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The "Great Accumulation" Is Over: The Biggest Risk Facing The World's Central Banks Has Arrived
To be sure, there’s been no shortage of media coverage regarding the collapse in crude prices that’s unfolded over the course of the past year. Similarly, it’s no secret that commodity prices in general are sitting near their lowest levels of the 21st century.
When Saudi Arabia, in an effort to bankrupt the US shale space and tighten the screws on a recalcitrant Moscow, endeavored late last year to keep oil prices suppressed, the kingdom killed the petrodollar, a move we argued would put pressure on USD assets and suck hundreds of billions in liquidity from global markets.
Thanks to the fanfare surrounding China’s stepped up UST liquidation in support of the yuan, the world is beginning to understand what we meant. The accumulation of USD assets held as FX reserves across the emerging world served as a source of liquidity and kept a bid under things like US Treasurys. Now that commodity prices have fallen off a cliff thanks to lackluster global demand and trade, the accumulation of those assets slowed, and as a looming Fed hike along with fears about the stability of commodity currencies conspired to put pressure on EM FX, the great EM reserve accumulation reversed itself. This is the environment into which China is now dumping its own reserves and indeed, the PBoC’s rapid liquidation of USTs over the past two weeks has added fuel to the fire and effectively boxed the Fed in.
On Tuesday, Deutsche Bank is out extending their "quantitative tightening" (QT) analysis with a look at what’s ahead now that the so-called "Great Accumulation" is over.
"Following two decades of unremitting growth, we expect global central bank reserves to at best stabilize but more likely to continue to decline in coming years," DB begins, before noting what we outlined above, namely that the "three cyclical drivers point[ing] to further reserve draw-downs in the short term [are] China’s economic slowdown, impending US monetary tightening, and the collapse in the oil price."
In an attempt to quantify the effect of China’s reserve liquidation, we’ve quoted Citi, who, after reviewing the extant literature noted that for every $500 billion in EM FX reserve draw downs, the effect is to put around 108 bps of upward pressure on 10Y UST yields. Applying that to the possibility that China will have to sell up to $1.1 trillion in assets to offset the unwind of the great RMB carry and you end up, theoretically, with over 200 bps of upward pressure on yields, which would of course pressure the US economy and force the Fed, to whatever degree they might have tightened by the time China’s 365-day liquidation sale ends, to reverse course quickly.
Deutsche Bank comes to similar conclusions. To wit:
The implications of our conclusions are profound. Central banks have accumulated 10 trillion USD of assets since the start of the century, heavily concentrated in global fixed income. Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD. Many studies have found that reserve buying has reduced both bund and US treasury yields by more than 100bps. For every $100bn (exogenous) reduction in global reserves, we estimate EUR/USD will weaken by ~3 big figures.
[...]
Declining FX reserves should place upward pressure on developed market yields given that the bulk of reserves are allocated to fixed income. A recent working paper by ECB staff shows that the increase in foreign holdings of euro area bonds from 2000 to mid-2006... is associated with a reduction of euro area long-term interest rates by about 1.55 percentage points, in line with the estimated impact on US Treasury yields by other studies. On the short-term impact, one recent paper estimates that “if foreign official inflows into U.S. Treasuries were to decrease in a given month by $100 billion, 5- year Treasury rates would rise by about 40–60 basis points in the short run”, consistent with our estimates above. China and oil exporting countries played an important role in these flows.
Which of course means the Fed is stuck:
The current secular shift in reserve manager behavior represents the equivalent to Quantitative Tightening, or QT. This force is likely to be a persistent headwind towards developed market central banks’ exit from unconventional policy in coming years, representing an additional source of uncertainty in the global economy. The path to “normalization” will likely remain slow and fraught with difficulty.
Put simply, raising rates now would be to tighten into a tightening.
That is, the liquidation of EM FX reserves is QE in reverse. The end of the great EM FX reserve accumulation means QT is set to proliferate in the face of stubbornly low commodity prices and decelerating Chinese growth. And indeed, if the slowdown in global demand and trade turns out to be structural and endemic rather than cyclical, the pressure on EM could continue unabated for years to come. The bottom line is this: if the Fed hikes into QT, it will exacerbate capital outflows from EM, which will intensify reserve draw downs, necessitating a quick (and likely embarrassing) reversal of Fed policy and perhaps even QE4.
