Several lines below you can read an excerpt from my Weekly Market Letter available exclusively for subscribers. In this week issue:

- Global Economy Developments
- Reopening Schedule
- US Earnings Season
- Main Stock Indices and High Yield Bonds
- Government and central banks interventions
- Zombie Companies
- Gold

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Here is the text:

The same thing applies to central banks. By lowering interest rates and buying assets they trying to decrease costs of lending while demand is still locked in the house. Going further into the debt is not a good cure for the problems during a crisis like this when the economy is halted and people and businesses can not increase their spending and investments. And yet, some opt for more cuts.
The chart shows that the number of interest rate cuts by 31 central banks in the world has reached the highest level for at least 20 years. It may boost the performance of financial assets but in many cases will cause more disruptions within already unproductive economies. This is the process of rescuing holders of stocks and bonds while this is the consumer or small business that is hit the most.

When we look at the Federal Reserve Balance sheet we see that it has jumped by $2.4 trillion in just two months.
As a result of this massive money printing, the US M2 Money Supply growth adjusted for inflation has jumped the most since the 1930s’.
And there is more to come – maybe even as much as $4 trillion. The worst thing is that there is no one talking about the unintended consequences and the exit strategy. Because there is no strategy. The only strategy is to flood the world with “FREE” money which as we discovered two weeks ago, does not go into the real economy.

In the Eurozone, economists expect the European Central Bank to increase its purchases from 1.1 trillion euros this year to roughly 1.6 trillion. While the Bank of Japan has already announced unlimited Japanese Government Bond purchases – let’s recall that their own more than 50% of the entire domestic government bond market totally crowding out investors.
The effect? The total value of the Federal Reserve (Fed), Bank of Japan (BoJ), and Europan Central Bank (ECB) assets have reached more than $18 trillion or 29% of the global GDP.
As you can see, the ongoing problems are being “fixed” by massive printing. In reality, they are simply swept under the rug or in other words flooded and covered by the money coming from the printing presses. Unfortunately, these actions will not get the planes back into the air or bring back people to closed restaurants. In the short term, it can patch some holes in the pipe but in the meantime, other holes are being created at even a faster pace. Instead of preventing new holes creation, a plumber is focused on inefficient methods and postponing fixation of the bigger issue. In effect, it can turn out that the plumber instead of replacing the pipe by naively using the same method led to a major leak and a complete lack of water. In other words, economic collapse.

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