Draghi Speaks the Truth; ECB Will ‘Do What it Must'
Words are important. This is not just a headline, it is a reality…
Draghi says ECB will ‘do what it must' on asset buying to lift inflation
Not ‘do what it thinks would be the best course for the European economy', not ‘choose the path of least resistance in guiding the financial system to recovery'… the ECB will DO WHAT IT MUST.
As I have written til I'm blue in the face for the last 10 years, we are in the age of ‘inflationonDemand‘©, 24/7 and 365. “…do what it must”… let that sink in for a moment.
Japan is trying to kill the Yen, China is dropping interest rates and the world over we have a rolling inflationary operation that is little more than a game of Whack-a-Mole. BoJ popped up a couple weeks ago and now this one…
Source: MarketWatch
US Situation
Transitioning to the country and policy making establishment that has truly shown ‘em how it's done over the last 6 years, we view the S&P 500 with its eternal attendant, ZIRP and add a view of the CPI as well. One message that can be interpreted from this chart is that stock markets have been used (controlled) as a mechanism for asset owners to keep up with the reported effects of inflation (CPI). Saving has been disallowed, legislated by policy right out of the equation. Everybody into the pool, if you've got the bankroll to play.
Created with SlopeCharts
We have maintained since the post 2012 lift off of the most intense phase of the inflated stock bull market that there is and has been no bubble in stocks (though they have become over valued* even by traditional metrics) but rather, a massive and ongoing bubble in global policy making.
First Alan Greenspan laid the groundwork and the initial blueprint (asset inflation), then his inflation operation was liquidated with extreme decisiveness and now, from the ashes we have a new global asset inflationary operation born not of good intention or rationally sound strategy. It is pure and simple desperation. The ECB will “do what it must”. The US federal reserve has done “what it must” since instituting ZIRP nearly 6 full years ago and through QE's 1-3.
