The global addiction of central banking stimulus – Contagion spreads to Spain as 10-year edges to 7 percent. Life in a perpetual quantitative easing world.
Financial markets around the world are now desperately dependent on central bank stimulus. The US recovery is largely dependent on the Federal Reserve funneling loans into the system via the quantitative easing process and other archaic forms of money development. It is interesting how the Greek stock market rallied this week merely on the notion that pro-bailout parties will be elected and thus allows even more debt to be injected into the system. Yet this does not solve the core problem that too much debt is swimming in the system. Central banks do not create any real tangible product in the economy. They have the incredible power to inject resources into banks and thus create “money” in the real economy. Yet this only happens if banks lend this out to consumers instead of using the funds to speculate in complicated global money making schemes. The whipsaw behavior of the market highlights the massive addiction to central banking stimulus we are in.
The Euro crisis reaches a critical stage