
plus war AND civil unrest starting in november....
I enjoy reading/listening to Mr. Armstrong and others like him. But, I cringe when I hear any of these guys give timelines on the collapse of our currency, our government, the uprising of the masses, the 1%, etc. I wholeheartedly agree with their arguements most of the time. None of this will end well, as the die has been cast. The landing will be hard and all one can do is prepare yourself and your family. As far as timing, who really knows?? If you had asked me 3 or 4 years ago, I would not have thought we would have made it this far into the ponzi scheme. The old... 'they can stay irrational way longer than you can stay solvent' line applies so well to what we are witnessing.
I agree . One must already be where is best for him and his. With as much resource as is possible. Very hard to do
Yeah, they'll def make the handoff smooth- they need enough lag time between stimulus and crater event to differ the blame. Fine with me. More time for preperations. The $64M question really is, who will be the end bagholder? Then again, who cares since it really doesn't matter
The bagholder???
Joe Public, for sure.
That for sure will be the pension plans as holders of the largest bags
See first chart here
http://www.showrealhist.com
October QE will be tapered again and ECB should take over with " QE private". That will not happen. In the charter of the ECB is written that the ECB is not allowed to buy sovereign debt. That was because already Germany and likes knew that Southern Europe could unload their problems to them. Nobody in its most wild imagination could forsee that "private/corporate" Loans would be allowed if you do not allow for sovereigns. Nobody but Draghi that found this loophole to exploit. But I guess his bluff will be called, he is a liar and will raise expectations until they are bust like a true Goldmanite, he is nothing but a broker. So I guess their will be a "vacuum" until the FED start to untaper.
Anyhow that is just my guess the FED tapers to be able to untaper if things get rough. But at the end with Japan after 24 years of QE in shambles, - 0,2% at the ECB and balancesheets of Central banks over the hill and end will come and it will not be pretty.
Uhuh, sure Germany knew ... that's why it let it's financial instutions hand out massive loans to the south. Deutsche Bank already got burned on Greece, without Draghi Deutsche Bank and the entire financial system in Europe would have crashed.
The ECB and the Fed are simply kicking the can, in front of a steam roller.
We sure do have a lot of different charts that are labeled "the only chart that matters".
I think we had about 4 this week.
Same thing with "the scariest chart ever" and such.
Yep, after seeing a dozen 'scariest chart ever articles' , don't forget to hop over to king world news, where they will tell you all about how gold and silver are going to the moon tomorrow (as they have every day for the past couple years)
I know. Occassionally they have a good guest, but usually it's the same 4 or 5 "IMMINENT COLLAPSE/BLAST OFF" guys lol
My guess is that the PTB will crash stocks and maybe bonds as well themselves to confiscate wealth and drain off liquidity.
Even the blind Fed can see what's on the horizon.
Each night they pray to the Black Swan god to make a showing, so there is something other than their own Keynesian policies to blame.
Each year, the Great Pumpkin rises out of the pumpkin patch that he thinks is the most sincere. He's gotta pick this one. He's got to. I don't see how a pumpkin patch can be more sincere than this one. You can look around and there's not a sign of hypocrisy. Nothing but sincerity as far as the eye can see. [/Linus]
Can't reply to comments anymore...
In who's interest this Ponzi scheme should blow up? This is the real question.
More to the point, with no new entrants why carry the charade on ?
I've got no money, and no place to go, so I need this abusive relationship to continue.
Run... don't walk to the exits
Fuck it, i've heard the run for the exits way too many times. No thanks, i'll walk.
I think I'll stay put. There is no way of knowing how, when or what will trigger a complex (chaos) system to unwind. I have no doubt however that whatever the outcome, 99% of the world population will suffer tremendously (yes, even the so called rich).
There is a contradiction in terms with regards to "central bank assets".
Who is going to pay the sort of money implied in these figures for, say, ex-Fannie Mae mortgage securities?
The mere fact of the Fed selling, rather than buying, financial assets will also scuttle any real market for them.
So we're above $10,000 Billion dollars of QE, or $10+ Trillion.
Deriviatives market is somewhere around $710 Trillion.
Funny, I ain't seen a penny of that.
Send me my check Janet.
It's 3 $bn now.
Tax free.
There's no real economy. It died 20 years ago; paper promises sucked up the revenues. CB's will print, HFT' s will prosper, higher rates is an illusion, financialization in combination with peak cheap energy is a bitch.
Too much on the shelves, too little debt to buy....
Yes, the real economy is offshored...and still accepts USD for payment.
Offshored? Like 64 million empty appartments in China. Depressed Foxconn workers on suicide mission. What i really meant is; humanity died 20 years ago. But it will rise again. After the big cleanup.
Just because they forecast it, doesn't mean it will happen. How many recovery summers have been forecast so far?
FED begins taper December 2013.
Russell 2k negative 2014 YTD.
Questions? Any questions at all?
Interesting. An argument that the financial stability of the system can be extended with BoJ, EU support. No one on ZH is forecasting long term stability. But calling the timing and depth of the turn, even approximately, matters.
