Three weeks ago, in "A Quick Reminder Of The Only Thing That Matters, In One Chart [8]" we did just that, showing the ever greater amount of global liquidity injected by the central banks, thanks to which they have so far successfully masked the accelerating economic collapse of the world, as shown by cratering "benign" inflation expectations to levels not seen since Lehman: hardly a confirmation of economic stability and growth:
[9]
... we and quoted none other than JPM that "the current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude and the ECB actions have the potential to make it even more extreme."
We left it off with the "one chart that should put everything in perspective, and explain why the world has reached a plateau of permanent addiction to monetary liquidity injections, and why nothing else matters."
[10]
So, with everyone fearing imminent Fed tightening, what does this chart look like in the coming years? For the answer of what the "only chart that matters" projected until 2016 looks like, we go to Barclays, where we find that absolutely nothing is about to change to the slope of the infinitely fungible, globally interconnected, liquidity excess. In fact, as Barclays puts it best, "central bank balance sheet growth will be broadly unchanged in the next 12-15 months." So much about all those fears of a global rate hike cycle...
[11]
In fact, the only difference is that if and when the Fed's QE ends and the US balance sheets declines modestly as a % of GDP, both Europe and Japan will take its place at the forefront of the global monetary firehose.
[12]
Of course, the assumption here is that once the Fed ends QE in 1 month, and concerns that a US rate hike is imminent, the market won't crash and thus force the Fed to promptly return to what it does best, CTRL-P. In fact, the €64K question is whether the hand off from the Fed to the ECB and BOJ will be smooth enough to avoid a stock market crash between now and the end of 2016. Everything else is semantics.