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Now eat that shit sandwich, Mr. Yellen! It's kosher!
When you're this big they call you "Mister"!
He's a handsome fella, isn't he?
There is no path to normalization...just consider the Fed's "plan" to raise rates...it's to pay banks billions moar IOER's...$2.5 trillion in excess reserves...to incent them not to lend and maintain QE while doing it??? If anybody wonders why the Fed wants to raise rates...follow the money!!!
http://econimica.blogspot.com/2015/08/rate-hikes-and-qesimultaneously.html
"Following two decades of unremitting growth, we expect global central bank reserves to at best stabilize but more likely to continue to decline in coming years,"
It wasn't growth...it was a debt bubble.
BTW, it loooks to me like "they" are "allowing" an "orderly" market decline today.
I've got a stash of about $60,000 that I got from selling on ebay contaban that passengers "left" at the checkpoints. I'm going to sell those 10Y like crazy.
This is one of those ZH stories to take action on.
Hah @ TSAThuggie...
Meanwhile, I'm REALLY CERTAIN that putting Yelling in THE chair is a big FUCK YOU to everyone...look, we can put this touchy, vapid, un-inspiring, un-inspired, formless pant suit and there is nuttin you can do about it...
Latest on the music front...if fusion is your thing...
https://www.youtube.com/watch?v=cvsqR27kxrU
We are not going to raise rates if we think it is going to tip the economy into a recession.
We will raise rates because we believe the economy is strong enough that it is appropriate to have higher rates to meet the objectives that have been assigned by Congress.
LOLOLOLOL!
...but we're independent!
hardy har har!
SEPTEMBER 2015:
The Writing’s On The Wall
http://stateofthenation2012.com/?p=21367
Yellen knows exactly what is going to happen this month,
just like Bernanke did in 2008 and Greenspan did in 2001.
Not to point out the elephant in the room, but the 10 year is down a couple bps today (i.e. it's price has gone up) and still riding in the same channel it has been for months. Maybe the blow-out in UST rates from China's dumping is yet to come?
They could dump another 100 Billion tomorrow morning and I don't think that would move the rate on the 10 year more than a couple of bps.
Said another way, if QE isn't what drove interest rates into the shitter to begin with (and it's not) why would anyone think that QT is what's going to shoot them to the moon?
If China is selling, somebody, somewhere is buying (the biggest buyer probably being withing the Marriner-Ecles building). These things don't just poof off the planet because China sold them. If only debt was that easy to be rid of.
http://www.shortlist.com/resource/binary/6f93f3e03fbadaa7ed270dec715cbb0...
I honestly never understood why Yellen took the job, she knew things were fuck up and they are worst now lol
To tell you the truth , she is indeed the prefect candidate to take the fall/blame
"If only debt was that easy to be rid of."
If only money grew on trees for us too!
Umm, what did they buy them with? It couldn't have been dollars.
Nice link.
I guess few actually watched or took it to heart.
So as "Smellin" Yellin is about to find out, if you're trying to pick up a turd, there is simply no clean end.
Fate the Magnificent
"Push the Button, Max"
Turds are like women, the older they are the easier they are to pick up!
This article makes a good point, though. If not enough bids come in to finance the debt that puts bonds in a squeeze play. Raise rates and wreck the economy but attract more foreign money. Maintain or lower rates and not enough purchases.
My bet is the Fed maintains, lowers if they are scared and then soaks up the extra bonds if they have to...until they own the entire national debt, if necessary.
$60K? That's a lot of toenail clippers and swiss army knives.
Shakedowns of Chinese white collar criminals can be profitable.
But think of the tens of thousands of air disasters it prevented.
Year after 9/11, flew out of Nashville. My carryon bag had a set of nail clippers unknown to me. No problems in Nashville. On the way home from Ohara, I was strip searched by an angry indian guy after he asked me if I had anything in my bag. I said no and when it came back on X-ray, there was almost a fight....over a set of small finger nail clippers. World. Gone. Mad.
