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November 2, 2018 | Do Central Banks Trade Our Markets?

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Central banks from Switzerland to South Africa are investing a bigger share of their growing foreign-exchange reserves in equities, corporate bonds and other riskier assets. This buoys our markets and rigs price discovery. 

Branching out from the traditional central-bank practice of investing primarily in ultrasafe government bonds such as U.S. Treasury’s means taking on more risk. But at a time when global growth, interest rates and potential returns on many assets are low, many central bankers are becoming increasingly focused on maximizing investment returns.

“When yields started to get really low and closer to zero in 2014, we decided to start equity investments,” said Jarno Ilves, head of investments at the Bank of Finland, who said he plans to increase his allocation to stocks.


Central Banks Embrace Risk in Era of Low Rates

My comments: Central banks can buoy a stock index whenever a down cycle develops. Yesterday, the HSI index was up $1,070.35 (4.21%) – only a Central bank can do this! The NIKKEI index was up 556.01 (2.56%) – only a trader of Central bank funds can do this! As I write the CARACAS General index is up 34,343.94 (7.30%) – only a Central Bank can create this result. Our DOW index was also up these past three days some 900 points. All this change in our index markets can continue as our Central banks trade our markets.


The lesson in all this is that we now live with rigged markets. How can any real price discovery happen given this situation. Central Banks all over the planet are using digital money units to trade our markets. They used to trade only for bonds and government securities. Today they trade for equities as well. This makes our markets rigged and unable to function as reflections of reality. None of this will change until all our markets are allowed to crash.


A crash is coming but the precise date is up to our Central Banks. The key Central Banks are the Fed, the ECB, the Bank of England, the Bank of Japan, the BIS, and the Peoples Bank of China. But the Bank of Switzerland, Finland, Sweden, Russia, and many others will help buoy all these digital stock markets as trading money is now created out-of-nothing (the consciousness of these elites who operate behind closed doors). I doubt that a crash will arrive until our Fed decides that the TIME is NOW!


The U.S. FED is the key Central Bank on our planet. This institution sets the tone for the global digital markets and our global central banks. I sense that this institution is now starting to cause global liquidity to decline (gradually). When our real estate market starts to implode and values decline by 20% or more, then a crisis will arrive. Until this happens I doubt if a crash will be allowed. Central banks can network to buy equities so that a crash is prevented.


But the important point is to recognize that our digital markets are all rigged and managed. There is no real ‘price discovery’ today. Prices can be rigged and manipulate via computer trading strategies. We can code an algorithm to trade any stock or commodity and rig the price via this methodology. Our money is now merely a ‘digit’ in the computer screen. When will our big boys choose to crash this rigged system? It could be in 2018 but it surely will happen in 2019. That’s my view. Enjoy the chaos!


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November 2nd, 2018

Posted In: Kingdom Economics

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