The central banks of the world's two main reserve currencies have more than tripled their balance sheets since 2005, when the Fed's was still below $1 trillion and the ECB's was just over that amount (in US dollars). The Fed's balance sheet is now close to $3 trillion and the ECB's is just over $3.5 trillion after a string of extraordinary measures following the Lehman Brothers' collapse in September 2008. For the top eight central banks over the last six years, combined balance sheets have expanded to more than $15 trillion from $5.4 trillion, according to Bianco Research. By design, central bank operations to leverage their balance sheets have helped support risk assets with the intention of lowering both public and private funding costs while pushing investors further out on the risk curve. Hence, the recent rally in global stock markets has corresponded with the latest trillion dollar push by the ECB.

David Fuller's view Subscribers will be interested in the graphic depicting this balance sheet explosion at the Fed and ECB. No doubt it has helped most stock markets since 4Q 2008 but we are in unprecedented territory. It will be interesting, to put it mildly, to see the longer-term consequences of this ongoing policy.