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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Iconoclast421's picture

Since the people dont seem to care that health "insurance" premiums will soon top $1500 a month and deductibles will soon eclipse $10000 and tuition costs will soon exceed $20000 a semester and rents are shooting up endlessly.... since nobody cares about all that enough to actually take back their government... hell yeah they're gonna print. Why not? It is a very profitable racket.

Blankfuck's picture

Market manipulation is a deliberate attempt to interfere with the free and fair operation of the market and create artificial, false or misleading appearances with respect to the price of, or market for, a security, commodity or currency.

Its an art and a high for these Central Bank fuckers, Fed Reserve fuckers to play this game. The rich get richer, the game is rigged

affirmed_78's picture

Sure do.  Bitcoin is freedom from government, plain and simple.  It puts money in the hands of the people, where it belongs.  And it cannot be created at the will of any central banker... sorry ole Yeller.  I couldn't care less if I lose money on bitcoin.  It's the principal of the thing that I love.

Deep Snorkeler's picture

I fear the Federal Reserve actually shifted over $20 trillion

to the world's bankers since 2009.

The economy was in a state of strucutural collapse

and the Fed saved it... temporarily.

 

Mercuryquicksilver's picture

Close, the economy was moments away from destroying the Fed. The Fed propped up its cabal of world banks to save itself.

mary mary's picture

There is no such thing as "the economy".  The FED banksters only saved themselves.  They ALWAYS WILL only save themselves.

affirmed_78's picture

$18 trillion lolol and debasing more and more each day.  In a world like this, why couldn't bitcoin go to $1 million?

Silver Savior's picture

I have the faith in Ethereum to go to a million. Something has to make me a millionaire. Not sure how much that million will be worth by then but I would still be a millionaire lol.

Don Sunset's picture

Yes, you can still trade stocks and buy options, etc. 

But the system hasn't been legitimate for years.

That's why is won't end well.

Because it can't end well.

Blatant rigging has ruined the system.

But you can still trade stocks for now.  Money can still be made or lost.  The end-game is bad news because this system is unsustainable w/o the MOAC (mother of all corrections).

Also, the system will never be trusted (by educated people) because of what they let happen and directed.

Pumpkin's picture

If I could print money, I'd be buying a lot shit too!

ThanksIwillHaveAnother's picture

Karl Marx would be so happy.

affirmed_78's picture

What happens when government cannot control the money supply?  They have to actually ask you what you want, and ask you to donate, rather than steal from you!  Money controls everything.  The fact that government can borrow at the expense of our children and children's children, monetized by the Fed, is absolutely sickening and disgusting.  And nobody does anything about it.  You may think bitcoin is stupid or whatever, but do yourself a favor and at least read up and learn about it.  Learn about the other cryptocurrencies as well.  I own very little bitcoin - I ain't getting rich off it even if it goes up another 100x.  The point is simply to support the cause - freedom from government control of OUR money.

bshirley1968's picture

You really believe you can escape gov control of your money on the Internet using a digital currency? That would be hilarious if it weren't so sad.

The only way you guys "get away with it" for now is because it is so small. As popularity grows, gov will co-opt it and use it to dominate world currency once and for all.

So have your fun and encourage everyone to play along, because the powers that be will probably just give up that power.....they always do, right? They don't control the Internet now, do they?

perkunas's picture

"What happens when government cannot control the money supply?"

They start a war!!!

Silver Savior's picture

I thought crypto was stupid but I bought Ethereum and now I am all about the ether! I yawned at bitcoin though. Too expensive, too hyped up and not as useful as Ether.

sister tika's picture

When everything crashes and stawkes nose dive to oblivion, will the central banks then own almost everything: bankrupt companies, commercial/residential real estate, farmland etc. (and the US taxpayer gets the derivative and US treasury bond losses)?

Plus the taxpayer loses his/her earned pension(s) and inherits the 20 trillion dollar debt? Buy an extra case of K-Y Jelly just in case?

Stawkes are not bad if you buy them with electronic money that you didn't earn. Then, you sell America to the Chinese (or highest bidder) for peanuts? Naaah, the Zionist JOOz wouldn't do that to us 'cause they nice people.

Wahooo's picture

Glad our "recovery" rests upon investments in corporate stalwarts like snapchat and uber.

Davidduke2000's picture

with counterfeit money that they printed out of thin air, a fraud of a galactic proportions. 

