The Chart That Explains Why Fed's Bullard Wants To Restart The QE Flow
Remember when the Fed (and their Liesman-esque lackies) tried to convince the world that it was all about the 'stock' - and not the 'flow' - of Federal Reserve Assets that kept the world afloat on easy monetary policy (despite even Bullard admitting that was not the case after Goldman exposed the ugly truth). Having first explained to the world that it's all about the flow over 2 years ago, it appears that, as every equity asset manager knows deep down (but is loathed to admit for fear of losing AUM), of course "tapering is tightening" - as the following chart shows, equity markets are waking up abruptly to that reality. So no wonder Bullard is now calling for moar QE - he knows it's all there is to fill the gap between economic reality and market fiction.
Tapering is Tightening.... as the flow of Fed free money slows... so equity performance suffers.
Of course it's not just the Fed (as Citi shows below) but for now the ECB seems unable to pull the trigger and the BoJ is hitting both political and market sentiment limits on its craziness.
And we better get moar... because the gap between perception and reality is huge...
Charts: Bloomberg and @Not_Jim_Cramer
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QE is a lot like a kid who cheats at school. Basically it's an economic cheat. First, it works less and less as you go on. Second, those wise enough to know what you are doing catch on. Third, you don't learn anything and thus the economy never adjusts to economic reality. Fourth, you encourage everyone else to cheat which essentially ends the game. And Last, when the real test comes and you economy pitfalls you are left with no bullets besides even greater cheating.
Central banks, go back to school and learn economic growth is not based on money supply, it's about increasing the goods and services in your economy which you are utterly failing at since 0% helps medium and small businesses.