Why "Nothing Matters": Central Banks Have Bought A Record $1 Trillion In Assets In 2017

Tyler Durden's picture

A quick, if familiar, observation to start the day courtesy of Bank of America which in the latest overnight note from Michael Hartnett notes that central banks (ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, "the largest CB buying on record."

As Hartnett notes, the "Liquidity Supernova is the best explanation why global stocks & bonds both annualizing double-digit gains YTD despite Trump, Le Pen, China, macro..."

And for those who have still not seen it, here is the only chart that matters.

Finally, as a reminder also from Hartnett, any time the central bank punch bowl is taken away, an unpleasant "financial event" inevitably happens.

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Ghordius's picture

+1 Dr. Krugman's cargo cult. up to "every window that breaks is a step forward", and "Please, Mars, Attack US"

problem is, imho whatever is left of the "Austrian School" is tainted, too, with oligarchic interests, at least in the more usual punditry

further, you can't defend all those wars if you have to admit that wars break windows, walls, doors, people and whole nations

so there are also substantial war monger interests behind the cargo cult, besides the stock market's makers and shakers

spastic_colon's picture

so many people didnt believe me 5 years ago when i told them that the CB's would be the largest asset owners globally

ah yes the '94 tequlia crisis....i remeber it well.......wait....no....no i dont.

Ban KKiller's picture

Circle jerk Russian roulette musical chairs. I'll buy your over priced assets, you buy mine, what could go wrong? Free market for chumps.

spastic_colon's picture

just like the auto/art auctions....just a bunch of dealers buying each others assets to keep prices inflated.....game of hot potato

Ghordius's picture

that "free market" idea is good, but it is also dangerous for the proper understanding of the thing

the better term would be "natural markets". it would, then, include things like natural monopolies and oligopolies

enter the characteristic of some markets: the market maker

until the crisis of 1907, people were actually asking questions like "who is the market maker of that?"

buyers of Russian soverereign debt, for example, knew that Baron Rothschild was the market maker, and that he bought anytime those bonds back when they went down at a certain level, and resold them when they were up again

but then, the run-up to the crisis of 1929, and this kind of questions... stopped. since then, we kind of use the term "free market" while actually meaning something like "magic markets", particularly since the 80's, and the start of "Voodoo Economics"

LawsofPhysics's picture

Quite a lot of mental masterbation there.  Allow me to simply it for you fucknut;

"Full faith and credit"

 

Ask yourself, if currency creation does NOT require any real work, then why can't everyone do it?

If these useless fucking middlemen want to slit their own throats, I say we let them.

BandGap's picture

You said fucknut.

You are an old one.

Ghordius's picture

bollocks

"If these useless fucking middlemen want to slit their own throats, I say we let them "

and? you are doing that since when? besides, I was not writing about currency creation, I was only writing about the whole concept of "free market" versus where natural markets go... and where they might fail in a natural, expected way

old man (like me), stop being so brittle. my version of the thing explains oligarchs. your's, while I often agree with you... accepts oligarchs without even bothering to look why there are

as I wrote above, plenty of magical thinking around

Bay of Pigs's picture

No. Your understanding of Central Banking and economic terminology in general isn't very accurate at all Ghordo.

Ghordius's picture

the comment at the top is about markets, the comment at the bottom is about central banking

are you sure you replied to the right comment?

Giant Meteor's picture

Brother can ya spare a dime ?

hedgeless_horseman's picture

 

Sorry, but Apmex is currently, "out-of-stock."

http://www.zerohedge.com/contributed/2012-12-05/hedgelesshorsemans-12-da...

12.   $50 face value bag of 90% Silver Barber Dimes (357.5 oz of Silver)
http://www.apmex.com/Product/70060/90_Silver_Barber_Dimes___500_Face_Value_Bag.aspx
This Christmas say, "Fuck you JPM!" with the gift of real money.

Giant Meteor's picture

Apple?

