At the end of March, the U.S. Congress passed a number of bills, injecting more than $2 trillion into the U.S. economy in an effort to keep the financial system working.
This money wasn't true stimulus, in the sense that these dollars were being injected to ensure commercial paper and bond markets, including investment grade corporate bonds, continue to trade.
Liquidity among many fixed income and securities has dried up and Central banks in the U.S. and around the world are scrambling to be the buyer of last resort. Financial markets appear to want nothing to do with certain debt instruments right now, a potentially dangerous indicator of the health of the global financial system.
Governments are printing money to inject into financial markets to keep the “plumbing” of the system functional. Some, such as myself, remain skeptical respect to the long-term impact of these liquidity injections.
Quantitative easing has spread to most developed countries now, with the Bank of Canada enacting its first QE ever on March 27, falling in line among many other central banks that have been buying securities for years.
My concern is related to the unprecedented level of global spending on a financial system that appears to be broken. There seems to be little to no regard as to the future impact of this spending in the years to come.
Invest wisely, my friends.