Oh yeah, my story is that I tried to find a good nail clipper company to invest in due to all of the seizures at the airport. I bought some WorldCom instead....
Nah, nothing says it like metal ..
https://youtu.be/pzH62MPTaFY
The "growth" as quoted is in central bank reserves, not economic growth. So you agree with the quote.
Leave today out but the rest is spot on.
Cause and effect, who knew? I expect whatever the best thing to do is, they will do the opposite, so prepare for a wild ride......
Talk about mixing up cause and effect, take a look at this tidbit from the DB so-called analyst:
"Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD."
So, let me get this straight, CBs don't want to hold so many dollars. That makes .gov pay more for the money it borrows. Okay, but having to pay more to get somebody to bid on your paper does NOT make your paper more valuable. It does NOT strengthen the dollar.
Rising rates put a bid under the dollar.
Get a job at DB. Let me put it another way. If you have to cut your price in order to sell more of your product (USTs), that does not mean that demand for your product has increased (USDs).
What if the path to Normalization is getting the US out of reserve currency status ? They cannot just withdraw ! They need to force the World to reject the $ as the Worlds Reserve Currency, then the Financial Masters are free to inflate the currency.
RP...looks like Jimmy Saville on the recieving end of a left cross from a limp wristed San Francisco liberal.
Bad confirmation, and you need to check its teeth.
Knacker fodder IMO.
One of the biggest stories about the ME in a long time was posted yesterday on ZH. Russia was moving into Syria. Read that threads comments closely.
Today RT has reported this on their website:
"No Russian jets were deployed to Syria in order to launch attacks against Islamic State militants (IS, formerly ISIS, ISIL) and Syrian rebels, a military source told RT, dismissing reports in Israeli media."
SO: No Putin commitment to Syria, no jets, no troops, no nothing. But Putin did host the leaders of the insurgents in Russia as his honored guests a few weeks ago to work on an agreement for post Assad Syria.
Never believe anything until its officially denied.
Here's a concept: Raise rates so as to encourage people to actually save again - and all the good that flows out of savings and rational capital investment.
They don't want people to save. They want people to spend their savings and then go into debt to spend more.
Yeah some folks just don't get the matrix do they. You don't do ANYTHING the masters don't want you to, problem for them is... their fucking days are numbered and it ain't in months.
That's like asking a junkie to go cold turkey. Not going to happen if they have a say.
f0ster
“@RT_America: #PopeFrancis issues 'EXTRAORDINARY HOLY YEAR OF JUBILEE IN 2016' http://t.co/ApP2GCGbOB http://t.co/BsTWRMxIjN”
9/1/15, 10:37 AM
"The great accumulation is over!" So you're saying they already printed up trillions of dollars and gave it directly to "the people in charge, whoever they are" (to quote Alex Jones). Now that they already gave their tribe ALL the money it's time to crash asset values to near nothing so they can use that money to buy up everything for pennies on the dollar.
Wait, doesn't this happen repeatedly every 1-3 generations? Yes, yes it does. And this is a big one. By 2030 "they" ("whoever they are") are going to own basically everything. Every home, every apartment building, every company, every bit of valuable land, every coal mine, every copper mine, every gold mine, every silver mine, etc. On and on it goes.
See Soros buying up coal companies and miners? Yep, he is one of "them." See the goyim mining company owners declaring bankruptcy? Yea, they are not "one of them, whoever they are." It's almost like this is the plan. It's almost like this has been done before. It's almost like this is what they do.
Wouldn't that make it a shitwich? Perhaps McD's would like to carry the new McShitwich at their fine dining establishments?
FUCK OFF Yellen.
Yellen looks like my dog when someone makes a funny fart sound.
Looks to me like he's sniffing his own fart and trying to figure out if it was last nights baby brains or the mornings baby blood pudding he's smelling.
From the thumbnail on the ZH Home Page, I seriously thought it was Jamie Dimon.
