By Gregory Mannarino TradersChoice.net
As most of us already expected, just last week the European Central Bank announced that “it stands ready to re-liquify the banks.”
Just to be clear, “re-liquifying the banks” is just a fancy term which central banks use which means that they will give banks all the cash they need.
Several months ago, the European Central Bank announced that it would be buying unlimited amounts of debt across the entire Eurozone, and now they stand ready to bail out banks if need be.
What is not being announced is the fact that the Federal Reserve is firstly continuing to buy debt, which is something they must do in order for them to keep rates suppressed. Secondly, the Federal Reserve as well stands ready to “re-liquify” the banks.
What is getting even less attention is both the ECB and the Fed stand ready to not only re-liquify the banks, but ANY industry. Which include airlines, tech, energy, etc. These are called BAILOUTS.
What is getting even less attention as of late is the fact that any action taken by a central bank to add capital to the system via bailouts, government acts or policies which require funding, or the purchasing of debt is massively inflationary! And central banks are determined to continue to inflate/buy assets with their product, which is currency that they create out of thin air.
Possibly the biggest lie being sold to the people of the world today, whom all of us exist under the rulership of a central bank, is despite any rhetoric to the contrary, central banks in direct collusion with so called “policymakers” continue to drive global inflation higher by design.
Over the last several weeks global debt has been selling off which has been driving bond yields higher rapidly, causing wild swings in bond yields which are supposed to remain relatively stable. This is a clear sign of instability in the global credit/debt markets.
This instability in the debt market is responsible for the recent pressure/gyrations in global stock markets, and a knee jerk reaction into the “safety” of the U.S. Dollar. As bizarre as it seems, the U.S. Dollar is still seen as a safe-haven asset.
Rising/widely fluctuating bond yields along with increasing strength in the relative strength of the dollar is not good for equities/stocks or commodities. Commodities are priced in dollars, so higher relative dollar strength, (the strength of the dollar relative to other currencies), is negative for commodities. It is also negative for stocks.
What is happening here with central banks buying more debt and standing ready to “re-liquify” banks, and any other failing industry, is this; they are hoping to create stability-or even the illusion of stability in the credit/debt market which is the number one driver of global stock markets. Higher stock markets prices create an illusion, it tricks people into thinking the economy is strong. Today there is no connection whatsoever between what is happening in the stock market and the economy. If central banks can “stabilize” the debt market and lower the relative dollar strength, stock markets will move higher.
World central banks remain on a mission to be the buyers and lenders of last resort—which solidifies, and greatly increases their power, at the expense of everyone else.