If not for the continual regular intervention of central banks, the global financial system will have collapsed. We can see the unprecedented market intervention firepower that went from desperate to absurd in the last decade timeline.
|Nov 2008||US Federal Reserve (Fed) started buying the debt of government sponsored enterprises and mortgage related securities in the secondary market.|
|Mar 2009||The Fed extended the program to include US treasuries which began the QE program. She ran three sequential QE programs.|
|Bank of England started its QE program.|
|Oct 2010||Bank of Japan started its QE program. Also started to buy ETFs linked to Japanese stock market and continue to buy whenever the stock market falls more than a certain percentage points by mid day.|
|Mar 2015||ECB started its QE program.|
|2017||Central bank stimulus set record in 2017. Together they pushed over USD 2 trillion worth of artificial central bank liquidity into the global markets through asset purchase programs. (pre-covid 19 record).|
|Dec 2018||The People’s Bank of China started to support the domestic banking sector by injecting hundreds of billions of USD worth of liquidity into the system.|
|Jan 2019||The US Fed Reserve made attempts to increase interest rates to stop the market rout which threatened to topple the US credit markets.|
|Mar 2019||The US Fed Reserve made U turn and started rates cut. Stopped the balance sheet normalization program.|
|Sep 2019||The Fed continued market bailout operations. The repo markets clogged up and the QE program was re-started by purchasing USD 60 billion per month from October 2019.|
It was clear that the global financial system was in serious trouble by the end of 2019. And with the pandemic lockdown in the first quarter of 2020, the market intervention by the central banks, especially the Fed, went from desperate to absurd. The Fed ended up backstopping U.S. Treasury markets, corporate commercial-paper and municipal bond markets and short-term money-markets. The Fed essentially socialized the markets. With such absurd socialization of all major markets by major central banks, the investors are pushed to even riskier financial market products. The balance sheets of central banks are now investment vehicles with no boundaries. The whole system is now so extremely fragile which requires even bigger bailout to stop it from implosion. The QE addiction is absolute and without regular infusion of QE drugs, the system will collapse.
Will the global financial system collapse by September 2022 ?
(All information is gleaned and re-presented for easy reading from the following article. https://www.zerohedge.com/markets/extremely-dangerous-game-central-bankers-extend-pretend-has-increased-risk-catastrophic/ )