$21 Trillion And Rising: How Central Banks Are LBOing The World In One Stunning Chart

Back in late 2016, we showed the unprecedented domination of capital markets by central banks using a chart from Citi, which had put together a fascinating slideshow asking simply "Where is the utility in marginal QE" and specifically pointing out that the longer unconventional monetary policy such as QE continues, the bigger its marginal cost, until eventually QE becomes a detriment.

A broad criticism of monetary policy, the presentation carried an amusing footnote: "This presentation does not change any of Citi’s existing, published views on the actual future path of monetary policy. It is merely intended as a contribution to the ongoing debate about the efficacy of available policy tools" -  after all, the last thing the market wanted is the realization that even banks no longer have faith in the central planners.

Incidentally, Citi's broad critique of global QE took place when central banks owned just over $18 trillion in assets.

Fast forward to today when in its latest update of central bank holdings, Citi shows that as of this moment not only has the total increased by another $3 trillion to a grand total of $21 trillion and rising, but that the big six central banks now own over 40% of global GDP, more than double the 17% they held before the financial crisis less than a decade ago.

Which is remarkable in a world where there is still some confusion about what is behind the "global coordinated recovery", and where there are deluded people who claim that central banks are now out of the picture.

It is also remarkable because now that central banks are gradually phasing out QE, it is the central bankers themselves who are terrified of what happens when the market starts selling; terrified that they have lost control. Recall that following stunning admission from Citi's Hans Lorenzen last November:

In the context of a self-reinforcing, herding market, the pivot point where the marginal investor is indifferent between putting more money back into risk assets and holding cash instead is fluid. But when the herd suddenly changes direction, the result is a sharp non-linear shift in asset prices. That is a problem not only for us  trying to call the market, but also for central bankers trying to remove policy accommodation at the right pace without setting off a chain reaction – especially because the longer current market dynamics run, the more energy will eventually be released.

That seems to be a growing fear among a number of central bankers that we have spoken to recently. In our experience, they too are somewhat baffled by the lack of volatility and concerned about the lack of response to negative headlines.... Our guess is that sooner or later in the process of retrenchment they will end up going too far – though that will only be obvious with hindsight.

For now, however, the ongoing LBO of the world's assets continues, and until it actually halts and goes into reverse, it is all just speculation. Finally, as we have observed on so many prior occasions, the volatile market response to a halt in QE tends to bring central bankers right out of hibernation, and right back on the S&P500 bid. 


Theosebes Goodfellow Four Star Sat, 03/10/2018 - 17:46 Permalink

~"If you're first out the door, that's not called panicking."~

Dude, I'm sitting at the little cafe across the street eating popcorn and watching the door to see who else makes it out. I love a good show.

In real terms: If all of the CBs in the world go tits up, I'm good with that. I will be out a few grand (in USD), max. The danger here is in having your wealth denominated in currencies, not money or tangible assets. All the rest of this is casino. When was the last time you saw real price discovery? I rest my case.

In reply to by Four Star

DillyDilly skbull44 Sat, 03/10/2018 - 15:42 Permalink

So remind me again how this all works...


(((Private CENTRAL BANKS)))

which are owned by (((amish dairy farmers)))

print leveraged debt money out of thin air, whereby the 'non-Amish' have to pay interest

and lend it to GOVERNMENTS (run by other Amish agents)

so that (((they))) can wage war & run up the tab against other (((governments))) who are doing the same thing against them

tax the citizenry to fund the paybacks

buy the media (& the infrastructure assets which they can OWN now, at zero risk, by way of the printed money)

propagandize the 'enemies 'on both sides' & lead the excess populace to slaughter based on that premise

then COMPLAIN, and subsequently pass legislation to criminalize "anti Amish" sentiment that arises within the populace


Did I miss anything? (aside from 'casting couches' & pizza parlors featuring special walnut sauce)?