Amerikan "exceptionalism" is causing the world to re-think the US dollar.
one would think the Fed has/had a think tank that would look into all shtf scenarios...if only
Your mistake is in using the word think.....
Mr. Yellen is thinking...
"My pussy could use some Quantitative Tightening...hmmm? Ya that's it!"
"Hmm. Maybe my turd-cutter too, while they are down there..."
thanks for ruining my lunch
Aw, come on...the visual: It's lunch time for God's sake
Ok. Visualize this...
Mr. Yellen's quantitative eeeasing...after lunch. It's kosher for god's sake.
haven't seen no guillotines yet
Shut off SNAP and see what happens.
True. But SNAP will probably continue, just not adjusted to the real inflation rate. That will lead to (possibly) a year of slow pain, all the time the the sheep will be begging to their God government to save them, which gives gov the go-ahead to tighten the screws more.
The system will bend bend bend and finally break in a spectacular display of rage.
Yes, eventually the producers of the food realize they are getting fucked and simply stop producing for anyone else but themseleves. That's the fucking point as that which cannot be sustained, won't be, period.
Tis a shame that we won't be treated to what would have been an inevitably increasing amplitude of Bernanke's trademark lip quivering as, over the coming months, clueless Congresscritters demand to know what went wrong.
Instead we have Stanley Fischer swatting imaginary flies.
While I have a strong desire to see Fischer flattened with a single, well-placed punch, I'd much prefer to see Bernanke publicly humiliated in long, drawn out hearings.
Derbanke would LOVE that, center of attention, mircrophone, opportunity to play the misunderstood savior, it's everyone else who would hate it.
My glass is half full on this one.
Basically, every 25 bps increase in the Fed Funds Rate causes some (mostly known) increase at the 10+ year end of the UST curve.
To quote Zoolander: So what, Matilda?
This is not some congressional hearing-worthy development.
This is why the fed does nothing. They need political cover to save the world.
The fed path to normalization and all their other treks are dead-end roads, and I'll enjoy watching them all walk back, and then down the path to institutionalization.
Um yeah. The Fed is all powerful. Sure. Keep focusing on that.
So, the central banks are finally going to make all their debt dissappear? That really wouldn't surprise me at all. They have done this numerous times throughout history. Their debt and liabilities magically "goes away", yours does not.
The guillotine will be fed again, fine by me.
good piece, and can then hike rates and implement QE4 at the same time.
If the fed funds rate trded outside of the target rate because of other CBs, old yeller could announce a new target that is higher without lifting a finger.
We're gonna need a bigger box.
That's what she said...
Just waiting until she says something "smart" the next time and it won't matter anymore.
It will be really fun to watch the horror in the TPTB faces...
www.denk-bubbles.com/leadership
Must be nice to create bubbles have them implode then collect all the goodies.Prior to the housing bubble the Fed had no mortgage backed securities now it has 1.5 trillion worth,and the great thing is they get full government support to create the next bubble.Remember its not 'Federal'it has no 'Reserves'and its not a bank yet its accumulating squillions on its balance sheet,yes its a great accumulation allright for Planet Rothschilds rulers
so bottom-line, the REAL $$$-printing has yet to begin
Of course. You have $175 Trillion in world debt and only $75 to $79 trillion in total currencies & credit. Have to service it somehow.
My God, Yellen is a disgusting thing to see. Amazing she reproduced. Oi vey!
Heck with all that. Just tell me when we can start rusltlin up banksters.
I bet you the Bernanke is no longer in the country.
He's probably off somewhere gaying it up with Jon Corzine.
Believe me - in no way does that turn me on, and I'm gay. Just goes to prove that us gay guys aren't attracted to all men. Only the good-looking ones.
No worries Droogs,
Benji and Corzine are on "The List."
We know where they live.
We sit in every audience where they speak.
We watch them go in and out of the black yukon.
We know where their adult off-spring live.
We know their every move.
And when the time comes...
We need to grab some Volker cells and clone him.
raise rates yeller!!! raise 'em high!!!! and fuck yourself up royally!!! DO IT !!!
She looks like she has no clue what is going on...
