> Surely the money has to dry up sometime?
Yup, this fall. By the close of 2018 all the world's central banks will be in quantitative tightening after having spent the past 10 years perpetuating an unprecedented level of quantitative easing.
Yup, this fall. By the close of 2018 all the world's central banks will be in quantitative tightening after having spent the past 10 years perpetuating an unprecedented level of quantitative easing.
Fed Balance Sheet https://fred.stlouisfed.org/series/WALCL Fed Balance Sheet hasn't been reduced in any meaningful way.
Bank credit: https://fred.stlouisfed.org/series/TOTBKCR Bank's have themselves continued increasing the money supply.
Worldwide debt: https://www.iif.com/publication/global-debt-monitor/global-d... Random snippet from Q32017
2. Viewing this chart on a logarithmic scale as it should be, or viewing the same data charted as year over year percent change, paints a much less intimidating picture. https://fred.stlouisfed.org/series/TOTBKCR
3. "This publication is available to IIF Members only."
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
This also ignores the fact that QE purchasing has continued to accelerate at an unsustainable rate in many of the world's largest economies, such as Japan.
https://tradingeconomics.com/japan/central-bank-balance-shee...
In addition, central banks are (and have been) purchasing stocks directly to prop up the markets. The Bank of Japan spends over $800 billion yen a month buying stocks and ETFs, resulting in the central bank owning a massive 75% of ETFs in the entire market.
https://asia.nikkei.com/Business/Markets/Bank-of-Japan-s-ETF...
If you don't understand the problems with central banks owning three quarters of the market and what that means in the future (near and far) then you don't understand markets. Nobody knows when the "extend and pretend" strategy employed by central banks around the world for the last decade will fall apart, but everyone informed understand that it won't last forever. The longer we keep our heads in the sand the worse the problem will ultimately be.
Free markets are based on price discovery. Central bank purchasing destroys price discovery by artificially creating demand. Its simply a matter of basic logic. Either central banks end their purchasing and demand falls to its organic level, or they continue to accelerate their purchases and increase the artificial disparity. In addition, as the share of markets owned by central banks increases the liquidity of markets decreases, meaning that when there is a crash those running for the exit will find the door much smaller.
Don't quote me though, I'm several months out of date on following it super closely.