Markets – Macro – Technicals

World War III

You can’t see the bombs, you can’t see the casualties, and you can’t see the headlines, but World War III is already in full progress.  And no, I’m not talking North Korea, Iran, or Syria or any other countries with minuscule military budgets in comparison to the US that are often hyped to be a global threat. World War III has actually been raging for a while, but it really kicked into full gear in February 2016. How do we know that? Because ever since February 2016 central banks have been throwing more financial resources into market intervention than the entire planet is spending on military defense combined. Indeed the latest figures for 2017 suggest that the run rate is now more than twice of all the defense budgets of the world combined.

This is what it apparently takes to fight the largest financial threat the planet has ever seen: Reality.

“Whatever It Takes” has been the rallying cry of central bankers ever since the 2008/2009 financial crisis. Still the main motto cited by Mario Draghi and other central bankers on a regular basis continues to be the primary driver of global asset values. Markets can’t correct, asset values can’t re-align with an underlying fundamental economic and fiscal reality. Hence price discovery remains a figment of night time algos correcting all bad news and morphing everything into a false illusion of calm and prosperity benefiting not only primarily the top 1% of wealth holders, but also an ever shrinking universe of stocks. The end result: An ever widening disconnect of asset values from underlying fundamentals.

And don’t think the US Fed has left the building. Far from it. Despite 3 rate hikes and a stable balance sheet, the Fed, being the entity most responsible for the nation’s M1 money supply, has guided the very same to ever steady record highs and stock prices with it. The Fed keeps printing and global central banks keep on buying.

How and when this all ends nobody knows, but know the data shows that central banks are engaged in World War III.

In the spirit of “Whatever It Takes” then please find below a summary of tweets and data just from the past few weeks highlighting the utter absurdity of the global interventionist system that has been created and, by all accounts, is absolutely required to keep this system from facing reality.

World War III in all its glory:

ECB:

Central Bank buying:

Central Bank buying:

Consumer debt versus Fed Funds rate:

Central bank buying versus military budgets:

M1 Money supply:

Q1 GDP evolution:

Debt, more debt, and more debt:

Asia Debt:

US Government Net Worth:

Credit Card Debt

Global Debt Evolution:

Wealth Inequality:

Japan: We will never stop

China:

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1 Response »

  1. If everyone is indebted to everyone else.. are we really in debt to anyone?

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