Central Banks Are Going “All In” On Creating The Mother Of All Bubbles

Stocks hit a new all-time high yesterday.

The media is trying to attribute this move to Joe Biden picking various people for his cabinet. However, as I’ve stated many times before, Joe Biden has yet to actually win the election. Moreover, the market moves are occurring at totally different times from the announcements of the Biden campaign. So, you can forget this narrative.

What is pushing the market higher?

The Fed and other central banks.

The Fed’s balance sheet exploded by over $60 billion this week, pushing it to new all-time highs of $7.2 trillion.

Chart, line chartDescription automatically generated

All told, the Fed has expanded its balance sheet by $3.1 trillion this year.

To put that into perspective, in response to the Great Financial Crisis, the Fed expanded its balance sheet by this same amount over the course of FIVE YEARS from 2008 to… 2013.

Put another way, it took the Fed FIVE YEARS to spend the same amount of money during the worst financial crisis and recession in 80 years. This time around, the Fed spent it in EIGHT MONTHS. 

If you want a reason for stocks exploding to new all-time highs over and over again, it’s this TSUNAMI of liquidity the Fed has provided.

And the Fed is not the only one.

The European Central Bank’s (ECB) balance sheet ALSO hit a new all-time high this week.

Forget Joe Biden or Donald Trump, globally central banks and governments have spent $14 TRILLION this year. We’re talking about an amount of money equal to the GDPs of China (the 2nd largest economy in the world).

That money has to go somewhere. And much of it has gone into stocks, where it is creating the mother of all bubbles.

For more market insights and investment ideas, swing by our FREE daily e-letter at www.gainspainscapital.com.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.