Who says central bankers can’t inflate an economy to prosperity? To head-off the worst economic downturn since the Great Depression, the “Group-of-20” central banks have slashed interest rates to record lows, while politicians have funneled trillions into the coffers of the most powerful Oligarchic banks. So far, the cost of mopping up after the world financial crisis is a staggering $12-trillion, or equivalent to around a fifth of the world’s annual economic output.

The hefty price tag includes capital injections pumped into banks in order to prevent them from collapse, the cost of soaking up toxic assets, guarantees over debt, and liquidity support from central banks. Most of the cash, about $10.2-trillion, was spent by the so-called developed countries, while the emerging countries spent only $1.8-trillion, mostly in the form of liquidity injections into banks.

In return for this hefty investment, the pace of job losses has slowed, and there’s been a recovery in industrial output. At the same time, global stock markets have bounced back with startling speed. Since hitting bottom in March, the MSCI World Index has rebounded by 50%, and key industrial commodities, such as crude oil, copper, rubber, and iron-ore have also rebounded in synchronization.

In return for this hefty investment, the pace of job losses has slowed, and there’s been a recovery in industrial output. At the same time, global stock markets have bounced back with startling speed. Since hitting bottom in March, the MSCI World Index has rebounded by 50%, and key industrial commodities, such as crude oil, copper, rubber, and iron-ore have also rebounded in synchronization.

World markets were ecstatic, after the G-20 finance ministers pledged to continue to underwrite the global recovery with massive stimulus, in the form of deficit spending, ultra-low interest rates, and expanding the money supply. On Sept 2nd, US Treasury chief Timothy Geithner said although the global economy has pulled back “from the edge of the abyss,” it’s too early to let up on inflating stock market bubbles. “We’ve come a very long way. We still have a very long way to go,” he said.

The G-20 central banks have pumped an ocean of high-powered liquidity into the world banking system, designed to artificially inflate asset markets. Under the radical “Quantitative Easing” (QE) scheme, the Fed is printing $1.75-trillion in order to buy Treasury and mortgage backed bonds. The Bank of Japan is printing 1.8-trillion yen each month, and monetizing half of Tokyo’s budget deficit this year. The Bank of England has expanded its hallucinogenic QE program to 175-billion pounds.

Even so, US President Barack Obama said on Sept 9th, the G-20’s work is far from complete. “As the leaders of the world’s largest economies, we have a responsibility to work together on behalf of sustained growth, while putting in place the rules of the road that can prevent this kind of crisis from happening again. To avoid being trapped in the cycle of bubble and bust, we must set a path for sustainable growth while steering clear of the imbalances of the past,” Obama declared.

….read this extensive article and view 6 more charts HERE.

Gary Dorsch, editor of the Global Money Trends newsletter

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