Ben Shalom at least looks like he MIGHT know whats going on...in the way a professor acts like HE knows what is going on
Yellen pic needs to be enshrined in the market close banner with the deer(s).
LuvIt good.
Once, long, long ago, she was fuckable...
http://assets.bwbx.io/images/isPx7AOHIk1M/v1/-1x-1.jpg
The petrodollar is what gave our currency reserve status. Somehow I missed the news of its death. There is nothing to save it now, unless of course foreign investors want to buy US real estate or exports. We export something right? Oh yeah, we're screwed.
The petrodollar is what gave our currency reserve status. Somehow I missed the news of its death. There is nothing to save it now, unless of course foreign investors want to buy US real estate or exports. We export something right? Oh yeah, we're screwed.
When price of oil moves 20-30% in a week...very unstable.
So the backing of the currency is unstable...so the markets respond thusly.
Get short or get out before the final collapse is on.
Then plan on precious metals after.
"The petrodollar is what gave our currency reserve status."
The petrodollar is meaningless. When all the major currencies in the world are fiat, the dollar retains reserve status based on the full faith and credit of the US military. It will continue to have reserve status as long as people believe in the worth of the dollar, and people will continue to believe in the worth of the dollar as long the US continues to be viewed as a strong empire.
Well said.
And just when the empire teeters too far, WHAMO! Whoa to the nation(s) who gets implicated in our demise.
In truth the Fed must respond to the political actions of Congress. Fed chair after Fed chair has mentioned that fiscal actions drive monetary decisions. The Fed is not out to loan the government money, the government demands it.
At least most of the blame falls on the Congress and President.
Yellen and Bernacke and Greenspan all get their share of the blame but they don't make an extra dime if the buy an extra billion in Treasuries.
Ultimately it is the will of the people that drives the inflationary demand for 'just a little more' medium of exchange. that was the cry in 1795 as it is the cry today.
Blame to Fed if you like but Yellen would be gone tomorrow if she 'did the right thing'.
Volker had the ability to allow rates to rise. If Yellen tried that the USG would be broke in a month.
The FED and the banksters chose the co-enabling path. No other options were considered, or I am not sure if present day economic and political thought can even think of alternate solutions.
So right what you say.
The enormous expansion of unproductive goverment wellfare states that we have lived in, funded since the early sixties on a 'stable' yearly inflation of 2% imposed upon the western central banks by IMF who also inflicted unlimited capital exchange in 1959.
First the currencies were fixed, then they made them float when the imbalancees became too big. and now, what are they gonna do? With world trade contracting since 15 years... how do you keep up the theft of 2% inflation when total global production is falling?
The Wizard of Oz and Follow The Yellow Brick Road..........was trying to tell us something
Trot out the Fed: We won't raise rates.
Too late dumbasses everyone is broke.
This can't happen without a life-crushing worldwide depression, starvation, and likely gigantic war. It can't be unwound without those horrific consequences and others.
I disagee with this. We used to live within our means.
We only need:
1) Food
2) Water
3) A potty (outhouse)
4) Prolly a house would be nice.
IPhones and all this other junk aren't needed.
I stopped paying my mortgage over a year ago becuase I know I'll never have to repay it.
Let us know how that turns out...
And that's the only thing I need is *this*. I don't need this or this. Just this ashtray... And this paddle game. - The ashtray and the paddle game and that's all I need... And this remote control. - The ashtray, the paddle game, and the remote control, and that's all I need... And these matches. - The ashtray, and these matches, and the remote control, and the paddle ball... And this lamp. - The ashtray, this paddle game, and the remote control, and the lamp, and that's all *I* need. And that's *all* I need too. I don't need one other thing, not one... I need this. - The paddle game and the chair, and the remote control, and the matches for sure. Well what are you looking at? What do you think I'm some kind of a jerk or something! - And this. That's all I need.
---Navin R. Johnson
"hey kid, what's this?"
"shit."
"and what's this?"
"Shinola."
"Your gonna do jus' fine, kid."
Remember, the Lord loves a working man, and Never trust Whitey.