In reply to by skbull44

Buckaroo Banzai Bank_sters Sat, 03/10/2018 - 15:18 Permalink

It's worth pointing out that the majority of this state-sponsored takeover is by Japan and China, which are racially uniform nation-states that operate, more or less, in the interests of their own citizens.

The US and Europe, on the other hand, are turning into multi-racial/multicultural shitholes controlled by Jews, and the central banks operate on behalf of Jews, to facilitate the transfer of national wealth from the local goyim to the Jews and shabbos goys who operate the Deep State. So in these areas the nation-states themselves are not the actual beneficiaries. Switzerland, of course, is the notable exception.

So while this article is interesting, it's misleading in that it lumps the activities of all central banks together and assumes they have the same motivations, which is the furthest thing from the truth.

In reply to by Bank_sters

abgary1 Sat, 03/10/2018 - 15:16 Permalink

Assets worldwide are in a bubble and the central bankers are still looking for inflation.

Asset bubbles are inflation.

End the central banks and get back to market price discovery.

the_river_fish abgary1 Sat, 03/10/2018 - 16:21 Permalink

High (or hyper) inflation or long term zero (or negative) interest rates – different central banks, different strategies.

Germany, Netherlands, Sweden, Switzerland - all with zero or negative interest rates now have a budget surplus largely due to lower interest payments on their debt.

Cyclical factors affect everyone but some Central banks are managing the structural issues and not even focussing on cyclical issues.


In reply to by abgary1

VWAndy Sat, 03/10/2018 - 15:17 Permalink

 The problem is not what they do with the money that they print up. The real problem is that they can print it in the first place.

 The stall and barter. Then some real justice.

MusicIsYou Sat, 03/10/2018 - 15:41 Permalink

I give people escalators,and movies so people see people running the wrong way up escalators so that people like Ron Paul get it, but they don't. There will be a debt jubilee that does away with debt so that the world can continue. Money gets printed from nowhere, and debt gets sent to nowhere. There will be a debt jubilee. Learn to play the game, or better yet, learn to be happy knowing the game.

veritas semper… Sat, 03/10/2018 - 15:45 Permalink

This is not the whole truth.

Why no mention of the 1.5 Quadrillion $ in derivatives ?

I do not think there are enough "money" in the Universe to cover that one.

Based on these Revelations , I ask : what system do we have here in 'the land of the free'? What -ism ?

Does not look like Capitalism to me : this should be  based on free market enterprise (not a centrally planned one ,through the Central Bank managed economy ,which ,by the way ,does not even have a 5 year plan like Communism,it just makes up s**t as it goes) . Capitalism (see the name ) should mean capital formation ,which is invested into further development of said free enterprise. Not capital destruction through QE to infinity and buy back of  their own stocks.

It does not look like Communism ,as ,at least in theory ,those were investing some of the profits (pathetic as they were) into some benefits for the people. All the population was screwed and badly paid ,but there were no unemployment and homeless people ,like here.People were equally screwed except for a few at the top ,the ruling class. But their theft was by no means measured in Trillions. And they were stealing only from their own population ,not the whole world.

I would call this a parasitocracy or the modern equivalent of feudalism .

I could be wrong. I am not an economist or a trader or broker.My understanding of how economy works comes from reading ZH and other sites.

Captain Nemo d… Sat, 03/10/2018 - 16:35 Permalink

So over time the bankers get to own everything. What's new about the realization? Oh look ...here's another real-life role play app that works both on Android and iPhone. Now go hunt the virtual monsters.

GoldenDonuts Sat, 03/10/2018 - 16:55 Permalink

Sorry to quibble with the headline, but where is the leverage.  They imagine currency into being and buy real things.   There is no leverage.  Just tyranny.

mendigo Sat, 03/10/2018 - 17:07 Permalink

Its not like they are going to run out of zeros.

There is huge slack in the "control" loop.

Still it makes some people very rich I hear.

pndr4495 Sat, 03/10/2018 - 17:13 Permalink

"The issue which has swept down the centuries
and which will have to be fought sooner or later
is the people versus the banks."   Lord Acton


"I'm Spartacus."