As proof, look no farther than Agora Financial’s 5-Minute Forecast’s synopsis of the Federal Reserve's weekly H.4.1 statement, which they characterize as “the Fed's consolidated balance sheet,” and found “$4.37 trillion in ‘assets,’ if that's what you want to call them, compared with $56.3 billion in capital. That's a leverage ratio of 77.6- to-1.”And switching to Agora Financial, answering a question from a reader:
Leveraged 80 times! Imagine you borrowing 80 times as much as everything you own!
“My question is as rates rise and the Fed’s $4.3 trillion load loses value (if they are not sold, there will be no recorded loss), is there any harm done to the rest of the world as that asset drops in value?”And there you have it. The Fed has $56.3 billion in capital and $4.37 trillion in assets they've bought. The Fed is pumping up the world's stock markets because if those markets go seriously down, the Fed goes bankrupt.
The 5: Well, seeing as the Fed is leveraged something like 80-to-1 — far beyond any of the investment banks circa 2008 — that would render the Fed insolvent and incapable of managing the next financial crisis whenever it comes.
I've always said that the reason the banks want "persistent, benign" inflation is that it's better for them. That's a bit glib and short on detail; this provides some of that detail.
But it's not just the Fed. Another important detail comes from Zerohedge, where "Tyler Durden" reports:
Another conspiracy "theory" becomes conspiracy "fact" as The FT reports "a cluster of central banking investors has become major players on world equity markets." The report, to be published this week by the Official Monetary and Financial Institutions Forum (OMFIF), confirms $29.1tn in market investments, held by 400 public sector institutions in 162 countries, which "could potentially contribute to overheated asset prices." China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, according to officials, and we suspect the Fed is close behind (courtesy of more levered positions at Citadel), as the world's banks try to diversify themselves and "counters the monopoly power of the dollar.The central banks own the stock markets? (Who else has $30 trillion??) And the Chinese are "the world's largest public sector holder of equities"? From there, it's a bit more difficult to see what percentage of the companies they own, but it's pretty close to the central banks and governments owning all the production capacity in the world. Governments owning the means of production... seems to me there's a word for that... World socialism, anyone?
China’s State Administration of Foreign Exchange has become “the world’s largest public sector holder of equities”, as the report argues is “partly strategic” because it “counters the monopoly power of the dollar” and reflects Beijing’s global financial ambitions
"The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries."ThePeoplesCube)
... Winston Churchill