So Tyler, consider the other crises we're reading about:
* the Keynesian debt-stimulus singularity,
* the disruption due to Russian sanctions,
* the looming collapse of
- the new US housing bubble,
- the sub-prime auto loan bubble,
- the shale gas bubble,
- the commercial mortgage bubble
- the securitized student loan bubble,
- the securitized rent bubble, and more,
* the instability baked into the financial system by the phenomenal growth of derivatives,
* a looming classical recession in the real economy (remember that? yup, it's still there somewhere) due to overproduction and inventory buildup,
* the inevitable exhaustion of the campaign to suppress the price of gold,
coupled with:
* the rapid contraction of many European economies now underway,
* the collapsing China housing bubble,
* the collapsing Chinese banking system
* growing financial crisis in EM countries,
- and a possible mass defection of EM countries from the dollar to the BRICS Bank.
[what did I leave out?]
........
So do you still see a chance that increased injection of liquidity by BoJ BoE and ECB can keep the game going? What else could serve to keep it going? Is this their last trick? Or is it a global currency such as IMF SDR's?
Finally, the infusion of liquidity by pumping trillions of dollars worth of SDR's, commenced before the onset of global panic, do you see any way it could
* relieve any of the pressure from swelling bubbles?
* deleverage the global economic system or any part of it?
* revive the effectiveness of Keynesian financial stimulus?
* usher in a new and stable global economy (for good or ill)?
Or would it just buy a few more months or years before financial Armaggedon? If the latter, how many?
Thanks. I'll be watching for your answer.
8-)
And how could large scale warfare change this equation?
With the Fed ending QE with October, one has to wonder if the yen heads off to hyperinflation could the Fed return to outright buyout the BoJ. It could be a first in can kicking field goals.
And the "PBoC"...........?
How many Double Digit Trillions is that ?
Or the more revelaing Equation: "CB Balance Sheet/GDP"
I keep showing this bubble because it's important to understand what's happening. I would say THIS is the only chart that matters until 2016.
http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...
Ewt, interesting link. Question is, is it that bad? Or is it much worse?
The picture I'm getting is that the collapse of the equities markets, catastrophic as that may be, will trigger a wave of other collapsing systems of staggering proportions.
I agree.
So, in other words in 2016 the price of BABA will probably be $2016. Still no dividends though.
Splooge - Yay!
Soon cold comes yet
In the number worlds
the boys and girls
will work like never
to bring the heat
to dying Heather
as it rots
under ice
Most of all this central bank action has been futile, if not recessionary. With the exception of ECB - which iis buying less quality collateral, and as such, liquefying them, and thus lubricating the economy - the fed, and the Boj are buying good quality collateral, namely government bonds.
At best, this is neutral and most likely monetary tightening. Why? Because most of the liquidity that goes to banks, is not lent to the real economy, but instead deposited at the central bank (money velocity and thus multiplier, zero).
At the same time the good quality collateral that is taken out of the system, deprives market participants of the ability to mobilize this collateral to be used to obtain secured financing - a vital source of credit in the economy which typically has a 2-3 times multiplier through the collateral re-use.
So when you add the two effects, it is unclear what the end result is, and if there is no demand for loans in the banking system ( which is the case), it is conceivable that all this activity has been credit restrictive.
Food for thought for all of you out there!
1916 ? Thats almost 500 days of whooping it up, having fun, pretending Iam rich, watching fooball, maxing credit card before Presidential elections when cadidates will promise me prosperity and happiness. I live in America and Iam invincible even though my only skill is conforming to the system. (background music---God bless America, land of.....)
Chinese experienced major currency turmoil around dynastic changes in a time of economic stress . See http://en.m.wikipedia.org/wiki/History_of_Chinese_currency
The present equivalent would be US midterm elections Nov 2014 , with a new Republican dynasty predicted .
Expect major market turmoil then.
Dream on about a GOP dynasty. Demographics, immigration included as a factor, suggest just the opposite and that is why the GOP is being the bitch they are on immigation. They know the voter base will be expanded with thoise who will tend to vote the other way. There are almost no metrics pointing the GOP way ultimately. Whites are either about to or have become a minority in the USA.
Up my FAFSA Brussels.
Once one of these four partners does something different from the others this gigantic circle jerk will fall apart. It's all 9th grade Algebra as I have always stated if A=B=C=D everything is balanced. But once one goes out of the loop it's over.
A chart projecting out two years is a prediction and predicting the future is an impossible task and full of pitfalls. Still we listen and soak in all that is said, we even spend a tremendous amount of money to gain an edge in knowing what maybe just around the corner. If you step back ten years in your mind, I suspect that things have not unfolded as you might have predicted.
When you see how the world has developed, the twist and turns are most unpredictable. Nowhere is this more apparent then in the economy, whether it is in the areas of interest rates and inflation or the rise and fall of companies. Surprise and awe, highlighted with bouts of shock is what we should expect going forward. More on the subject of predictions in the article below.
http://brucewilds.blogspot.com/2013/06/predicting-future-and-hindsight-m...
I don't recall hearing JPM worrying about QE when they were begging to get bailed out by it....fucking hypocrites don't think I forgot.
I think uncertainty in the markets is to big now. That is why i don't invest anymore, but instead trade the volatility with cfd