Sunday, February 19, 2012

All you need to know about money printing

A few days ago there was another significant round of currency debasement.  Quantitative Easing (QE) is  taking place on a massive scale despite the fact you are not hearing about it in the mainstream press.

If the basic definition of quantitative easing (QE) is a significant increase in a central bank's balance sheet via increasing banking reserves, then all eight of these central banks [the others include the Bank of England, the Swiss National Bank, the Banque de France and Germany's Bundesbank] are engaged in QE (see graph above -click to enlarge).

What's particularly shocking about the data is that while every major central bank is busily printing money like it's going out of fashion – which it is – one of the biggest culprits is the one most widely associated with sound monetary policy, namely the Bundesbank, which has been one of the biggest inflationists of all:

The combined size of the Big 8 central banks' balance sheets has almost tripled over the last six years, from $5.4 trillion to more than $15 trillion and still rising. That $15 trillion compares with the capitalisation of world stock markets which stands at $48 trillion. The Big 8 central banks now account for the equivalent of one third of world stock market capitalisation.


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