Global Quantitative "Tightening" in Pictures

Central banks are allegedly in a state of "Quantitative Tightening". Let's investigate.

I created the above graph in Fred. It is slightly out of scale as it's in dollars, euros, and 100 million Yen. There are about 1.16 dollars per euro and .92 dollars per 100 yen.

I was going to download the data into Excel to equalize things but before I did, I searched for "central bank balance sheets assets as percentage of GDP" and came across Global Economic Briefing: Central Bank Balance Sheets, released today by Dr. Edward Yardeni.

It's a treasure trove of charts.

Assets of Major Central Banks in US Dollars by Country

Major Central Bank Assets Combined US Dollar Total

Yearly Change in Central Bank Assets

Yardeni posted 16 charts in all. Inquiring minds may wish to give it a closer look.

Mike "Mish" Shedlock

Comments
No. 1-5
RonJ
RonJ

Reminds me of the FED's Bullard stock manipulation. When the market was tanking in 2014, Bullard said that QE should not end. That ignited a big stock rally. At the end of the year QE ended and Japan stepped up to take over QE, at which time Bullard said that QE should end and his earlier remarks were misunderstood. Of coarse, Bullard waited several months to tell anyone that his remarks were misunderstood, which makes his remarks a market manipulation.

Roger_Ramjet
Roger_Ramjet

Central banks embarked on this turbo charged QE strategy without due consideration of limits or the impact of an eventual unwind. It is clear that they anticipated the economy (and inflation at least the kind that they deem to be relevant) would be ripping higher by this time. If so, it was again a major miscalculation on their part (what else is new).

At this level of CB assets, along with a fragile global economic backdrop, it seems that it would be difficult for any significant unwind can take place. In fact, even a pause would likely be detrimental to this house of cards.

It seems that we may all be far too complacent that a Venezuela type devaluation is impossible in the developed countries who readily embraced their turbo charged QE programs. Perhaps not to the same degree (i.e. 95% devaluation), but I just dont see how the CBs can jump off this rat tread mill. In the alternative, it would appear that QE programs will continue at various degrees of increase.

In my view, its likely that developed market currencies will continue to erode in the coming years until the market forces the central bankers to do something they (and all of us) truly dread. That would include the textbook IMF remedy of higher interest rates, reducing fiscal deficits and limiting the growth in debt.

lol
lol

Shell game or central bank 3 card monte only works if money printing increases exponentially over time that's why Central banks printing more cash in tightening mode(a Record) than they ever did in easing mode to the point where it's virtually impossible to hide

Six000mileyear
Six000mileyear

The underlying financial system has to be in very bad shape given such levels of accommodations for such a long time. It also helps to explain the US dollar rally as Euro's and Yen are converted into USD for investments.

Gasmire
Gasmire

Tonight, approximately 0.91 dollar = 100 yen Mish.