Galt's Gulch

QE Magic Number: Central Banks $200 Billion Per Quarter To Avoid A Market Crash

Posted by freedomforall 9 years, 6 months ago to Business
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Matt King - Citi's most respected strategist and the only person on Wall Street to warn about the Lehman collapse and its consequences before it happened, just said - if and when the global central bank liquidity tracker ever drops to $200 billion per quarter or less, the market will crash.
SOURCE URL: http://www.zerohedge.com/news/2014-10-21/magic-number-revealed-it-costs-central-banks-200-billion-quarter-avoid-market-crash

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  • Posted by richrobinson 9 years, 6 months ago
    Good article Freedom. I wonder if that 200 billion number has increased with time or if it will increase. Fatigue and reality have to kick in at some point and seasoned investors will realize this is unsustainable. At some point bubbles burst. Central banks and their manipulation of the markets is a huge problem that needs to be addressed and soon.
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  • Posted by CircuitGuy 9 years, 6 months ago
    This way overstates the influence of monetary policy and understates people's ability to create value. A business's value comes from its earnings and the markets expected value of future earnings. There's no formula to correlate how much value we provide each other with monetary policy. Bankers, including central bankers, have too high an opinion of their level of influence on the economy.
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    • Posted by freedomforall 9 years, 6 months ago
      You are talking about real value, for example, the actual benefit one receives after buying a piece of land and building a house on it. The price that property can be sold for is affected by more than that actual benefit.
      The article is talking about fiat, perceived value of pieces of paper, i.e., stock certificates, denominated in fiat currency created from nothing. The amount of fiat available and the false perception that is implied by prices buoyed by that fiat have been propping up the non-productive looter economy for years, just as the Soviet Union was viable to most until it collapsed under its own fraud, The share 'market' is a herd of followers, all using the same misleading indicators based on a limited number of equity prices that make up a few indices. Manipulation of those critical prices is possible and likely by those who would lose everything if their rigged game is completely exposed, especially when they are given the power to create virtually unlimited trillions of fiat to do so. Other large market participants assist the fraud because they have an economic interest; they produce nothing, and never will, but they profit as long as the rigged game continues.
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      • Posted by CircuitGuy 9 years, 6 months ago
        "The article is talking about fiat, perceived value of pieces of paper, i.e., stock certificates, denominated in fiat currency created from nothing."
        All these people are out there fixing furnaces, keeping factories running, diagnosing/treating illnesses, designing the look-and-feel of Apple products or products that mimic them (almost all consumer products), providing sex and drugs, minding stores, and whatever; and then someone comes along and says you're not _really_ serving one another. It's all fraud and an illusion. That person who did this-and-that for you really didn't help you. The stuff you did to earn the money you gave her/him really didn't help your customer. Why the heck not?
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        • Posted by freedomforall 9 years, 6 months ago
          The stock market is based on confidence as much as real products. Pull out the $80 billion a month the Fed has been supplying and prices start to drop because there isn't the demand for shares that there was before. Then the trading software that all the major trading companies use will predict softer pricing and the slide becomes worse. Then the margin calls come for anyone who bought shares on margin, and the slide gets worse. Then everyone knows someone who has lost a lot in the market and confidence in the market evaporates, and the slide becomes a collapse. Then the banksters go to DC with their hands out for a few trillion more to pay their multi-million $ bonuses and the market crashes on rumors.
          http://www.youtube.com/watch?v=uI4fVgVVp...
          Its a house of cards, just as it was in 1929, 1987, 2001, and 2008 except that this time everyone has a mortgage to pay on the house they couldn't actually afford, and no savings. It only takes a breeze to knock it down, regardless of all those burgers, ipads, and accountants preparing tax returns. Emotion and confidence cause markets to move, up and down. The downs are always steeper and faster, and they always overshoot real value.

          I am not saying that this is the way it should be. But it is the way it happens today.
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