Not the lookin kind, the eatin kind ...

hedgeless_horseman's picture

 

I would, but the apples on our trees are not yet ripe.

nachochan's picture

Didnt include the PBOC so the $1 trillion is highly underrated

urhotdogs's picture

Didnt include Switzerland either

Ghordius's picture

as I wrote elsewhere, today:

credit expansion has to match the expansion of the economy... as much as the expansion of credit in other countries (it starts with banks, it ends with CBs doing QEs, it matches too - with exceptions like the SNB - sovereign debt because of fiscal deficits. it's all connected)

if you don't... foreigners start to buy up everything you see around, with foreign credit (see China vs US, currently)

those graphs are excellent, ZH. you see there clearly who starts... and who responds

behold, the Currency War

hedgeless_horseman's picture

 

credit expansion has to match the expansion of the economy

Horseshit.

Although the bankers that make their living off credit do love to make it seem to be a fact.

Economies can expand just fine, naturally, without increasing debt (aka credit expansion).

 

http://www.zerohedge.com/news/2016-01-06/hedgelesshorsemans-revolutionar...

 

 

6.  Read, The Creature from Jekyll Island: A Second Look at the Federal Reserve - 5th Edition, by G. Edward Griffin.

 


Ghordius's picture

+1 HH, I think I have to word that in a different way, with the caveat: "... if you can't stomach deflations"

at the end, this is the real difference most of the time between a gold-backed and a fiat monetary regime

in the first, you often have as many deflationary bouts as inflationary ones

in the second, you only have either CBs "filling the hole" or inflationary bouts

note that in the first, it levels out, and gives the result you are talking about

hedgeless_horseman's picture

 

with the caveat: "... if you can't stomach deflations"

Deflations are natural and healthy.  The entities that cannot stomach them are fractional reserve banks and governments that run at a deficit and carry a large debt.

Sound like anyone you know?


Ghordius's picture

absolutely. but... deflations lead us back to the phenomenon of foreigners buying up everything you see around you

aka "buying opportunities", btw

hedgeless_horseman's picture

 

deflations lead us back to the phenomenon of foreigners buying up everything you see around you

Wrong.

People don't have to sell assets, especially in trade for a weaker foreign currency, which is likely in the situation you describe.  

LawsofPhysics's picture

Bingo.  More proof that Ghordius is a banker/financier.

Ghordius's picture

ah, my problem on ZH is that I constantly have to battle the cargo cultists of Neo Keynesian bent

then, from time to time, I encounter you guys... whereas you often react as if I am one of them

I blame my avatar

here, it reads: "balance your budget" (in Dr. Krugman's words "dreaded austerity")

where you live, it seems to read "something like the dollar" and "fiat flat forever, forward to progress" or something

you guys do know that Dr. Krugman hates the EUR with a passion, don't you? did you ever wonder... why?

you are a farmer... and you know one hundred times more about prices in financial markets then me, and how to exploit a "compression trade", something I could not do even if my life depended from it. just saying

OverTheHedge's picture

Hey Ghordius - you do know that budgets CAN NOT be balanced, yes? As in, with our mad, never-ending, expanding money system, where debt crates money but not the interest to pay it back, government debt MUST always grow. Balanced budgets only work in non-fiat systems.

I would love to see a balanced budget as much as you would, but it is not actually possible in the real world, unless we give up on fiat.

Of course, rather cleverly, the eu allows individual countries to run a surplus, as long as the whole runs a deficit. I wonder who is winning that little contest?

bshirley1968's picture

Agreed but........the only way THIS economy expands is by debt creation because we are a debt based economy.  Debt is the foundation.  Debt is our currency.  Debt....by design.....IS our economy.

hedgeless_horseman's picture

 

the only way THIS economy expands is by debt creation

MOAR horseshit.

Read what I wrote, above, about deflation.  

LawsofPhysics's picture

So, you still believe that economies, humanity and currencies can expand forever and ever at an exponential rate?

Damn, I thought you were a smart guy, my bad.

Ghordius's picture

no. but they can grow nevertheless at rates that might be inimaginable, before

since you are a farmer: the "green revolution" of the 50's... didn't that make a productivity increase in the ballpark of ten times more of what would have been imaginable before the second world war? mostly thanks to new fertilizers?

I know that I don't know, and that's most of the future

meanwhile, the "recipy" I wrote about: you did not even really read it. it's about proportions. and foreigners

RagaMuffin's picture

How much of the value of bitcoin is a function of this liquidity?

CJgipper's picture

It goes up every time they announce a print.  Closing in on all time highs today.  I'm so glad that ETF didn't go through because they can't price manipulate it without the paper backing like they do gold/silver.

