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Top Bankers: Too Much Central Bank Easing Is Becoming Dangerous

George Washington's picture





 

Everyone knows that “too big to fail” banks are bad for the economy.  Indeed, even top bankers themselves say the big banks need to be broken up.

Now, the heads of many of the world’s biggest banks are saying that the amount of liquidity which the central banks are flooding into the economy is becoming dangerous.

Agence France-Presse reports:

An influential group of leading world banks warned Thursday that central banks are pumping out too much easy money and markets risk becoming dangerously addicted to ultra-low interest rates.

 

The Institute of International Finance, which groups 450 banks, said that if central banks continue to flood money into the global economy, then any future bid to get it under control could itself destabilize the financial system.

 

***

 

“These conditions — quantitative easing, very low interest rates — cannot last forever, but the risk is that financial markets have become addicted to them,” it warned.

 

“The longer central bank liquidity is relied on to hold things together, the more excesses and distortions are being accumulated in the financial system. An eventual unwinding of these excesses will become a destabilizing risk event.”

 

***

 

IIF deputy managing director Hung Tran said that central bankers should be aware of “the unintended consequences of their actions” and make clear how they expect to adjust monetary policy over the long term.

 

“This would help lessen the risk of large swings in financial markets,” he said.

 

***

 

US Federal Reserve chief Ben Bernanke last week downplayed worries that liquidity was fueling fresh bubbles in financial markets. But he added that the Fed — which has held its key rate near zero since the end of 2008 — was monitoring the situation.

The IIF is not some renegade group.  Its board members include the top brass from many of the world’s biggest banks, including Goldman Sachs, Citigroup, Barclays, HSBC, Deutsche Bank, Société Générale, BNP Paribas, UBS, Credit Suisse, Morgan Stanley, Agricultural Bank of China, Industrial and Commercial Bank of China, Sumitomo Mitsui Financial Group, BNY Mellon, Bank of Tokyo-Mitsubishi UFJ, Commerzbank and Scotiabank,

As we noted in 2008, the problem was never liquidity.  The problem is that the big banks became insolvent because of stupid gambling.

In other words, the government’s whole approach to the 2008 financial crisis was entirely wrong.    And the easy money policy (quantitative easing) of central banks doesn’t help, but instead hurts the economy and the little guy.

Interestingly:

“Much of the recovery so far has… been heavily reliant on ‘easy money’ conditions fostered by central banks,” the IIF said in a statement,

 

***

 

The IIF said the US Dow Jones Industrial Average’s had hit an all-time high this week more because of relaxed international monetary conditions than thanks to any recovery in the real economy.

 


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Fri, 03/08/2013 - 12:59 | Link to Comment Sach Mahoney
Sach Mahoney's picture

The central banks have been very successful at hiding the truth from the people, using their little special FX, double secret probation printing and lending just to have the economy and stock markets appear healthy and robust.  Stop the press...and the global economy is cooked.  There is no way out.  My predicton: Pain! 

Sun, 03/10/2013 - 04:30 | Link to Comment All Risk No Reward
All Risk No Reward's picture

How To Be a Crook (Federal Reserve and Plan Revealed)

http://www.youtube.com/watch?v=2oHbwdNcHbc

Debt Money Tyranny

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

Nicole Foss on Bubbles and Busts

http://www.youtube.com/watch?v=kYXA9XHFUCU

Fri, 03/08/2013 - 12:14 | Link to Comment moneybots
moneybots's picture

" Federal Reserve chief Ben Bernanke last week downplayed worries that liquidity was fueling fresh bubbles in financial markets."

Greenspan played that game- he lied that he couldn't see a bubble before it burst.  Bernanki is just as much a liar as Greenspan was.

Fri, 03/08/2013 - 12:09 | Link to Comment moneybots
moneybots's picture

"Prediction: History will show the current Chairsatan to be the most incompetent Chairsatan in history."

 

It is not about incomptence.  It is about financial fraud.

Sun, 03/10/2013 - 04:31 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Exactly.

How To Be a Crook (Federal Reserve and Plan Revealed)

http://www.youtube.com/watch?v=2oHbwdNcHbc

Fri, 03/08/2013 - 12:05 | Link to Comment moneybots
moneybots's picture

How many times has someone been trotted out to play Cassandra, now?

Wash, rinse, repeat.  It is the same script, over an over again.  Somebody warns this can't go on, everyone else says shut up, don't spoil tha party.  The party ends and the people who didn't want the party spoiled are angry that they got burned.

