07-14-2016, 09:01 PM
I mostly agree but there is one very large detail I must deviate from you on. It's is NOT the stock market that matters this time. It is the bond market.
The very nature of QE ought to signal that to you. It is a money printing operation to buy BONDS (some equities to prop stock markets up...but it's a bond buying program at it's core).
If equity markets crash it's painful, but manageable. If money stops flowing into the bond market, GOVERNMENTS COLLAPSE. In this case we are talking about the sum of Europe, Japan and the USA....just to name a few. ;)
Over the course of a currency collapse/helicopter money cycle equities tend to actually do OK (not great but OK). At least many of the underlying companies provide something of VALUE. Bonds on the other hand see their value evaporate (cheapened currency makes the value of said bonds drop - in the case of outright currency crisis long dated government bonds become just as worthless as the hyper inflating currency).
IF central banks were to "helicopter money" because of a crash in the equity markets they would be making an ENORMOUS mistake that will lead to a bond sell off like the world has never seen (in the sense that the world economy is so tied together the SCALE has never been seen) and would PRECIPITATE hyperinflation instead of "just" a large scale devaluation.