You fergot #5. A club to bash mate over head with.
Please remember, 99.9% of us ants on this planet are not affected by this disaster. They already have nothing. They are already specks of dust in the wind.
But since we are here....Where is the next stopping point for SPY????
Zero.
Stocks aren't necessary for life.
Same with Mansions. What's a $10M mansion worth, nothing. It's too big to become practical and no one else will be able to buy it.
All Bersnanky did was to print up MOAR shitty paper to buy up even MOAR shittier paper off of the Banksters balance sheets and then provided them free shitty paper, to go buy stuff and inflate asset prices.
Big banks losing billions in interest rate swaps gone wrong with long-end ratr going down = September opex expiration looming= NY Fed with $500 billion in term and reverse repos to help = massive media effort to justify rate manipulation = zerohedge participating in this sh*tshow of a ridiculous theory that makes zero sense = dirty game
Look at the reserves graph. In 2008/09 reserves slowed down and yields cratered. Its called safe haven trade = wall street and bill Dudley's greatest enemy.
Our yield curve is by far the steepest of all developed AAA, recently accelerated this steepeness despite catastrophic econ data - nonsensical and utterly rigged
Greenspan testified before Congress before he left.
"We lost control of the long interest rate"
This was the turning point and showed debt was too high and they only made it worse.
Greenspan was simply pimping the mythology of the Fed with that statement. The truth is he never had control of the long interest rate, he merely followed the market.
Right before the box she's standing on beneath the lamppost gets kicked out, the last words she's heard muttering are, "Data points... data points... my lovely data points..."
There's no risk, we're all safe as houses in Janet's silk purse.
So the fed just prints enough fiat to absorb all the excess treasuries hitting the street which rather than selling off they rise via the fed bid. World equity markets rally as that new cash looks for alternitive assets.. what difference do pe ratios make when you know the tital wave of inflation will drive earnings? The fed would probably print a little extra to keep a lid on paper gold as well. Isnt all this bullish ?
1929 had the second crash which came later. This is the second crash.
Western governments and central banks acquired <xxx,xxx,xxx,xxx,xxx.xx> of paper assets worth x% of face value.
Other governments and central banks acquired gold.
Game Over.
I stopped reading at 'path to normalization' (yeah like as if).
I'm on my second bottle of the good stuff since midnight by the way.
http://www.imagecross.com/d/image-hosting-view-07.php?id=8225buffalo.jpg
You having sardines with that?
The world's central banks ARE the biggest risk.
Tyler thats not a top, its too slow for that. Its a bullish continuation pattern ;). Actually articles like this make me think its more probable QE4 coming, you guys and Gartman are alike ;). In fact if you look at that line around 08-09 you can see same type of "pause" ;).
What? This isn't normal?
I love this! Watching the Federal Reserve Bank squirm. If they do nothing the market will collapse. If they increase the Fed Funds rate by 1/4 point the market will collapse. If they announce another round of money printing the market will collapse.
yeah, and Janet is pzzing in her panties.
Just got word on RRR cut again.
So is that bullish?
I have no idea. Let's watch tonight.
I was kinda being sarcastic, but something tells me, it won't be. Bullish, that is. It's still kinda sarcastic.
And here it comes. Nothing Yellen can do about it, except make it worse, just like CBs always do.
Is reducing FED balance sheet positive or negative for Gold?
Or will the pain of doing so push gold up?
Does it matter?
Ok, so in terms that I can understand, we've reached the scene in Good Fellas where they have to torch the Bamboo Lounge?
And everyone thinks it's normal that a "bank" gets to decide how the entire world operates.
The CEO of a company called "Unikrn" ("you know, we're like a theme park for e-sports") earlier today said on CNBC everything is awesome and he is very excited.
- "Look", uber is awesome
- Tesla is awesome, "they are changing energy"
- And his company just launched a new product that allows you watch video games and to bet on video games ("you know").
- And Ashton Kutcher is investing in it.
WHAT THE FUCK!
TOP. IS. IN.
Top WAS in.
