With a Hat-Tip to Karl Denninger for this one. [extracted and edited from one of his articles]
Lets keep this short and sweet shall we.
By estimating that zero stimulus would be consistent with a 10 percent quarterly drop in equities, they calculate it takes around $200 billion from central banks each quarter to keep markets from selling off.. (link to quote – Bloomberg)
What does that mean… ?
Let’s say there are exactly two things in the world of economic value — $100 and 100 bottles of milk.
What’s the likely clearing price — that is, what you would exchange one bottle of milk for?
(Remember, other than time preference[forward contract etc] – there is nothing else in the economy to express value through, other than Milk and Money [dollars].)
OK – so now the Central Banks simply double the number of dollars. That is, there now exists $200.
What is now the likely clearing price for one Bottle of Milk ?
So, back to our first quote: the “price” of the Markets “not selling off“, is the theft of that $200 billion a quarter, or $800 billion a year, from you in the form of your purchasing power. In other words that $800 billion a year is stolen from you.
If you were taxed to the tune of a few thousand dollars a year – so people with stocks would not see the price of their stock decline…
…And it was literally given to those people who owned stock, you’d be outraged.
The lower-income people who can’t afford to, and don’t own any stock, would likely revolt – and quite-possibly violently so.
So let’s now have a full and fair discussion about your silent consent to this now-admitted theft……
~ KD [edited]