How Many More “Saves” Are Left In The Central Bank Bazookas?

All central banks have succeeded in doing is pushing the systemic risk into an arena they do not control.

The master narrative of the global economy shifted six years ago from “China will push global growth for decades to come” to “the central banks can push global growth for decades to come.”

The major central banks have tag-teamed one rally in global stock and bond markets after another: the U.S. Federal Reserve goosed markets in 2008, 2009, 2010, 2011, 2012 and 2013, only ending its various quantitative easing (QE) money-emitting programs in late 2014.Time after time we’ve witnessed enfeebled global markets jolted out of terminal declines by central bank pronouncements and new money-printing policies. Never mind that the European Central Bank’s (ECB) Mario Draghi had no concrete proposals in hand when he announced the ECB would “do whatever it takes” to save the European Union from the financial consequences of its reckless abandonment of risk management; the mere announcement was enough to trigger a massive reversal in global markets.

The ECB saved the day with Draghi’s “whatever it takes” PR gambit and more recently with its own QE money-printing program.

The Bank of Japan (BOJ) injected monetary amphetamines into global markets with Abenomics, a last-ditch effort by the BoJ and the government of Japan to crush the value of the Japanese yen and import inflation.

The People’s Bank of China (China’s central bank) has kept the credit spigot open wide for years, unleashing one of the greatest credit expansions in recent history.

China’s central bank balance sheet has doubled since 2009, but the star attraction in China’s debt bubble is bank credit. Compare China’s bank credit with that of the U.S.. Measured in dollars, the U.S. GDP is $17 trillion and China’s GDP is $10 trillion; measured in purchasing power parity (PPP), the two economies are roughly the same size.

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The remarkable success of grandiose pronouncements, money-printing programs and serial expansions of credit raises a key question: how many more “saves” can the central bank bazookas fire that will have the desired effects of maintaining perceptions of central bank omnipotence and pushing global markets ever higher?