I haven't been this excited about a new product initiative since Sports Illustrated offered a free Shoe Phone (a plastic telephone shaped like an athletic shoe) PLUS the Swimsuit Issue if you called in your subscription NOW (operators were standing by).
The clerk at 7-11 forgot to play his lotto numbers and missed out on a 50k winning ticket. He asked me how long it would take him to make 50k with his life savings of 5k using E-Trade.
I told him to get PMs; he'll understand why soon enough.
Release the hounds!
I think Cover cover cover. They are gonna jack this up.
Yellen has such a 'quizzical' look, doesn't she? What's going on here?
The people and our guillotines are their biggest risk.
Zion is a scheme, not an ethnicity.
what u say willis?
Upward pressure? Good luck trying to run a reserve currency when buyers refuse to just put the thing in a box a sit over it. Circulate it baby!
Yellen's look sums up the general depth of those at the helm.. "Help me understand."
Exactly. "What is Stock Market?"
Ve haff shot ze Bazooka and der iss no more rounds.
There are two economies.
One economy is for financial interests, other is producing consuming economy.
Bank credit does not vector into consuming/production - that part of economy is only incidental to bank credit formation.
This quote from the article caught my eye:
"And indeed, if the slowdown in global demand and trade turns out to be structural and endemic rather than cyclical"
Money is a pay to the bearer upon demand. Upon demand. Upon demand. Upon demand.
Get it.
If supply is available and there is money also, then demand will be met.
There is NO SHORTAGE OF DEMAND FOR GOODS AND SERVICES.
There is a SHORTAGE of money in the proper channels to then make demands.
QE is a liquidity swap which trades money for debt instruments. This action happens primarily in finance, in banker loops - it is not part of the regular transaction economy.
IT is better to think of the economy as two loops, an upper loop of finance, and lower loop of consumers. Lower loop of consumers are constantly in debt, and usury they pay on their instruments passes through to upper loop. Upper loop may deign to shower lower loop with returning usury, especially in the form of bought luxury goods and paying less for labor's services. So, producers/consumers get screwed twice, as finance takes usury up front on loans as seigniorage, and then witholds it to make labor desperate to sell their goods and wares. Finance also spends incorrectly - how many pair of blue jeans can one Oligarch wear? Their spending is irrelvant to the mass of consumer/producers, except for luxury goods sales.
QE made price of creating new credit cheaper, so that consumers MIGHT go out and take out new loans. But, in reality, consumers are paying down their debts. They are taking the bait for new credit loans only through college (desperate as they have no job) or cheap car loans.
Finance though has grown with new paper and new demands on producers (bottom loop).
Finance grew because they could take .20 or .10 fed rate, and then make loans to themselves, to then lever it against other paper in the Casino. Much of it also was carry trades to then distort other economies.
You cannot push on a string. New debtors will not show up to bankers door to be hypothecated, if debtors are already drowning in debt.
Most likely next step for finance will be DIRECT INJECTIONS, and this then WILL STIMULATE DEMAND.
There are plenty of 'GOODS' being produced given the nature of today's supply chains and automation.
The bankers will tell their stupid politicians what to do. They will inject just enough into bottom loop of consumers to stabilize things, and also so fiance parasitism won't be obvious to sheeple.
Without fail, banksters will continue to promulgate myth that money is banker credit. That is their con game, money = credit; so they get to hold debt instruments on society, and also get usury. It is great to be the king and everybody else is quiescent debt peons.
Politicians like it too. Entire societies have their head bent down as debt slaves, in fear of their jobs. People must have money to survive, and banks are the money (credit) factory.
sovereignmoney.eu
is your handle ironic? did you ever read the books of the man behind the mefobills? i recommend them very much
Hey guys,
You can find a complete copy of this Deutsche Bank report at the following link:
https://app.box.com/s/kivxdd8ph5bjg8uniuq8houcom4bac6r
The "Great Accumulation" Is Over: FX Reserves Have Peaked, Beware Quantitative Tightening
- This piece argues that 2015 will mark the peak in global FX reserve accumulation. Following two decades of unremitting growth, we expect global central bank reserves to at best stabilize but more likely to continue to decline in coming years.
