The Chicken Or The Egg?

jsmineset.com / by Bill Holter / April 22nd, 2017

Zerohedge put out an interesting article yesterday: Why “Nothing Matters”: Central Banks Have Bought A Record $1 Trillion In Assets In 2017. Please note this is $3.6 trillion annualized rate so far this year.

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What jumps out at you should be the quadrupling of the their balance sheets since 2007 from $3.5 trillion to over $14 trillion.

So what exactly does this mean? Basically, to keep the system from imploding upon itself the world’s central banks had to “create” over $10 trillion of liquidity by purchasing assets onto their balance sheets. This is puts forth a “chicken or the egg” question, or actually two as you will soon see.

First, central banks have been buying everything …including stocks, to prevent the markets from turning down. It is safe to say they understand that with the leverage and derivatives outstanding they cannot allow markets to correct (or God forbid actually enter bear markets). They understand the “size” of the derivatives markets is so large, NO ONE can withstand a downturn and actually be called upon to perform their “insurance payments”.

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