DENEMY's picture

When it all collapses the CB will own all the home morgages, companies and financial assets. Sounds like a plan to me, print worthless paper buy up assets.

economaly's picture

let's play a game:

assuming everyone knows everyone with six degrees of seperation, what is the minimum you need to get in contact with a central banker who knows about the punchbowl?

Savyindallas's picture

Is this a plan for central banks to own all private industry buy printing money to own hard assets? What are the limits? What's to stop them from printing and buying and owning most of the assets? How much can they buy before hyper-inflation and destruction of paper currencies? 

FreeShitter's picture

This has been the "globalists" plan so to speak...have cb's buying everything up thus ending in hyperinflation/ruins and then reintroducing a new type of world currency for even more control. The goal here is absolute control. The 08 crash was engineered so cb's/fed could implement zirp/qe....its been working as planned for the them, for everyone else its been a fucking nightmare. If they kill off half or more of humanity maybe thats icing on the cake...as long as these fuckers continue to get away with this, it will end up badly for everyone. Financial terrorism is what it boils down to.

Giant Meteor's picture

Indeed. Not only that, has anyone else noticed the beatings continue and morale still hasn't improved ?

War, Ooooomph, what is it good far, absolutely nuthin, good God y'all ..

War, oooomph, what is it good for ...

Bankers, money changers, shape shifters, shadow government, deep state, MIC, no bid contractors

Say it again!

War Oooopmh ...

BigFatUglyBubble's picture

"The financiers are the nation's worse enemies. They have done more than any to undermine the foundations of freedom, and it is unquestionable that most of the peoples of Europe would by this time be in full possession of Liberty if such men as Rothschild.....did not lend the autocrats the support of their capital."

-Ludwig Börne

 

Ignorance is bliss's picture

You are correct. A man who has lost everything is a dangerous man. I wouldn't be surprised to see the Fed and bankers get a different kind of ROI then they were expecting.

sister tika's picture

Yes, Savyin, that exactly what they're doing. Buying everything with electronic money that they didn't earn.

Solio's picture

They'll buy everything, particularly a failed theory. What's that? That they can pull this shit forever!

Bryan's picture

Buying assets is not a smart way to stimulate the economy.   What will the CBs do with the assets they buy?  Be productive with them?  Put them to good use?  I think not.  I think lower taxes and less punitive regulation is the way to stimulate the economy... but try telling a bankster or a politician that... *deer in headlights*

 

This is the hubris of thinking that central planning and control works so much better than capitalism and entrepreneurs/individuals pursuing personal gain and success.

Hitlery_4_Dictator's picture

Hey buddy I got news for you, they don't want to stimulate anything but their pocket books. 

Bryan's picture

I was giving them the benefit of the doubt.  ;-)

Sonny Brakes's picture

The nice thing about these central bankers is that they acted in the best interest of their clients with who they intend to share the spoils. My only regret is that I failed to go into central banking when I might have had the chance. It is too late now, right?

hooligan2009's picture

get on your central banks website - there are may jobs - but not those of governor or chairman.

the governor and chairman jobs have been earmarked for the next 80 years to thrity or so people and neither you nor i are earmarked for the simple reason we are not part of the 0.000001% of the world's population that matter as far as central bank dynamics are concerned.

in other words, for policy making (not janitor or screen cleaner) you were never going to be in the mix of 30 central bankers that run the world's failed and discredited central bank cabal that has bankrolled libtard socialism for decades with make believe money.

central bankers view blood sweat and tears as a retarded main stream way of creting value that is measured in terms of the money they can print in a heartbeat.

 

Sonny Brakes's picture

So what you're telling me is that I have no chance? Ah shucks!

Ghordius's picture

if you speak about the US, ok. but then, don't use that term, "the world"

in europe, we do it differently. as an example, when Trichet had to get a successor, the political consensus was that it was time to take an Italian or a French, and the choice was among several Italian and French former National Bank chairmen

then Sarkozy and Berlusconi had a phone call, and the result was Mario Draghi

who is not part of that... hey, I have to try it out this new format: (((0.000001% of the world's )))

in China, they take a Chinese, in Russia, they take a Russian, in India, they take an Indian

oh, in Israel, they take either an Israeli or a US-Israeli, I heard