- Three cyclical drivers point to further reserve draw-downs in the short term: China’s economic slowdown, impending US monetary tightening, and the collapse in the oil price.
- Structural changes have permanently reduced the need for reserves as well. China’s new FX regime would lead to less intervention in the medium-term. EM external positions are stronger than two decades ago reducing the need to recover reserves beyond prior peaks. Oil prices are unlikely to return to previous highs reducing petrodollar recycling. And both the SNB and BoJ have moved away from currency intervention as their primary monetary policy tools.
- The implications of our conclusions are profound. Central banks have accumulated 10 trillion USD of assets since the start of the century, heavily concentrated in global fixed income. Less reserve accumulation should put secular upward pressure on both global fixed income yields and the USD. Many studies have found that reserve buying has reduced both bund and US treasury yields by more than 100bps. For every $100bn (exogenous) reduction in global reserves, we estimate EUR/USD will weaken by ~3 big figures.
- Against this new secular trend, there are forces that point in the opposite direction. The Euro-area with its huge current account surplus has become the world’s largest saver implying persistent capital outflows and European demand for foreign assets, a term we have previously called “Euroglut”. The BoJ and ECB quantitative easing programs remain in full swing, generating downward pressure on global yields.
- Placed against global QE, the secular shift in global reserve manager behavior represents the equivalent to Quantitative Tightening, or QT. This powerful, but countervailing force is likely to present additional headwinds towards developed market central banks’ exit from unconventional policy in coming years.
Retail has left. Today. Again.
As a small retailer, I can say that it died sometime back in June. Sluggish wages, Obamacare and rising utility costs were the the drivers according to my customers.
http://www.cnbc.com/2015/09/01/the-bull-market-is-over-louise-yamada.html
The bull market is over: Louise Yamada
The market turmoil continued Tuesday as weak data out of China pushed all major U.S. indices down more than 2 percent. The S&P 500, Dow Jones industrial average and Nasdaq composite have now fallen a respective 6.5, 9.5 and 1 percent year to date, and according to one renown technician, the move may have signaled the end of one of the longest-running bull markets in history.
Looking at a chart of the S&P 500, Louise Yamada noted that momentum has been declining for four months, which by her work, is a "classic" sell signal.
"This is suggesting to me that we are looking at a bear market," said Yamada said Tuesday on CNBC's "Futures Now." Yamada noted that the last two times the market saw a similar shift in momentum were in January 2008 and June 2000.
At this point, the S&P 500 is already 10 percent from its May all-time high, but for Yamada, it's about to get a lot worse. "We could certainly see the S&P test its 2009 uptrend at 1,800," said the founder of Louise Yamada Technical Research Advisors.
"If the 1,800 level were to be breached, I think we could go all the way back toward 1,600 which is the breakout point through which the market moved in 2013," she continued. "In a normal technical concept, it's nothing more than a pullback to the breakout, but it would be a 24 percent decline [from the peak], which would hurt if people didn't protect themselves."
Yamada doesn't see the sharp selling coming in one swift move. Instead, she believes the market could see bounces and the overall decline will happen over the course of a number of weeks to months.
In the meantime, Yamada has a simple message for investors: Tread carefully.
"Lighten positions in stocks that are beginning to become fragile."
The demise of Pax AMericana's model and Oligarchy seems to be the premise of this civiization change.
I wonder what the trader mentality will become when the Casino is forced to shut down?
Looks like Dow will be down 500 today. I'll buy when Dow hits 3000.
These central planners will continue to print money, buy stocks and bonds, etc. to keep asset prices from declining for as long as they live. But, the effect on the real economy is is going to be as ineffective as it has been all along. If anything, their policies have inflated asset prices, deflated the real economy and created a gap between asset value perception and economic reality.
That people believed the premise that printing money to inflate asset prices and taking from savers to give to borrowers with ZIRP ever created any value at all is beyond belief.
Dear Janet, I refuse to be the last dumbass holding the bag.
BTW, that's the same face my kids make when they're pooping.
Your kids look more intelligent, I'm sure.