Solio's picture

Great idea! Buy everything with debased money. It's not like it is illegal or anything!

Who would care? Who would know?

The nation's lost its soul.

JailBanksters's picture

But they're buying stuff with Fake, Counterfeit money.

eclipse001's picture

I've called this "the world's largest experiment ever conducted outside of a laboratory".  Makes the Los Alamos Project look small.

Rebel yell's picture

It is very disappointing that the charts in this article did not correspond to the central banks being discussed. The article cited the ECB and BoJ asset purchases of $1trillion, yet the accompanying chart was for the balance of all central banks, unless it was improperly labeled.

The assets also were not specified. Was it gold? Who knows, it didn't say! If it was gold, I highly doubt that attributed to stock market gains.

Also, regarding Fed balance sheet, the Fed did not purchase those assets. The future tax payers of America handed them over to the Fed in a stick up where the treasury went into debt for the first time in history, not to finance the government, but to bail out the corrupt banks to the tune of $3.5 trillion in under the misnomer QE!

Also, the capital gains rate is responsible for bubbles far more than the fed funds rate.

I do not agree that the low interest rates fueled the bubbles on Wal St. I believe that the low capital gains tax rate fueled the bubbles on Wall Street. The stock market has nothing to do with the real economy. Raising interest rates will completely destroy the real economy since people have had to resort to debt financing for survival. Inflation was at 2.3% and since incomes did not rise to the occasion for 90% of the population, and since over 40% of Americans have absolutely no way of meeting an unexpected $400.00 financial obligation , either interest rates cannot rise, businesses will lose more customers for basic things like cable tv ( fine with me! It's all dope anyways!) cell phones, entertainment, travel, clothing, furniture, electronic equipment and appliances, or we raise the capital gains tax rate to pop the bubble while allowing businesses to rely on actually selling a product which is not a patch of blue sky. Taxing capital gains at the same rate as earned income is sound economics!
Exhibit A.
95 year chart of capital gains tax rate: I rest my case.
https://www.google.com/amp/s/www.fool.com/amp/retirement/2017/02/11/a-95...

100 year prime rate chart:
http://www.moneycafe.com/personal-finance/prime-rate-history/

90 year S&P chart
http://www.macrotrends.net/2324/sp-500-historical-chart-data

100 year DJIA chart
http://www.macrotrends.net/1319/dow-jones-100-year-historical-chart

45 year NASDAQ chart
http://www.macrotrends.net/1320/nasdaq-historical-chart

Treasury for the fed
From Global Research:
“The Treasury Department, for the first time in its history, said it would begin selling bonds for the Federal Reserve in an effort to help the central bank deal with its unprecedented borrowing needs.”2
This is extraordinary. Why is the Treasury issuing U.S. government bonds (or debt) to fund the Fed, which is itself supposedly “the lender of last resort” created to fund the banks and the federal government? Yahoo Finance reported on September 17:
“The Treasury is setting up a temporary financing program at the Fed’s request. The program will auction Treasury bills to raise cash for the Fed’s use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.”
Normally, the Fed swaps green pieces of paper called Federal Reserve Notes for pink pieces of paper called U.S. bonds (the federal government’s I.O.U.s), in order to provide Congress with the dollars it cannot raise through taxes. Now, it seems, the government is issuing bonds, not for its own use, but for the use of the Fed! Perhaps the plan is to swap them with the banks’ dodgy derivatives collateral directly, without actually putting them up for sale to outside buyers. According to Wikipedia (which translates Fedspeak into somewhat clearer terms than the Fed’s own website):
“The Term Securities Lending Facility is a 28-day facility that will offer Treasury general collateral to the Federal Reserve Bank of New York’s primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally. . . . The resource allows dealers to switch debt that is less liquid for U.S. government securities that are easily tradable.”
“To switch debt that is less liquid for U.S. government securities that are easily tradable” means that the government gets the banks’ toxic derivative debt, and the banks get the government’s triple-A securities. Unlike the risky derivative debt, federal securities are considered “risk-free” for purposes of determining capital requirements, allowing the banks to improve their capital position so they can make new loans. (See E. Brown, “Bailout Bedlam,” webofdebt.com/articles, October 2, 2008.)
In its latest power play, on October 3, 2008, the Fed acquired the ability to pay interest to its member banks on the reserves the banks maintain at the Fed. Reuters reported on October 3:
“The U.S. Federal Reserve gained a key tactical tool from the $700 billion financial rescue package signed into law on Friday that will help it channel funds into parched credit markets. Tucked into the 451-page bill is a provision that lets the Fed pay interest on the reserves banks are required to hold at the central bank.”3
If the Fed’s money comes ultimately from the taxpayers, that means we the taxpayers are paying interest to the banks on the banks’ own reserves – reserves maintained for their own private profit. These increasingly controversial encroachments on the public purse warrant a closer look at the central banking scheme itself. Who owns the Federal Reserve, who actually controls it, where does it get its money, and whose interests is it serving?"
http://www.globalresearch.ca/who-owns-the-federal-reserve/10489

