Analysis: Endless QE? $6 trillion and counting

Many more years of money printing from the world's big four central banks now looks destined to add to the $6 trillion already created since 2008 and may transform the relationship between the once fiercely-independent ...

"The FX markets are now under the influence of a trilogy of themes," says Société Générale strategist Vincent Chaigneau in his latest report.

  Since the Financial Crisis erupted in 2007, the US Federal Reserve has engaged in dozens of interventions/ bailouts to try and prop up the financial system. Now, I realize that everyone knows the Fed is “printing money.” However, when you look at the list of bailouts/ money pumps it’s absolutely staggering how much money the Fed has thrown around.   Here’s a recap of some of the larger Fed moves during the Crisis:  

CHICAGO — U.S. Federal Reserve Chairman Ben Bernanke said on Friday that the shadow banking system still posed a threat to financial stability, and funding markets might still not be able to cope with a major default. In a wide-ranging speech explaining the Fed’s role in monitoring the health of the banking system, Bernanke also laid out how the central bank was looking at asset markets closely for signs of excessive risk taking.

Germany recently made big news by announcing its plan to bring home part of its massive gold reserves. By retrieving 300 tons from New York and all 374 tons from Paris, 19% of its holdings – $36 billion worth – will be repatriated. By 2020, Deutsche Bundesbank expects to have 50% of its gold reserves stored in its Frankfurt vaults.

The world’s major central banks may be shifting their tone subtly from “whatever it takes” to “we can only do so much”. Financial markets supercharged this year by the extraordinary monetary stimuli of the top four central banks are once again asking how long this can last. Friday’s stall of this year’s global stocks market rally was blamed by many on fresh policymaker chatter about when the U.S. Federal Reserve will or should start to wind down its bond-buying and money printing programs, or “quantitative easing”.

  Anyone who wants to get to the truth behind the inflationary threats to their wealth should ignore everything the Central Banks say about inflation and look instead at their actions.   Worldwide gold demand in 2012 was another record high of $236.4 billion in the World Gold Council’s latest report. This was up 6% in value terms in the fourth quarter to $66.2 billion, the highest fourth quarter on record. Global gold demand in the fourth quarter of 2012 was up 4% to 1,195.9 tonnes.