[arcbyte]

> Surely the money has to dry up sometime?

Yup, this fall. By the close of 2018 all the world's central banks will be in quantitative tightening after having spent the past 10 years perpetuating an unprecedented level of quantitative easing.

[irln]

Three data points:

Fed Balance Sheet https://fred.stlouisfed.org/series/WALCL Fed Balance Sheet hasn't been reduced in any meaningful way.

Bank credit: https://fred.stlouisfed.org/series/TOTBKCR Bank's have themselves continued increasing the money supply.

Worldwide debt: https://www.iif.com/publication/global-debt-monitor/global-d... Random snippet from Q32017

[RhodesianHunter]

1. Does not account for inflation, which would show a 5.8% drop between 2014-2018.

2. Viewing this chart on a logarithmic scale as it should be, or viewing the same data charted as year over year percent change, paints a much less intimidating picture. https://fred.stlouisfed.org/series/TOTBKCR

3. "This publication is available to IIF Members only."

[johnvanommen]

Well that's the stuff of nightmares.

[dragonwriter]

QEs been tapering off for a long time (US QE ended in 2014); there's very little reason to believe that it's global final (for now) end will do much to capital markets.

[StanislavPetrov]

This only means that the FED hasn't been increasing its purchases since 2014. It has maintained an over $4 Trillion (trillion with a T) balance sheet, and it continues to roll this money over. Ending QE would mean stopping repurchasing and letting the balance sheet shrink - quite different in substance and effect than tapering.

https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

This also ignores the fact that QE purchasing has continued to accelerate at an unsustainable rate in many of the world's largest economies, such as Japan.

https://tradingeconomics.com/japan/central-bank-balance-shee...

In addition, central banks are (and have been) purchasing stocks directly to prop up the markets. The Bank of Japan spends over $800 billion yen a month buying stocks and ETFs, resulting in the central bank owning a massive 75% of ETFs in the entire market.

https://asia.nikkei.com/Business/Markets/Bank-of-Japan-s-ETF...

If you don't understand the problems with central banks owning three quarters of the market and what that means in the future (near and far) then you don't understand markets. Nobody knows when the "extend and pretend" strategy employed by central banks around the world for the last decade will fall apart, but everyone informed understand that it won't last forever. The longer we keep our heads in the sand the worse the problem will ultimately be.

[Veelox]

If you think the bubble is going to pop you should take out some options and you should be able to make a killing.

[StanislavPetrov]

There's no question its going to pop - the question is when. It could be tomorrow, or it could be 5 years from now. Certainly central banks are going to do everything in their power to prop up the markets with continued equity and bond purchasing to delay the inevitable as long as possible - which will make the pop that much louder when it does come to pass.

Free markets are based on price discovery. Central bank purchasing destroys price discovery by artificially creating demand. Its simply a matter of basic logic. Either central banks end their purchasing and demand falls to its organic level, or they continue to accelerate their purchases and increase the artificial disparity. In addition, as the share of markets owned by central banks increases the liquidity of markets decreases, meaning that when there is a crash those running for the exit will find the door much smaller.

[danharaj]

If you blow a bubble, I won't know how long it'll float around before it pops. But I know it's going to pop.

[arcbyte]

Yes easing has been tapering off, but the balance sheet reductions are a whole other beast that only started in ~November and only from the Fed. Once the ECB starts, and potentially the JCB (although I think they've changed direction now), there will actively be a drain on the world's economy instead of the artificial faucet.

Don't quote me though, I'm several months out of date on following it super closely.

[dweekly]

Can you provide data to back that specific claim around timing?

[resource0x]

For how long? My conjecture is that they will re-start "easing" as soon as some index drops by 10%. And this new easing will exceed in scale all prior "easings" combined. Just a pure speculation :).