https://www.newyorkfed.org/markets/statement_091708.html

https://www.fhfa.gov/DataTools/Downloads/Pages/Treasury-and-Federal-Rese...

https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/backissues.htm

John Law Lives's picture

Greed and cowardice are on full display.

Central_Bank_FUBAR

NAV's picture

A nation that puts its national financial system primarily in the hands of the Jews, with that fiat banking system having unlimited ability to transfer wealth from Americans to pay for war, will find itself heavily supporting  the foreign policy of Israel and the Jews' age old quest for world domination.

As such, prepare your psyche for world holocaust.

Frightening times indeed  | The Irish Savant

For the first time since the mid-sixties I believe nuclear war to be terrifyingly close. The Trump regime seems hell (sic) bent on provoking a major conflict with Russia. And anyone else that likes to join in, the more the merrier.  That Russia poses no threat to America or Europe is beside the point. The US Administration is like that bellicose drunk who wants a fight and will not be dissuaded by logic or appeasement. Eventually you have to deck the fucker because there's no alternative. That's the way I'd feel if I were in Putin's shoes.

What's behind this insanity? A commentator on Zero Hedge says this: 'You, like many Americans, still believe that people make a difference in American politics - elect the right bloke and things will change for the better. 


The undeniable fact is that your government has been taken over by others who don't even recognise the people of America as anything other than enemies of the state. No one in America will reach the presidency who has not been vetted deeply by these folks. And if by some VERY remote chance someone did get through the screen, they would be instantly marginalised or assassinated - as was Trump.

You have lost your country. Face it.'

Reminds me of what Alexander Solzhenitzyn wrote in '200 Years Together'.


'You must understand. The leading Bolsheviks who took over Russia were not Russians. They hated Russians. They hated Christians. Driven by ethnic hatred they tortured and slaughtered millions of Russians without a shred of human remorse. The October Revolution was not what you call in America the ‘Russian Revolution.’ It was an invasion and conquest over the Russian people.'


To better understand what's going on read The Monomorium Analogy.

http://irishsavant.blogspot.com/

mary mary's picture

"As long as I can control a nation's money, I care not who sits upon the throne".

withglee's picture

has been taken over by others who don't even recognise the people of America as anything other than enemies of the state.

They definitely recognise the people of America as something other than enemies of the state. They take 3/4ths of the fruits of these American people's labor. Without it, the game doesn't work.

Iterative secession. The time has come.

Burticus's picture

Conjure "money" out of thin air and buy assets...now accepted as routine.

Great scam, except if I do it, I get charged with counterfeiting.

withglee's picture

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."

They didn't buy them. They have nothing to "buy" them with. They took control of them ... by magic. And they removed the burdon of them from one of their friends who would be taking a bath if they owned them any longer.

Umh's picture

They really are working on the wrong end of the problem. The central banks and governments use the tools they have to yank the numbers around instead of looking to the foundations of the problem since they are unwilling to see that they are the root cause.

Vilfredo Pareto's picture

The difference between neokeynesians and Austrians, in a nutshell.

To Hell In A Handbasket's picture

Check my post history. I have been saying to anybody that will listen for over 1 year, that the Central Banks are buying up all the valuble assets and the goys are not fucking listening. Look at the data, but that is too fucking hard for the average man. Forget the merry-go-round of the Central Bank buying up government debt. Forget the parlour tricks of the central Bank placing on the ledger X amount to loan to the government, digital and paper money plucked from thin air.

