The world now is on the brink of another round of quantitative easing. Although the Federal Reserve is still hesitant, it will eventually submit to political pressure. The leaders of the world's major political countries are almost invariably eager to have some kind of economic results in order to prove themselves, while completely ignoring the law of economic operation. They know that there will be a looming crisis in the future, yet they must focus on the present and get through the crisis they are currently facing. Under such pressures, central banks around the world have almost no other option but to give up the independence they were proud of, and play by the decisions of political leaders. There is only one thing that can be done now, and that is to boost liquidity.

The international financial community has also noticed this trend. Almost 90% of Standard & Poor's companies are in the "green" evaluation state. What investors want is to make the index reach a record-breaking level and continue with that. Even if a bigger crisis arises in the future, investors do not really place concerns on that. The moderate view of Federal Reserve Chair Jerome Powell will not bode to give the market long-term confidence, and therefore the next step can only call for starting to think about cutting interest rates. The economy has started to slow down and the stock market should start to reflect the slowdown in growth, while investors should start to cut their profit expectations. However, this is a scenario that no one really wants to become a reality. The purpose for all these measures is to maintain and push the level higher.

If countries around the world boost liquidity in a large-scale effort, what will happen in the future?

There are two possibilities. The first possibility, similar to most bear markets, is that the yield of U.S. Treasury bonds will fall. There are sufficient reasons to take measures in alleviating the stock market, and the economic weakness is apparent. At this stage of the economic cycle, next year there will be either a recession or a cyclical slowdown. One strategist pointed out that, if the Fed cuts interest rates, it would be unlikely that an economic recovery would happen. Another strategist from the Bank of America Corp also said that investors have withdrawn US$152 billion from emerging and developed stock exchanges and exchange-traded funds this year. About one-third of the funds came from passive and active funds in the U.S. The strategist also concluded that "now is not the time to be greedy". It is obvious that the possibility of a global economic recession is there, but nothing could stop it.

The second possibility is that the global financial system will enter a new period of inflation. Given that the Fed is leading the boost of liquidity, and the global trade war enters a new stage of the transition from tariff dimension to the dimension of enterprise focused competition, the global financial trading systems will have a good chance to regroup again towards the direction of an independent system. That is, by getting rid of the real economy, global financial trading systems can get rid of the turmoil in the world market. Therefore, the expansion of the financial system will absorb the growing monetary supply in the market, and the profits on paper of the respective institutions will be sustained through the internal transactions of the financial system.

There are two preconditions for above mentioned possible outcomes. The first is the expansion of the money supply. The current political leaders are basically willing to expand the monetary supply, and thus, it is not a big deal. The second is the loosening of policies. There is still doubt about this, but if the market pressure is at a sufficient level, there is a greater possibility of this happening. Therefore, the financial markets of the future present a prosperous scenario with a huge hidden bubble. No matter how serious troubles may be in the long run, and to what extent the next economic crisis will be, these possible outcomes are becoming increasingly apparent.

Final analysis conclusion:

Perhaps this is the right way to understand the world's financial markets: since we cannot avoid an outbreak of an economic crisis, what we can really do is try to avoid the crisis from breaking out around us. As for the future affairs, we cannot really control and manage them that much, so it is best we leave it for people in the future to deal with. Therefore, on the whole, the independent financial systems of the future are going to be active again. This is because they will have new assets under management, more capital, and more importantly, new traders coming in to trade.