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Guest Post: It's Failing All Over the Show – So Let's Do More of It!

Tyler Durden's picture


Via Pater Tenebrarum of Acting-Man blog,

The insanity that has gripped policymakers all over the world really is a sight to see. There was a time when central bankers were extremely careful not to do anything that might endanger the currency's value too much – in other words, they were intent on boiling the frog slowly. And why wouldn't they? After all, the amount by which the citizenry is plucked via depreciation of the currency every year is compounding, so that the men behind the curtain extract more than enough over time. That they thereby retard economic progress by decades over time as well is not something anyone would notice after all, since we cannot engage in a controlled experiment that proves it to all and sundry beyond doubt. We only know that it is so if we employ sound economic theory. Since sound economic theory is by its nature not statist, it is not employed by the mainstream, and so most citizens are successfully shielded from the truth.

 The latest example for the growing chutzpa of these snake-oil sellers is provided by Lord Adair Turner in the UK. To give you a little bit of background: the UK is about to fall into its third recession in a row (a 'triple dip', something that has never before happened) not in spite, but because the Bank of England has monetized a cool quarter of all outstanding gilts, which has allowed the zombie TBTF banks to remain on artificial life support.

However, that is not Turner's conclusion. The policy is evidently failing, so he naturally concludes that there should not only be more of it, but it should become more brazen by veering off into the 'Weimaresque'. After all, we will be able to stop in time, right? We just need a 'little bit of it'. Although Turner for some reason also thinks it is 'not appropriate for the UK' (why not? The UK for some reason 'does not respond to demand and price signals', which would really be a first in economic history…where do they find these people?), he thinks everybody else should do it. According to the FT, under the heading “Print Money to Fund Spending”:

“Lord Turner, the departing chairman of the Financial Services Authority has defended financing government spending by printing money arguing that, within limits, it “absolutely, definitively [does] not” lead to inflation.


Speaking before a farewell speech in London on Wednesday, Lord Turner, who applied unsuccessfully to be the next Bank of England governor, called for “intellectual clarity” in economic policy, including breaking a taboo that permanently printing money to pay for government services is always bad.


“I accept entirely that this is a very dangerous thing to let out of the bag, that this is a medicine in small quantities but a poison in large quantities but that there exist some circumstances, in which it is appropriate to take that risk,” he told the Financial Times.


The tool should have been used in 1930s Germany and 1990s Japan, he said. It should be considered across the world, he added, at a time when banks, companies and households are trying to pay down debts and seeking to return to growth by borrowing more is seen as perverse.


In a direct challenge to the German authorities who shudder at the memory of the hyperinflation of the Weimar Republic, Lord Turner suggested that the absence of monetary financing in the early 1930s, which led to depression, falling prices and the rise of the Third Reich, had been a greater disaster.


“Is [monetary financing] desperately dangerous because every pound of money financed turns into inflation? Absolutely definitively not. There is no coherent rigorous bit of economics that takes you in that direction,” he said.


He did add, however, that the country where monetary financing was least likely to be needed was the UK. There he accepts that more stimulus might lead to higher inflation as the underlying health of the economy is weak and could not “respond to demand and price signals”.

(emphasis added)

Let's count the ways in which this is misguided nonsense. It begins with the title already. 'Money' cannot 'fund' anything. What is required for funding economic activities are real savings and real capital. You could drop $10 trillion in the middle of the Sahel zone and still wouldn't be able to 'fund' anything. Money is merely a medium of exchange and as such indispensable to economic calculation, but it is not a means of 'funding'.

Now to the assertion that “printing money does not lead to inflation”, which is at the heart of Turner's argument. First of all, it may take many years, even decades, before a broad-based inflationary effect becomes noticeable. For example, the US and others 'printed money' and engaged in deficit spending throughout the 1950s and 1960s.  There also seemed to be no problem, until the problem suddenly became noticeable in the 1970s.

Moreover, 'inflation' in the sense of an increase in CPI is in any case a problem of secondary importance. Money printing most definitely distorts prices all across the economy – it is relative prices that change, as money is not neutral. This hampers rational economic calculation and therefore leads to capital malinvestment. Scarce capital is therefore wasted, and although there may be a 'feel good phase' (the boom), all the accounting profits generated in the boom will eventually disappear again in a bust. They are an inflationary illusion.

The appeal to the 1930s and Hitler is quite amusing in a way, as Hitler himself was a major inflationist. We already mentioned it:  A war on the scale of WW2 would not have been possible without massive inflation and employment of precisely the methods his Lordship recommends. Moreover, the reason for Hitler's rise is ultimately to be sought in the successive abandonment of the gold standard in order to finance WW1. This made it impossible to return to sound money without upheaval, and the 1920's boom ensued when the US attempted to help the misguided policymakers of the UK by leaving interest rates too low, so they could to push through their return to gold at par. This brought on the credit and asset boom of the 1920s, which ultimately led to the Great Depression.