Fri, 03/08/2013 - 09:39 | Link to Comment falak pema
falak pema's picture

take two pods of IIF and add three pinches of IMF then sprinkle some FED powder on it, stir and add pure vodka from Putin larder; add a cherry from Merkel berry, then shake, rattle...and the DJIA is on a roll!

Wow, one flew out of the Cukoo's nest and he has to be the best; he looks like Einstein  on psychedelic drugs and says that the Martians are coming to save humanity. He is totally unplugged, running on lithium batteries like a Dreamliner.

Krugman! We have a meeting at Reichenback falls...I hope Marilyn's ghost will join us for that ball, rolling down that awesome shute on levitated greenback dollary toot-toot-toots ! 

Flimsy tinsel tits and jawsy remnants of human bits when we hit rock bottom.

Back to the salt mines we go! What's left of us! 

Fri, 03/08/2013 - 09:35 | Link to Comment MFLTucson
MFLTucson's picture

Everyone knows that “too big to fail” banks are bad for the economy.  Indeed, even top bankers themselves say the big banks need to be broken up.

And what a perfect time, right after the Jews running thes banks have stolen Trillions of taxpayer IOU's.

Fri, 03/08/2013 - 09:12 | Link to Comment John Law Lives
John Law Lives's picture

Prediction: History will show the current Chairsatan to be the most incompetent Chairsatan in history.

Fri, 03/08/2013 - 14:40 | Link to Comment SAT 800
SAT 800's picture

Actually, I doubt it. You need to read Greenspan on Greenspan; he's been "explaining" his actions and his "reasoning' lately. to say that he was an idiot in the real world would be unkind to idiots. Apparently, he scored high on math tests, and got a Phd. in Economics, (a phoney, or non-existent science);but he had less idea about what went on in the real world than my younger sister.

Fri, 03/08/2013 - 17:52 | Link to Comment John Law Lives
John Law Lives's picture

Perhaps you would consider reading this before passing judgement on Bernanke vs. Greenspan:

------------------------------

Federal Reserve Chairman, Ben Bernanke, Has A Nightmarish Track Record Of Incompetence
Saturday, February 16, 2013

http://beforeitsnews.com/economy/2013/02/federal-reserve-chairman-ben-be...

------------------------------

Fri, 03/08/2013 - 09:19 | Link to Comment Ghordius
Ghordius's picture

he hasn't beaten Greenspan yet, imho - but he has positioned himself well to achieve this goal

Fri, 03/08/2013 - 14:34 | Link to Comment SAT 800
SAT 800's picture

We just recently found out what Greenspan was thinking about; he says he was sure regulation wasn't necessary, because the Big Banks wouldn't do anythng too risky so as to damage their own reputation or profitability; I was completely gobsmacked. Apparently we had a kind of an arithmetic Savant with a real-world mental age of 8 in charge of this important office. Absolutely astounding.

Fri, 03/08/2013 - 11:40 | Link to Comment Divided States ...
Divided States of America's picture

The main problem is that both Greenspan and Bernanke are jews and are serving the interest of the 1% most of which are jews...and I can guarantee that the next chairman will be another jew.

Fri, 03/08/2013 - 14:37 | Link to Comment SAT 800
SAT 800's picture

mindless nonsense.

Fri, 03/08/2013 - 13:53 | Link to Comment Savyindallas
Savyindallas's picture

Not necessarily-There is a slight chance a goyim Chairman could get appointed. G. William Miller was. See this:   -"since February 1, 1970 the Federal Reserve has been chaired by Jews, except for a year and a half by G. William Miller.  Here is a list of Federal Reserve Chairman since February 1970 in chronological descending order; Ben Bernake {Jewish}, Alan Greenspan {Jewish},  Paul Volcker {Jewish}, G. William Miller, Arthur F. Burns {Jewish}." 

Fri, 03/08/2013 - 09:12 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Really, there isn't much of an incentive for the bankers' to give up their gig [getting something for nothing], change will have to come from elsewhere.  If I could get food, shelter and energy for nothing, I would be quite content for things to go on uninterrupted....

Fri, 03/08/2013 - 14:45 | Link to Comment SAT 800
SAT 800's picture

All the people ranting about the bankers are playing the role of "useful idiots", as Lenin remarked. The Banks are regulated, or not; by Congress, by legislation passed, or repealed by Congress; such regulation as may exist is either a.) enforced, or b.) politely ignored, at the whim of the executive and the Attorney General's office. The Government is 100% to blame; as always. As it always has been, as it always shall be. You can prove this thesis; you can over-prove it; you cannot disprove it. Until you get a majority in the House and the Senate who are actuallly not there for the payoffs, but for the benefit and welfare of the nation; you're going to see repeats.

