Category Archives: Central Banks

23/3/18: Still Printing Their Ways Into Prosperity: The Big Three


Just a gentle reminder... the QE is still going on, folks...


As of mid-March, total assets on BOJ, ECB, PBOC and Fed balancesheets have amounted to USD 20.6 trillion, excluding PBOC - USD 14.9 trillion. In Q4 2017 terms (the latest comparable data for GDP), US Fed's assets holdings amounted to 22.4% of GDP of the country, ECB's to 38.9% and BOJ's to 94.5%.  In three largest advanced economies in the world, the Central Banks' created liquidity (printing money for Governments) remains the only game in town, when it comes to sustaining both, asset prices and fiscal profligacy.

10/6/2017: And the Ship [of Monetary Excesses] Sails On…


The happiness and the unbearable sunshine of Spring is basking the monetary dreamland of the advanced economies... Based on the latest data, world's 'leading' Central Banks continue to prime the pump, flooding the carburetor of the global markets engine with more and more fuel.

According to data collated by Yardeni Research, total asset holdings of the major Central Banks (the Fed, the ECB, the BOJ, and PBOC) have grown in April (and, judging by the preliminary data, expanded further in May):


May and April dynamics have been driven by continued aggressive build up in asset purchases by the ECB, which now surpassed both the Fed and BOJ in size of its balancesheet. In the euro area case, current 'miracle growth' cycle requires over 50% more in monetary steroids to sustain than the previous gargantuan effort to correct for the eruption of the Global Financial Crisis.


Meanwhile, the Fed has been holding the junkies on a steady supply of cash, having ramped its monetary easing earlier than the ECB and more aggressively. Still, despite the economy running on overheating (judging by official stats) jobs markets, the pride first of the Obama Administration and now of his successor, the Fed is yet to find its breath to tilt down:


Which is clearly unlike the case of their Chinese counterparts who are deploying creative monetarism to paint numbers-by-abstraction picture of its balancesheet.
To sustain the dip in its assets held line, PBOC has cut rates and dramatically reduced reserve ratio for banks.

And PBOC simultaneously expanded own lending programmes:

All in, PBOC certainly pushed some pain into the markets in recent months, but that pain is far less than the assets account dynamics suggest.

Unlike PBOC, BOJ can't figure out whether to shock the worlds Numero Uno monetary opioid addict (Japan's economy) or to appease. Tokyo re-primed its monetary pump in April and took a little of a knock down in May. Still, the most indebted economy in the advanced world still needs its Central Bank to afford its own borrowing. Which is to say, it still needs to drain future generations' resources to pay for today's retirees.

So here is the final snapshot of the 'dreamland' of global recovery:

As the chart above shows, dealing with the Global Financial Crisis (2008-2010) was cheaper, when it comes to monetary policy exertions, than dealing with the Global Recovery (2011-2013). But the Great 'Austerity' from 2014-on really made the Central Bankers' day: as Government debt across advanced economies rose, the financial markets gobbled up the surplus liquidity supplied by the Central Banks. And for all the money pumped into the bond and stock markets, for all the cash dumped into real estate and alternatives, for all the record-breaking art sales and wine auctions that this Recovery required, there is still no pulling the plug out of the monetary excesses bath.

11/10/15: Of Central Banks and Spoons in the Arctic


Much has been said recently about the need for normalisation in the policy rates environment (in plain English - the need to hike interest rates off zero bound) and much has been inked about the feasibility of such normalisation. So the latest G30 intervention on the subject is both banal and late in timing.

But, as posted by @Schuldensuehner a few minutes ago on twitter:


Which is basically telling us two things:

  1. Talking of any normalisation, given the quantum of financial assets accumulated since 2007 by the Central Banks is about as realistic as talking about mining Mars for fresh water; and
  2. Talking of anything, but the Central Banks, taking up the task of providing liquidity in the current environment is about as sensible as arming an ice-breaker with a spoon: sure it chips ice, but good luck making much of a progress.