To blame the rise of Hitler on the “refusal to inflate” is especially piquant if one considers that Germany was in the throes of a hyperinflationary conflagration in the year when Hitler was first heard about (he attempted a coup in 1923). Lastly, the 'argument from history', a specialty of Marxists and German historicists, is inappropriate when discussing points of economic theory.

Finally Turner asserts that “we should take the risk” because allegedly, “Is [monetary financing] desperately dangerous because every pound of money financed turns into inflation? Absolutely definitively not. There is no coherent rigorous bit of economics that takes you in that direction,”

This is at best a half-truth. Since money is not neutral, an outbreak of consumer price inflation may or may not happen, that depends largely on many other factors influencing peoples' inflation expectations. However, as noted above, there is no way a sound economic theory can regard inflation of the money supply as 'harmless' or even 'necessary'. Turner is just another snake oil seller.

As an aside, the Knappists, i.e., the  'Modern Monetary Theory' Church, think highly of Turner since he came out with this crazy argument. Enough said.

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Thu, 02/07/2013 - 14:36 | 3223600 davidsmith
davidsmith's picture

This is at best a half-truth. Since money is not neutral, an outbreak of consumer price inflation may or may not happen, that depends largely on many other factors influencing peoples' inflation expectations. However, as noted above, there is no way a sound economic theory can regard inflation of the money supply as 'harmless' or even 'necessary'. Turner is just another snake oil seller.



You're not getting it.  The money being used is simply being paid to a criminal conspiracy.  THAT'S the point.

Thu, 02/07/2013 - 14:50 | 3223634 The Juggernaut
The Juggernaut's picture

Do any of you think the Fed will blame the upcoming northeast winter storm Nemo on another drop in GDP?

Thu, 02/07/2013 - 14:51 | 3223659 otto skorzeny
otto skorzeny's picture

I thought of that as soon as they metioned the first whiff of a big NE storm on The Weather Channel. of course-when there is a big weather event somewhere else in the country-that doesn't matter-ONLY IN THE ALL IMPORTANT NE US-HOME OF THE ELITE

Thu, 02/07/2013 - 15:04 | 3223706 The Juggernaut
The Juggernaut's picture

I'm looking to see when the Fed will blame traffic congestion for drops in GDP.

Thu, 02/07/2013 - 14:55 | 3223669 trav777
trav777's picture

Who are the delusional idiots who write these articles???

Do they ACTUALLY believe that this situation in which we find ourselves could just be FIXED and we could go back to the gold old days of 'economic growth' if we just applied different "economic policies"?!?!

I have BAD NEWS; the ENTIRE pseudoscience of economics is a TOTAL load of bullsh!t.  It wasn't RIGHT before peak oil simply because it happened to fit the facts then.  It was just a coincidence.  The entirety of the profession arose as a result of FLAWED ASSUMPTIONS about why things happened and how.

The policymakers are NOT MAD.  They can do basic math on compound interest and realize that the credit system won't grow organically so they have no choice but to grow it by force.

The fundamental problem is the attempt to perpetuate exponential growth and NO ECONOMIST even acknowledges this.  Where are the chapters in economics texts "when growth ends due to production rate constraints in a finite world"??  Where does growth EVER end in economics?  Economics isn't even a very good model; it's fantasy.

Thu, 02/07/2013 - 14:57 | 3223678 davidsmith
davidsmith's picture

That's not the main problem with economics.  The main problem is that it is normative, not speculative.  Economics comes right out of natural mathematics (in its modern form, Cantor and progeny) with its creepy, protofascist bias.

Thu, 02/07/2013 - 14:56 | 3223671 kliguy38
kliguy38's picture

Absolutely not. That would smack of manipulation

Thu, 02/07/2013 - 19:19 | 3224493 nightshiftsucks
nightshiftsucks's picture

No they won't blame the storm so it gives them cover to do another groteque huge stimulus program

Thu, 02/07/2013 - 14:44 | 3223636 blu
blu's picture

... and they are not holding onto it, but using it to acquire real assets. When the "money" evaporates into an inflationary cloud (or a deflationary hole) they will be left holding the real goods and won't care what became of the money.

Ant that is why it is being called the greatest trasfer of wealth ever seen in human history. 

Thu, 02/07/2013 - 15:00 | 3223684 davidsmith
davidsmith's picture

Yes, it's a transfer of power, not money.  It's amazing that everyone I talk to who participated in flipping, now interprets U.S. financial policy as, "We gave you an opportunity with the money, and you fucked up.  Now we're taking it all away."


