The central banks’ balance sheets can continue to grow forever

Never underestimate the central banks’ ability to buy up the world

Here is a Bloomberg article titled, Bank of Japan’s Hoard of Assets Is Now Bigger Than the Economy, which remarks that despite the sense of unease about the BOJ’s dominance in Japan, its balance sheet continues to grow. As always, assets that are on the central bank’s balance sheets are effectively under the control of the elite owners of the private central banks.

For a glimpse into the future of the US, EU, and China, look at the Bank of Japan’s asset buying program. Investors will rejoice as their balance sheets are saved from oblivion

The Bank of Japan’s massive asset purchase program has taken it into uncharted territory, with its ballooning holdings now larger than the country’s annual economic output.

Its holding reached a staggering 553.6 trillion yen ($4.9 trillion), figures released Tuesday show, compared with nominal gross domestic product of 552.8 trillion yen at the end of June.

Bank of Japan’s Hoard of Assets Is Now Bigger Than the Economy – Bloomberg (November 12th)

Never underestimate the central banks’ ability to continue buying up the world; Global investors will demand it if the markets continue to roll over.
Investors pretend to be uneasy about the potential growth of the central bank balance sheets

“There’s no consensus theory on how big a central bank’s holdings can get before it starts getting dangerous,” said Nobuyasu Atago, chief economist at Okasan Securities Co. and a former BOJ official. “There’s a vague sense of unease when the holdings keep getting larger, but it’s unclear at what level things should stop.”

Bank of Japan’s Hoard of Assets Is Now Bigger Than the Economy – Bloomberg (November 12th)

I submit to you that the central banks will never stop buying. The owners of these central banks will continue to buy up as much as investors will let them buy. I bet that when things begin to unwind in earnest most investors will beg the central banks to buy up all sorts of assets to create artificial demand for most asset sectors.

For your reference, I have attached Yardeni Research’s latest Global Economic Briefing: Central Bank Balance Sheets. The report is dated November 9, 2018. Although there is much discussion of the US Fed unwinding its balance sheet, total central bank assets continue to grow on a year-over-year basis. The consolidation of the global wealth must continue. By the time all this is through we will owe a big chunk of our debts to the central banks. We could be paying our highway tolls to the central banks, and most our loans will be owned by the central banks.

I wouldn’t be too concerned about real estate collapses causing economic catastrophe. Japan’s land values finally rose this year for the first time in 27 years and yet their economy continued on an IV drip since their bubbles burst in the early 90’s. I imagine the Federal Reserve or the Peoples Bank of China could buy up any excess commercial and residential real estate supply and the average homeowner will applaud the action.

If the stock market collapses most investors will cry out for central bank intervention.

By the time the collapse screaming is through the central banks could theoretically own large swaths of the economy and it will be done while the alt-financial and mainstream business media were scaring the pants off their readers. Publicly, most of the Wall Street shills and writers will only offer cursory resistance to such drastic measures, but privately they will be elated as their personal balance sheets continue to grow. Jim Cramer will tell all his followers that the Fed is undertaking the best course of action. They won’t care that they placed on the chains of the NWO themselves; they will gladly sell their birthrights for a bowl of soup.

There is plenty of room for central bank balance sheets to grow

The ostensibly unconventional monetary policies of the BOJ will most likely be considered somewhat normal in the next several years. I predict that the Chinese ChiCom government and the People’s Bank of China will begin to support real estate prices by accumulating RE assets on the PBOC’s balance sheet.

The only constraints on future balance sheet growth will be potential inflationary pressures, which will probably be minimal as the world continues to sink in a sea of deflationary red ink, and the population’s willingness to tolerate the balance sheet growth.

Chris Pirnak

The US Fed asset balance sheet only amounts to about 20% of the US economy. If the BOJ now holds assets equivalent to 100% of Japan’s annual GDP, we could see the US Fed balance sheet continue to grow essentially forever. The only constraints on future balance sheet growth will be potential inflationary pressures, which will probably be minimal as the world continues to sink in a sea of deflationary red ink, and the population’s willingness to tolerate the balance sheet growth.

Ask yourself this question; As long as real estate and asset prices hold up, do you think most people will care if the Fed owns the entire US economy? I don’t think so.