“A Staggering Number”: Over $18 Trillion in Global Stimulus in 2020, 21% of World GDP
The comments below are an edited and abridged synopsis of an article by Tyler Durden
Last week, Durden relayed the latest observations from Bank of America chief investment officer Michael Hartnett, who concluded that there is just one bull market to short—credit—but the Fed won’t let you; by which he means all central banks won’t let you. A table included shows that the balance sheet of the G-6 central banks has exploded, with the Fed’s total assets expected to double in 2020 amid an avalanche of money printing.
And it’s not just central banks. There is also the 2020 fiscal bazooka, which has a way to go, with the massive fiscal stimulus unleashed post-Covid taking three forms in 2020: spending, credit guarantees, and loans and equity.
Hartnett noted that, according to BIS data, the US and Australia lead spending (>10% GDP) and Europe is using aggressive credit guarantees (e.g. Italy 32% GDP), while Japan/Korea are stimulating via government loans/equity injections.
But the most staggering fact was when one puts it all together.
According to Bank of America calculations, in addition to the record 134 rate cuts year to date, the amount of total global stimulus, both fiscal and monetary, is a staggering $18.4 trillion in 2020 consisting of $10.4 trillion in fiscal stimulus and $7.9 trillion in monetary stimulus for a grand total of 20.8% of global GDP, injected mostly in the past three months.
And to think none of this would have been possible if officials had not collectively decided to shut down the global economy in response to the coronavirus pandemic.