Fri, 03/08/2013 - 08:44 | Link to Comment Racer
Racer's picture

NatWest allow  payday loans companies to drain a person's account who are on benefits by using an expired card details and refuse to refund the payments. (The person then didn't have enough money for food and rent payment because of it)

The banksters do not care about your money...or your accounts.

They can mess up your credit files and refuse to correct it.

You are a slave and the banksters own your life

Fri, 03/08/2013 - 06:25 | Link to Comment smacker
smacker's picture

 

 

It beggars belief that central banks -- with all the financial power and expertise at their disposal -- have not considered in great detail the serious downside risks of insane QE/Zirp policies. It's not rocket science to see these are destroying the markets, creating new bubbles, leading to mal-investment and destroying middle class savings and wealth.

All that being so, it is encumbent on central bankers to err on the side of caution -- especially as it's not at all clear whether these policies are doing any good. IF the whole financial system crashes (again) it can ONLY be due to their blatant negligence in public office, almost certainly driven by other hidden agendas, not the national interest. They will need to be held to criminal account.

Fri, 03/08/2013 - 09:22 | Link to Comment Ghordius
Ghordius's picture

central banks... ok, but do you mean all of them? there are 60 major ones and 50 minor ones

what about the Polish or the Hungarian National Banks, for example? are they baddies, too?

Fri, 03/08/2013 - 14:29 | Link to Comment SAT 800
SAT 800's picture

IMO; they know better, but they're kind of caught up in the prop wash. One has to feel compassion for Poland, as is so often the case, and Hungary also.

Fri, 03/08/2013 - 09:47 | Link to Comment smacker
smacker's picture

 

 

I'm referring to any central bank that's hitting Ctrl-P and Zirp buttons. The majors: Fed, BoE, BoJ, ECB and quite a few others are guilty of this, some more than others.

Fri, 03/08/2013 - 02:49 | Link to Comment ebworthen
ebworthen's picture

BINGO!

Thanks George, keep telling it like it is.

Fri, 03/08/2013 - 01:54 | Link to Comment earnyermoney
earnyermoney's picture

Almost ran off the road listening to Jack Spear, NPR, quoting The Bernank "America has almost recovered all of the 16 Trillion wealth lost in 2008" His next line was even more enraging, wondering if that would spur consumption?

Dutifully parroting the propoganda to the sheeple.

If only the Bernank would impale himself on that iron fence outside the Eccles building in DC.

Fri, 03/08/2013 - 14:27 | Link to Comment SAT 800
SAT 800's picture

That's an amazing quote; thanks for passing it on. Josef Gobbels would have been proud of him. As to the Great Impalement; I'm thining of a rather wonderful sequence from a Steven Segal movie, where he crashes the bad guy out through the window of his third floor apartment and he falls on his back on the iron spike railing. Nice.

Thu, 03/07/2013 - 23:23 | Link to Comment lieto
lieto's picture

Hahahaha.

These bankers are worried about too much money?

Well duh.

They are about to be paid with toilet paper.

Hope their assets smell good.

 

 

Thu, 03/07/2013 - 21:54 | Link to Comment Fizzywig
Fizzywig's picture

A very important question we must ask ourselves.....

Is a free market realistically possible, or will it always eventually degrade into cronyism, fraud, and corruption?

The founders kept power in check in the private sector by allowing free market competition and restrained the public sector by establishing a limited government with checks and balances.  This brings us to today.

Thu, 03/07/2013 - 21:45 | Link to Comment SKY85hawk
SKY85hawk's picture

No Mark-to-Market, no Glass-Stegal, no threat of prosecution, NO PROBLEM!!!!!

 

Thu, 03/07/2013 - 20:36 | Link to Comment joego1
joego1's picture

Yes we are printing money for our friends, laundering money for the drug lords, manipulating anything that can be manipulated, stealing pensions, savings and anything that's not nailed down. Oh, and by the way, and we have lot's of boolits and drones!

Fri, 03/08/2013 - 06:28 | Link to Comment GoldIsMoney
GoldIsMoney's picture

That subsumes the situation short and acurate. 

Central banks the biggest shame in whole history. And what we get is what must come from "money" which easily can be printed. 

Thu, 03/07/2013 - 20:44 | Link to Comment diogeneslaertius
diogeneslaertius's picture

relax, i always buy 2 billion hollow point bullets to take to the range and IED-proof light tanks

 

its loving

Thu, 03/07/2013 - 22:37 | Link to Comment Lmo Mutton
Lmo Mutton's picture

Never mind the cheap ball ammo for practice.
Amerika. Fukk yea.

