Welcome to the theatre of deception. For weeks we sit helpless in the imposed house arrest, because our human social behaviour is not in accordance with, or Corona, in accordance with. In doing so, we are witness to how our authority is fighting supposedly bravely against the threat to our Saved by corona bonds.
ECB provides far more money than corona bonds
Super, would you want to say – if not for a tiny, weeny, little detail. As a sign of solidarity for us will be presented, since Thursday evening, with a lot of theatrics negotiated European credit shield of up to 500 billion euros. This is to lend, rather than the evil corona bonds in indebted countries such as Italy, easily up to 2 percent of their GDP. About the author
Leonhard Fischer, an internationally recognized capital market expert and creative thinker in the financial sector. The Manager magazine referred to him as a “Banker with a beautiful child certificate”. He began as an investment banker at J. P. Morgan and was only 36 years of Executive Board at Dresdner Bank, later also in the Alliance. He was the CEO of Swiss insurer Winterthur, and the Executive Board at Credit Suisse. In 2017, his book “once There were the bankers: Why the modern financial system has failed”. In his MONEY column “Created!”, says Leonhard Fischer, valuable secrets around the money system.
That sounds good, but the thing has a hook: in Italy, we and the other EU States will enter as a result of the shutdown deficits in the range of 10 to 15 percent or more of our annual gross domestic product (GDP). These amounts can no longer be sold but are today’s interest rates on the market – or, as in the case of Italy and of other countries times more likely to: not at all.
Why not have even more to fight for corona bonds, you might want to ask there? Because you don’t need yet. Because it is precisely here that Bank (ECB) and your balance sheet comes from our European Central to the game. The ECB has only announced 2 weeks ago, Euro-zone bonds, in fact, unlimited purchase. The official rescue umbrellas “only” hundreds of billions, so it goes in the purchases of the ECB equal to many trillions.
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ECB balance sheet grows and grows
The ECB’s balance sheet has grown in the last 10 years alone, due to the Euro crisis, from 1 to about 4 trillion. Now you will have to explode in a short period of time of up to 7 trillion. That’s what I call a “curve flattening”…
If that happens, you can get the ECB on a balance sheet total of up to 60 percent of GDP in the Euro area and in the possession of the half of the debt of some Euro countries such as Italy. So much for “No mutualisation in the Eurozone.”
However, the most important Central Bank in the world, the famous Fed in America, not back there. On The Contrary. The Fed is after several announcements of the last few weeks to purchase programs in the trillions for all sorts of bonds to the delight of Wall Street have gone a step further: she now wants to buy up in a big way also shaky corporate bonds, including so-called Junk Bonds.
This is remarkable, because you don’t have to do this again at the peak of the financial crisis, and according to its statutes, actually not likely. Meanwhile, the British state got granted last week an almost unlimited overdraft line with the Bank of England and the Bank of Japan also buys the same share directly.
We talk of billions, it’s trillions
dear readers, we are talking about billions of euros, not hundreds of billions. Now a trillion euros or dollars is the smallest size. For comparison: The entire Federal budget of our country was in the year 2019 “only” around 350 billion euros.
all of This will take place almost unnoticed by the Public. And please do not forget that the Central banks have all this money and even. You only have different than we normal citizens the opportunity to print it is ultimately unlimited.
So you are the key to the question of why the exchanges are doing what they do and what happens to our money. The first result of all these trillions of intervention is that there is no traditional financial markets more. This is perhaps not such a great loss – after all, we were unfortunately in the financial crisis, the Dysfunction and incompetence of the entire system will experience.
The core theses
this Time the Central banks at the beginning of the steps and have saved the markets from Junk Bonds to ETFs for bonds. The unfortunate side effect is that all prices, whether for stocks, bonds, or currencies, no real market prices are more. Rather, they are controlled more or less by the state.
DOUGH, want to look with you in the next few weeks more behind-the-Scenes of this unique experiment and of the side-effects record. the we’ll Start today with one of our core theses.
However, the strategy of Financial Repression is not new. Our interest rates are already for some time at Zero. The Problem of Central banks in recent years, however, was that inflation rates are not quite rise wanted. That will change, in my opinion, the corona of a crisis.
to print a due to alone whether or not its circumference, one-time experiment by the Central banks, in the shortest amount of time, trillions of fresh money. And, second, because global supply chains in the Wake of the Corona experience will be more regionalized. Both of these effects should be inflationary, and the more price-cutting more than offset the effect of the digitization.
last week, I said that I’m at heart an Optimist. And the Optimist in me believes and hopes that this Plan will succeed. Since the whole world is in debt to Corona and finally, the Alternative bankruptcies, Deflation, and Depression.
What does this mean for you? Now, contrary to all the Crash-prophet your money in the account is probably safe. The sobering truth is, in my opinion, but that it will be in a few years, a good third less in value. So you don’t come around, whether you like it or not, to share even. More on this next week.
take care of yourself, your future and your money!
This article was written by Leonhard Fischer
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