Since the dawn of the pandemic, central banks have spent about $834,000,000 per hour. And that’s within 18 months. A multiplier factor would bring us in front of colossal figures – about 10,808,640,000,000 USD.
This estimate belongs to Bank of America Corp, via Bloomberg and the estimate is that the Federal Reserve Bank of USA alone brought about $4,000,000,000.
These colossal sums effectively supported companies afloat in the 18-month hawks and, at the same time, triggered the largest increases on the world’s stock markets. Inflation has been the watchword on Wall Street, and assets are hyper-inflated. Estimates by Bloomberg analysts lead to the largest inflationary rally in a generation.
Central banks are merely absorbing from the bond market and as a consequence, are forcing the cost of borrowing to be reduced. In other words, we have a lot of cheap money in the market, about $16,000,000,000,000 with negative returns.
And that is why fund managers have no alternative but to continue to do what they have been doing so far, which is to make investments on stock exchanges, on raw materials. Investors are wondering how much more central banks can sustain the cash flows that circulate in the market. The Federal Reserve has not given a definite date, remaining in uncertainty for the eventuality of the end of 2021.
Transposed as far as we are concerned as ordinary people, central banks have borne the work of companies so that they do not collapse. In turn, the companies generated revenues to the population. But the money has to go back to the circuit with profit, and so the fund managers had raw materials as their main option.
As a result, “commodities” have become the main pillar of inflationary growth, and we are detaching from this everything related to food, that is, wheat, corn, soybeans, rapeseed, rapeseed and sunflower seeds and their derivatives, which are used for human, fodder and industrial use. Adjacently, the rest of the raw materials had the same evolution and we mention only the ferrous, non-ferrous raw materials, fossil fuels, which generated chain reactions on the inflationary scale.
We all see the consequences amplified by the weather factor, which has conditioned supply in the agricultural raw materials market, raising the inflationary level in the spectrum of the lack of abundance of agricultural commodities. The same effect was had by the cost of fossil energy, which effectively doubled the cost of transportation by road, rail, as well as the oceans and seas of the world.
The expectations of a return to prices in 2018-2019 do not yet have a clear horizon of expectation. The measures to support and combat the effects of the pandemic are effectively inflationary reversed costs. The world’s population must be fed and, according to a study led by the USDA, out of 7,800,000,000 inhabitants of the Earth, about 1,200,000,000 fail to reach the daily threshold of 2100 kcal / day, necessary to carry out daily activity and, implicitly, to support life. The largest share exists in Asia, with 60% of the 1.2 billion, followed by Sub-Saharan Africa with 20%, and the last group of 20% is divided between the Caribbean, Central and South America.