Five years after the "recovery" began, the Fed continues to monetize more debt as part of QE3 than at any time in history, and certainly more than during QE1, Twist, and QE2, as can be seen on the chart below (remember: all that matters is the flow, as we noted well over a year ago [4], and as even the Fed has finally realized [5]).Why is this important? Because as even the Treasury has now admitted, the Fed's daily liquidity injections are all that matters [6]. Of note: in the just completed week, the Fed's balance sheet increased by over $50 billion (again, in one week), by $100 billion in the past month, and by just shy of $1 trillion in the past year. Incidentally, this is "money" that continues to not make its way into the economy, and every single "reserve" dollar created by the Fed in exchange for monetization, is used by banks to ramp asset prices to now daily record levels.
[7]
And since in a centrally-planned market self-fulfilling prophecies always come true, and Fed balance sheet correlation is causation, the reason why for the second day in a row we have seen panic buying is because as we noted last week [8]...
[9]
.... stocks have still substantial catch up (now certainly less than a week ago) to the "fair" Fed balance sheet implied fair value.
However, all that matters to the BTFATHers, is that a $4 trillion Fed balance sheet, which is where it will be on December 31, implies 1800 on the S&P [10].
[11]
Do it for the "wealth effect"... if only for some.