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Bitcoin remains unmoved by the 500 billion telephoned by the ECB – Cryptocurrencies

The ECB continues to use the Covid as an alibi to print trillions. The Debt Purchase Program (PEPP) has just been increased by another 500 billion. Bitcoin (BTC) did not react but do not think less …


Pandemic Emergency Purchase Program (PEPP)

It will therefore be in all 1850 billion that the ECB will have printed to buy back debts from private banks since March.

Cumulative ECB QE
Courtesy of the WSJ / In yellow, the QE corresponding to the PEPP (Pandemic Emergency), in blue the “normal” QE accumulated since 2015

The ECB has just announced that it has extended the PEPP by 9 months. It will therefore end in March 2022, just before the election of German MPs and the Italian presidential election. The next leaders of these two countries will then have to negotiate with Christine Lagarde to continue to benefit from her monetary largesse …

It was also decided to reinvest the money from the (purchased) debts maturing until December 2023 (date of the following Italian legislative elections…). It’s not clear ? Example:

Suppose the ECB now buys a short-term (one year) French debt security worth one billion. In a year, thehen the French state repays this billion to the ECB, the latter will reinvest this money by buying again for a billion in debt. In this way, the ECB’s balance sheet never goes down.

Another measure: the TLTRO is extended until June 2022. That is to say that private banks will be able to continue to borrow from the ECB at the rate of -1%. Yes, you read that correctly, banks borrow at negative rates. They pay less than they borrow. If only we could put this in place for home loans …

In all, 3 trillion euros will have been injected in 2020 by the ECB. More than enough to finance the EU’s 750 billion aid plan. A figure to be compared with the 900 billion “stimulus package” that the US Congress could announce soon, and the 700 billion $ announced by Japan earlier this week.

The ECB therefore prints more than 60 billion euros per month. This amounts to constantly buying back 3/4 of the new debt issued by all the countries of the Euro Zone. For comparison, the FED is currently buying $ 120 billion in debt and other financial products backed by the real estate market.

The markets did not react much to these announcements because the President of the ECB had already telephoned this decision for many weeks.

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Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

How long will this last?

You have to be crazy to believe that there are no consequences in printing trillions, especially in a context of oil scarcity. All of this money will eventually flow into global debt (nearly $ 300 trillion now) and create a bed for inflation. But not only. It will also end up in the stock market casino and make the billionaires even richer …

And yet, even the Bank for International Settlements (BIS), the famous bank of central banks, put an end to this Monday in its quarterly report. Same story last week from the IMF.

The BIS is concerned about the rise in stock markets and the euphoria surrounding the vaccine announcement. However, it has been more than 10 years that the Bank of Basel has been making this kind of speech while being royally ignored by central banks.

Note, however, the scathing phrase of the author of the paper, Mr. Borio:

“We are in the process of moving from a liquidity crisis to a solvency crisis. “

Borio, BIS, quarterly report

Translation : bankruptcies are to be expected in the coming months. And especially the bankruptcies of small businesses that we have been forced to close …

Multinationals, however, are immune. Indeed, these trillions injected by central banks keep lending rates close to zero, even in negative territory. And this fact is pushing banks and investment funds to invest in other assets. But what is left when you cannot buy sovereign debt? The stock market, of course. What else ?

There is currently the equivalent of $ 17 trillion in debt offering negative yields. The stock market bubble will not stop rising as long as this number grows. That is, as long as central banks keep the printing press spinning.

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Cryptoassets are highly volatile unregulated investment products. No EU investor protection. Your capital is at risk.

Negative yielding debt

The current context is a true Bitcoin paradise because whatever the IMF or the BIS says, banks are forced to constantly add a layer. To shut down the robiner would be to collapse the system in a biblical recession that no one wants to take responsibility for triggering …

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