That is merely an accounting trick. Hidden in plain sight are terms like "Buyer of last resort". Who has been purchasing corporate bonds? When the SHTF and every comes out in the wash, who is going to be left holding and owning? The plebs are too busy arguing over the fake threats of the Alt-Right, the fake threat of BLM  and the fake threat of SJW, while the last chess pieces for the major plunder have been moved into place.

Given the fact EVERY 1st world nation has allowed their Central Bank to be immune from auditing. Well, one only has to guess what kind of improprieties and fraud the Central Banks have got up to, without any oversight?

Vilfredo Pareto's picture

Central banks (I.e. taxpayers) will be left owning the devalued paper.  The smarties in the financial world will own the assets.

 

Whether we repudiate it or inflate it away the taxpayer takes the hit in either deflation and loss of confidence or inflation (and loss of confidence there too lol)

Vilfredo Pareto's picture

Moentize all the previous monetizations and introduce new colored paper?  A common solution and still results in either inflation or deflation depending on the aggregate consumer response and velocity of the new money.

Gorgeous's picture

"central bank punch bowl is taken away..."

The punch bowel never gets taken away.  In fact they need a bigger punch bowl.  When the Fed stops to refill, the ECB pours more in, then the PBOC, and back to the Fed.  But they can charge more for new punch.

Mountains of liquidity and slightly higher rates.  What is the cycle history, and what are the thresholds?  What measure of scarcity would predict a crash?  How is asset price with GDP as the denominator a useful metric?

 

Vilfredo Pareto's picture

Rhetorical questions lol, but you know that.  All unknowns lol.

 

But CB's are making their best guesses and taking a shot at it lol.

cycal101's picture

madoff should have started a bank

Silver Savior's picture

Madoff is proud of the central bank right about now.

GreatUncle's picture

A Madoff bank would probably be more honest than these CB's.

r3phl0x's picture

At least some of his investors made money. CBs literally exist to ensure that banks win at the expense of everyone else.

moonmac's picture

Our Econ Profs told us Central Bankers now had the tools to prevent economic depressions by rigging markets with liquidity.

To me that was like saying we could also prevent earthquakes, floods, droughts, forest fires, tornados and airplane crashes by rigging reality with computer software.

atthelake's picture

They want everything. Everything of yours, everything of mine. They want our land, our money, everything we have and they're getting it.

Chet Ricco's picture

They can have my case of jock itch.

UnschooledAustrianEconomist's picture

They can have my lead and brass. Coming at high velocity.

MrNoItAll's picture

Next year at this time the headline will be "bought record 3 trillion assets in 2018", and the year after that it will be "6 trillion assets in 2019..".  IF we make it that far without a major reset which I personally believe we won't.

Vilfredo Pareto's picture

You can shear a sheep twice a year but only kill it once.

 

They might be able to get away with a three trillion annually forever.

GreatUncle's picture

If they do 3T in one year they will have to increase it the next because without an increase in value they cannot justify the level of debt. It is the way they managed to ramp up the debt to begin with and another trick and comical

Nation 1 owes Nation 2 $1T

Nation 2 owes Nation 1 $1.1T

The difference is $100 billion and no reason why the debt cannt be cancelled so that Nation 2 owes Nation 1 $0.1T.

Or is there?

All an illusion.

 

Silver Savior's picture

I was wondering who was buying all this shit. lol.

 

This can all go on forever except one problem. Inflation. I am still a little unclear on what it will be like. A hard crash or a gradual reset into a new currency. We already have things like Crypto, gold and silver that can and do already act as money/currency. I just hedge for the second worst. Nothing more nothing less. I just know the current path is unsustainable. The dollar has to go.

mailll's picture

I'm no economist but I believe wherever all the money goes into, there will be inflation.  The stock and bond markets are currently in massive inflation mode because everyone, including the banks, is buying them.  Same for gold.  Deflation is wherever all the money is withheld.  So if people (mostly the banks) decide to stop buying gold, stocks and bonds, the prices will collapse.  And so do all of them massive 401K's, pension funds, and everything else.  We will then become The United States of Enron.  The perfect storm is brewing.  But that's only if they decide to "Pull", if you get my drift (9-11).  Personally, if they decide to do it, I think it won't  happen until probably next fall.  They need to make everything go higher and higher first so the crash is more intense.  If they ARE planning on doing it, they are looking for another great(est) depression, not childs play like 2008, a mere recession.  We'll have to wait and see.

Silver Savior's picture

That seems like a pretty solid response. Thanks.