QE4EVER

By: Nadeem_Walayat

For over a year now all you have heard on MSM has been how tapering is bearish for asset prices, what;s the narrative that the perma fools have clung onto for new bear market lows being just around the corner right to the recent wholesale capitulation where bears turned into blow off top clowns!

Leaving aside the surge higher in March as on the slightest glimmer of banking sector systemic pain pain and the Fed and other central banks hit the PRINT MONEY button to once more start expanding their balance sheet so as they monetize government debt

However as the following big picture chart of the Fed balance illustrates Quantitative Tapering is TRANSITORY, not only that but is coupled through myriad of engineered backstops such as the reverse repo market so that over $1 trillion was ready to soak up the flood of treasury bonds being issued following resolution of the debt ceiling nothing burger that the mainstream press had obsessed over for several months this year. And just as the great financial crisis QE of 2008/09 now looks like a pin prick, so will today's balance sheet of $8 trillion first double and then triple before the end of this decade to $24 trillion! Let that sink in. It is inevitable, it is the only way to finance deficit spending that looks set to run into several the trillions per year because the banks can't finance such deficits thus the Fed will resume QE on an epic scale which will trigger waves of inflation where the Fed will play the misdirection game of keeping everyone eyes on the annual rate of CPLIE.

There is no free lunch, you don't get economic growth by printing money, on the contrary debt results in LESS economic growth because the private sector cannot compete against an ever growing unproductive public sector that consumes the productive capacity of an economy. In fact it is a vicious cycle, where the weaker the economy the more the debt the government prints, the more bonds the central bank monetize's resulting in weaker economic growth and so on where the only answer the government has is to manipulate how GDP is calculated to give the illusion of growth such as by using a lower inflation measure for the GDP price deflator.

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S&P

Targeting 4600 Mid Summer 2023 Top followed by correction to below 4150 into October 2023.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2023 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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