Central Banks Begin to Panic
After rapidly reversing policy in 2019, does it seem to you that the global central banks have moved into full panic mode over the past several weeks? To that point, consider some of the headlines that have appeared over just the past few days.
Let’s start with Count Draghi and his insistence that the ECB restart their QE programs as soon as possible. Beginning next month, the ECB will begin regular purchases of up to €20B in bonds each month.
• https://www.ft.com/content/de4a958a-eab3-11e9-a240…
Not to be outdone, the U.S. Fed went from “neutral” to “Large Scale Asset Purchase Program” in less than four weeks with the announcement on October 11 of a new $60B/month debt monetization program. The Fed also announced that their liquidity-providing repo facilities will remain open through January of 2020, at a minimum.
• https://www.cnn.com/2019/10/11/investing/fed-qe-po…
So what is prompting this quick reversal in monetary policy? Is it simply the worsening global economy, or is something darker lurking in the shadows? As I type, it’s Tuesday morning, October 22, and here is a collection of headlines from just the past week.
First, here’s the Secretary General of the UN—a largely symbolic, international diplomatic post—urging global central bankers, the IMF, and World Bank to “do everything possible” in order to stave off a potential crisis: https://www.zerohedge.com/economics/central-banks-…
Next, the consulting firm McKinsey & Co. is out with a new report that concludes that more than half of the world’s banks may not be strong enough to maintain economic viability in the next crisis(a crisis which is inevitable, I might add ). Remember, the central banks are owned by and serve their own member banks. If the majority of the world’s banks are in financial trouble, then it’s understandable that the majority of the world’s central banks would be quite nervous:https://www.bloomberg.com/news/articles/2019-10-21…
…click on the above link to read the rest of the article…
