Central Banks Finally Hit Their Targets... Just In Time For Another Crisis

Phoenix Capital Research's picture

They finally did it.

Since 2008, Central Banks have been desperately trying to generate inflation.

They know they cannot produce growth (hence why both the Fed and the ECB abandoned this as a goal in their statements back in 2013)… so they have chosen to “target” inflation.

To that end, Central Banks have maintained Zero Interest Rate Policy (ZIRP) as well as Negative Interest Rate Policy (NIRP) for the better part of eight years. They’ve also printed over $14 TRILLION in new capital and funneled it into the financial system.

These two policies failed to create inflation for the simple reason that the money never made it into the economy. Banks simply were not lending. So all this cheap money just sat on bank balance sheets (earning interest for the banks) and the velocity of money continued to drop in a deflationary spiral.

This all changed in August 2016.

That’s when the Bank of Japan began a policy of targeting a 0% yield on the 10-Year Japanese Government Bond or JGB.

And this was a game-changer.

Instead of periodically buying bonds from banks (which would then park this cash on their balance sheets) this policy opened the door to endless money printing.

Put simply, if the yield on the 10-Year JGB rose above 0%, the Bank of Japan would simply print Yen to buy bonds, thereby driving the yield down.

And unlike QE, which is usually limited in both scope and time period, this policy is open-ended and can occur as frequently and for as long as the financial system can take it.

Put simply, the Bank of Japan began a campaign of abject intervention in the bond markets. And it has unleashed a tsunami of liquidity into the system.

Indeed, between this, and the ECB’s decision to maintain “emergency” levels of QE despite the fact that the EU’s economy is not only well out of crisis-mode but is in fact now in danger of heating up too rapidly, inflation has finally arrived in the financial system.

Why does this matter?

Because the Bond Bubble trades based on inflation.

When inflation rises, so do bond yields to compensate.

When bond yields rise, bond prices FALL..

And when bond prices fall, the Everything Bubble bursts.

With that in mind, take a look at global bond yields and you will see them breaking out to the upside across the board. Indeed, Japan’s 10-year JGBs (bottom box in the chart) are the only bonds to remain below their long-term downward trendlines and that’s because of the aforementioned ABJECT intervention!

Put simply, BIG INFLATION is THE BIG MONEY trend today. And smart investors will use it to generate literal fortunes.

Imagine if you'd prepared your portfolio for a collapse in Tech Stocks in 2000... or a collapse in banks in 2008? Imagine just how much money you could have made with the right investments.

THAT is the kind of potential we have today. And if you're not already taking steps to prepare for this, it's time to get a move on.

We just published a Special Investment Report concerning FIVE secret investments you can use to make inflation pay you as it rips through the financial system in the months ahead

The report is titled Survive the Inflationary Storm. And it explains in very simply terms how to make inflation PAY YOU via smart investment strategies.

We are making just 100 copies available to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/inflationstorm.html

Best Regards

Graham Summers

Chief Market Strategist

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Herdee's picture

Watch for huge deficits out of control in December and a federal government desperate to squeeze American taxpayers. Why? To support their stupid wars worldwide while the country goes bust.

chestergimli's picture

Isaiah 26: 3-7, The Old error is passed away: thou wilt keep peace: peace, because we have hoped in thee. You have hoped in the Lord for evermore, in the Lord God mighty forever. For he shall bring them down that dwell on high, the high city he shall lay low. He shall bring it down even to the ground, he shall pull it down even to the dust. The foot shall tread it down, the feet of the poor, the steps of the needy. The way of the just is right to walk in.

The monetary systems of the world and those who profit from them will be pulled down to the dust. They shall be tread down by the feed of the poor, the steps of the needy.

everything1's picture

Shorting the dollar or whatever currency via inflation, is just one way to try and get the debt paid back, or keep more of the loans from defaulting next time around.

starman's picture

Brings to mind that old paper box game "Monopoly" !

Remember that? 

webmatex's picture

 "Go to Jail" is sooo passé these days i guess.

mikamolyneaux's picture

Growing numbers of financial analysts and investment advisors realize that the fiat currency based financial system / market economy is rigged, fraudulent and designed to cause devastation to average citizens when trust in the financial system eventually erodes. But the advisors are all still in the crooked game, playing by the rules on behalf of their customers, still hoping to extract long term profits from their bets against the smart, crooked, insiders and riggers. That seems crazy. Knowing what they know, wouldn’t it be smarter to exit from the game and establish an alternative, small but effective alternative market with honest, fair saving schemes outside the fiat currency system? Why are investment advisors like Graham Summers still playing this rigged, dishonest game and encouraging others to be part of the unfair Ponzi scheme?

Kyddyl's picture

Obviously people have lots of money to "invest", aka "be taken to the cleaners". The rest of us are simply casualties and collateral damage who can hardly afford groceries. 

East Indian's picture

Somehow I have a feeling that the banksters may get away this time too. 

By the time the sheeple wake up, the banksters would have purchased everything in this world...

Direct tattooing the numbers, and joining the serf queue...

GreatUncle's picture

What is your financial level of revolt ... everybody will eventually find out.

JibjeResearch's picture

Just looking at the Japan's data, the CB and stock buy-back will leave the average Japanese poorer as wealth consolidation continues.

The US and other Economies look to follow...

People from all part of the world who don't have/lack of information will be dirt poor.