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Top Bankers: Too Much Central Bank Easing Is Becoming Dangerous
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.
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“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.”
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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.
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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,
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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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you have laid such groundwork and foundations through diligent effort, amid a chorus of such works from other free-spirited humans that - truth be told - i almost feel sorry for the enemy.
i cannot imagine the punishment which will be levied upon them and upon their offspring for generations to come should the plot be fully exposed
the real criminals imagine that they have set up enough fall guys for the angry masses to chase after...
And, that of the politicians who enabled it all.
when they start openly admitting to the con game you know they are ready to implement the next phase
You say that to suggest that there is a plan that they are implementing.
There is no plan sir.
They are simply opportunistic and act in what thet perceive as thier best interest. They are analogous to a bacterial infection or a cancer.
This town needs an enima.
That's correct. I believe they all believe it's impossible to kill the goose that's laying all these golden eggs; eg. USA, Inc.; but of course, it isn't.
Crash the markets, steal all the wealth, and rent everything to everyone?
As pleasant as that sounds, one cannot steal the wealth and then rent to the impoverished (well leaving aside section 8).
We stick the taxpayers with the loss then offer to take the property off thier hands then flip it to some greater fool. We would not want to be caught owning something.
pump and dump.
the dumping phase is around the corner.
I'm mostly cash waiting for this. I tend to be impatient, I wish the dumping would hurry up and happen.
Patience is a virtue; "The wise man is a patient man". Throw away your TV and read books , you'll feel much calmer.
reading realistic stuff on the internet sooths me, too.
Indeed ...
Hurts me more than the average little guy. My wife just got mad at me again this morning. Why do you keep spending all our money buying gold and silver when you know you will lose it the next time you go ocean kayaking. It hurts me to have her so upset with me.