Central Banks

Silver Linings: Keynesian Central Banking Is Heading For A Massive Repudiation

Inflation targeting has been a giant cover story for a monumental power grab. The academics who grabbed the power had no idea what they were doing in the financial markets that they have now saturated with financial time bombs. When these FEDs (financial explosive devices) erupt in the months and years ahead, the central bankers will face a day of reckoning. And they will surely be found wanting. The immense social damage from the imploding bubbles dead ahead will be squarely on them.

This Crash Will Be Bigger Than 2008 - Here's Why

"The world has never seen this and there is no one that knows the eventual consequences of this... This is desperation! The central banks have run out of ammunition and tools...all they have now is just talk."

The World Is Red

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

The Silver Age Of The Central Banker (Ends Badly)

The Golden Age, per the original Greek myth, was an era of unblemished cooperation and great deeds. The Silver Age, on the other hand, was a pretty miserable time to be alive. Not as warlike as the Bronze Age, and not the war of all against all as in the Iron Age, but the spirit of the age was one of strife and competition. It ends badly. What’s required is seeing the world for what it is, not what we might wish it to be. That’s not easy, whether you’re a central banker or a small investor, but it’s never been more important.

The Chilling Ways The Current Global Economy Echoes The 1930s Depression Era

The imbalances that low rates and elasticity produce may “return us to the modern-day equivalent of the divisive competitive devaluations of the interwar years; and, ultimately, [trigger] an epoch-defining seismic rupture in policy regimes, back to an era of trade and financial protectionism and, possibly, stagnation combined with inflation.”

When Cash Is Outlawed... Only Outlaws Will Have Cash

If the Benjamin is killed, it will “deter illicit activities” they say, apparently taking us all for complete idiots. Very organized criminals all over the world could be heard rolling on the floor laughing their heads off at this pronouncement.

Stephen Roach: "Central Banking Has Lost Its Way, Is In Crisis"

In what could well be a final act of desperation, central banks are abdicating effective control of the economies they have been entrusted to manage. First came zero interest rates, then quantitative easing, and now negative interest rates – one futile attempt begetting another. Just as the first two gambits failed to gain meaningful economic traction in chronically weak recoveries, the shift to negative rates will only compound the risks of financial instability and set the stage for the next crisis.

Weekend Reading: The Bull Is Back?

That didn’t take much. After a three-day rally, the media is back into “bullish” mode suggesting the bottom is likely in and by the end of this year, it’s all going to be just fine. Unfortunately, history suggests that after such a long unabated expansion risks are substantially higher than it has been previously. Furthermore, as I have repeated often in these missives, in an economy that is driven primarily based on consumption, and such consumption is already weak, it doesn’t take much to “flip the switch.”

The Efficient Market Theory Is Long Dead (And Central Bankers Are Just Realizing It)

Recognizing that there is mostly gray rather than the polar opposites black (efficient - market knows best) and white (markets irrational and biased) is even more vital in a world where exogenous shocking (including central banks) and systemic distortions (computer algos) have made if-then statements decidedly precarious.