In the last six weeks, the Fed, BoJ and ECB have issued statements saying they are prepared to buy “unlimited” amounts of bonds.
On 9 March 2020, the Dow set a record by falling 2013 points. On 12 March, it beat this record with a 2352-point fall. Then, on Monday, it went into freefall, plummeting by 2997 points, or 12.93% on the day.
"At some point in the future, someone is going to pull all the data together. They will closely examine the hospital logs, analyse the transmission number and the infection rate, and do a cost-benefit analysis of the efforts to contain the virus. They may well conclude governments overreacted..."
"The Chairman of the U.S. Fed, Jerome Powell, should understand how supply and demand works, but as a reminder, the less available something is, everything else constant, the more it is worth. Mr. Chairman, your predecessors removed $3.5 trillion of bonds from the market, what did you think would happen to bond prices and therefore yields?"
"As noted in this past weekend’s missive, the Federal Reserve has begun reducing its torrid pace of liquidity, while already weak economic growth, and potentially weaker earnings growth, is at risk from the impact of the coronavirus."
When the debt bubble pops so will other liabilities like the $1.5 quadrillion of derivatives.