Thu, 03/07/2013 - 20:43 | Link to Comment diogeneslaertius
diogeneslaertius's picture

dorner set a clear precedent for going beyond the Established surveillance vector and if they couldve droned him to death on the 9'oclock news (just in time for a snack before obamabot Debt Brother From Planet O reads the SOTU of a teleprompter), then by god, they would have.

 

not quite there yet so they just waco'd em

likely a puppet somehow in my estimation as well or simply a useful idiot used as a tool, the way one picks up a random hammer - to smash our civil liberties with mind you!

Thu, 03/07/2013 - 20:39 | Link to Comment diogeneslaertius
diogeneslaertius's picture

zero habeas corpus/due process hellfire missile for questioning governmet = freedom or you are with al-qaeda

greetings from FEMA Region 5, or as i like to call it, lil fallujah

Thu, 03/07/2013 - 20:25 | Link to Comment shovelhead
shovelhead's picture

"An eventual unwinding of these excesses will become a destabilizing risk event.”

Haha,

Especially if that 'unwinding event' comes from the untidy real world instead of the Bankster Wonderland of Illusion.

Fri, 03/08/2013 - 14:22 | Link to Comment SAT 800
SAT 800's picture

Oh yes.  That's a beautiful quote. The unwinding will come from the great untidy world alright; "Will the last person who wanted to buy a Treasury Bond please turn the light out as they leave, (the USA)."

Thu, 03/07/2013 - 20:37 | Link to Comment diogeneslaertius
diogeneslaertius's picture

ahhh the luscious sprawling fields of Ponztopia, a "Bankster Wonderland of Illusion," where the sheeple graze contentedly and the muppets frolic all the live long day XD

Thu, 03/07/2013 - 19:50 | Link to Comment Fix It Again Timmy
Fix It Again Timmy's picture

Can not last forever and yet can not be stopped, therefore - oops.........

http://www.youtube.com/watch?v=j2AvU2cfXRk&list=PLAE23CD02737F5D59

 

Thu, 03/07/2013 - 19:34 | Link to Comment Meat Hammer
Meat Hammer's picture

Capitalism will be blamed even though we haven't seen a free market in a century.

Fri, 03/08/2013 - 14:53 | Link to Comment SAT 800
SAT 800's picture

Happening right now. Every other semi-literate jack-ass in the country is mouthing off about "Capitalism" and they don't even know what it iis.

Fri, 03/08/2013 - 08:37 | Link to Comment e-recep
e-recep's picture

does that not make you think even once "is the free market an utopia?" ?

Thu, 03/07/2013 - 21:56 | Link to Comment max2205
max2205's picture

We should all be rich but we are not which is why ben won't stop

Fri, 03/08/2013 - 12:57 | Link to Comment whotookmyalias
whotookmyalias's picture

...and when everyone is rich, no one will be rich.  Except for the elite few.

Sun, 03/10/2013 - 05:07 | Link to Comment All Risk No Reward
All Risk No Reward's picture

Capitalism doesn't exist.  It is a hoax.

What does exist is a societal asset strip fraud called Debt Money Tyranny...

http://www.keepandshare.com/doc/4768883/debtmoneytyranny-6-1-pdf-60k?tr=77

...that systematicallyand fraudulently transfers the monetary wealth of the working class to the money definer/nation state monetary funding class of people.

This criminal international banking cartel then leverages their monetary conveyance system to manipulate the "free market," "capitalist" OVERLAY in order to game the system because they are the highest bidder and get what they want, including power over government to enforce their tyranny as it hardens.

America has been a velvet glove authoritarian financial soft dictatorship since at least 1913 - and it is hardening rather quickly at this stage in history.

There is nothing "capitalist" about a system engineered, from the ground up, to systematically asset strip the nation.

How to be a Crook

http://www.youtube.com/watch?v=2oHbwdNcHbc

Nnicole Foss on [fraudulently engineered] Bubbles

http://www.youtube.com/watch?v=kYXA9XHFUCU

A Tribute to The Automatic Earth

http://www.youtube.com/watch?v=v-geWu-E9ys

Thu, 03/07/2013 - 22:08 | Link to Comment thisandthat
Thu, 03/07/2013 - 23:09 | Link to Comment Umh
Umh's picture

Well that is closer than saying the capitalist made you do it!

Fri, 03/08/2013 - 14:19 | Link to Comment SAT 800
SAT 800's picture

That is certainly correct; but he won't understand you.

Fri, 03/08/2013 - 21:12 | Link to Comment thisandthat
thisandthat's picture

Yeah, it couldn't possibly be a systemic flaw, obviously... not when you're doing god's work - it's those damn chicoms, they hate us for our freedoms!

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