Instead, it was a seventy year policy of increasing power based on expanding the middle class.  As with every expansion, it had to come to an end.  It has come to an end.  Now there has to be some other model.  In the meantime, don't expect power NOT to go to power.  Power ALWAYS goes to power.  That's why fascist corporatism is taking over.  It will be a client model economy for a while.  Know someone who knows someone who knows someone who knows someone?  Then maybe you will have a job.

Thu, 02/07/2013 - 14:41 | 3223603 francis_sawyer
francis_sawyer's picture

For chrissakes ~ Let's just mint 1,000 bleepin trillion dollar coins... build the fucking DEATH STAR... then turn it inwards & put everybody out of their misery...


With the gooks that are in charge now, when it was all set to go, somebody would shout... "READY... FIRE... AIM""!

Thu, 02/07/2013 - 15:23 | 3223780 foodstampbarry
foodstampbarry's picture

Best comment of the day, bravo.

Thu, 02/07/2013 - 14:37 | 3223610 thismarketisrigged
thismarketisrigged's picture

i fucking hate all these central bankers. they completely take away what was once a real market, trading on fundimentals, to now trading on pumped up liquidity, and to only dropping when they want it to.


like today the market of course is starting to gain back there losses, and certain stocks like goog, amzn, nflx, just no matter how hard the market falls, these stocks just stand pat.


its truly remarkable how rigged this game is, and how these central bankers worldwide are allowed to get away with it so easily, at the expense of all the hard working ppl.

fuck u bernanke, fuck u obama, fuck u draghi, fuck u china, fuck u japan, fuck u all bankers, u fucking bastards

Thu, 02/07/2013 - 14:54 | 3223646 otto skorzeny
otto skorzeny's picture

what are you talking about-take today's market action for instance-there is no manipulation on a POMO day at all. cue Maria and CNBC shills-"Stocks are off their lows"-ad nauseum

Thu, 02/07/2013 - 14:56 | 3223672 trav777
trav777's picture

someone who lost all his money shorting.

Grow up, kid

Thu, 02/07/2013 - 15:25 | 3223778 Central Bankster
Central Bankster's picture

Do chicks ever tell you how small your Dick is?

Thu, 02/07/2013 - 15:29 | 3223801 redpill
redpill's picture

No they just give up and tell him to use their belly button.

Thu, 02/07/2013 - 15:45 | 3223867 trav777
trav777's picture

lol so there's a big group here who lost all their money shorting and you're in it too, huh?

Don't worry, those of us who didn't will take your nuts in exchange for watching our harems.

Thu, 02/07/2013 - 15:49 | 3223878 redpill
redpill's picture

Fraid not, I'm not the shorting type.  I like PMs and foreign dividends in appreciating currencies (well, or not deliberately depreciated currencies at least).

Thu, 02/07/2013 - 15:45 | 3223863 trav777
trav777's picture

no, quite the opposite

Thu, 02/07/2013 - 16:02 | 3223914 Central Bankster
Central Bankster's picture

You tell them how small their dicks are? 

Thu, 02/07/2013 - 16:05 | 3223919 redpill
redpill's picture

You made good contact on that softball!

Thu, 02/07/2013 - 16:25 | 3223991 medium giraffe
medium giraffe's picture



"you eat pieces of shit for breakfast?!"

Thu, 02/07/2013 - 17:07 | 3224148 trav777
trav777's picture

lol I would up arrow you if I did that sort of thing

Thu, 02/07/2013 - 17:48 | 3224273 tickhound
tickhound's picture

That's just the good in you, the conflict.  Don't forget to let go... 

Thu, 02/07/2013 - 16:32 | 3224021 thismarketisrigged
thismarketisrigged's picture

i actually have not lost anything shorting because i have not shorted anything yet.


i will however be shorting these markets relatively soon, as this will come crashing down eventually.

Thu, 02/07/2013 - 15:07 | 3223723 pomlad5
pomlad5's picture

They would never answer to your meaningless post

Thu, 02/07/2013 - 15:18 | 3223765 francis_sawyer
francis_sawyer's picture

  "they completely take away what was once a real market"


When was it actually 'REAL'?... Like ~ before 1913? [or even before that]...

Thu, 02/07/2013 - 15:38 | 3223777 medium giraffe
medium giraffe's picture

Yeah, it's frustrating as hell that things are no longer allowed to devalue and just get pumped, I feel your oh so familiar pain.  I suppose we should be glad that there is still a OMO buoyancy reaction though.  When we drop and the Fed pulls the trigger, and nothing happens, that's the real time to get concerned. Like, 'game over' concerned.

Easier said than done, but don't get emotional - just apply a healthy dose of cynicism and deal with what is presented to you if you want to play the game. There's nothing you can do about it anyway.  And look, S&P now crawling back to 100hr MA / 2nd Std deviation of 100 day MA - no big surprises there really, just requires a reality adjustment - this is what the new normal looks like.

Good luck.

Thu, 02/07/2013 - 15:33 | 3223791 The Heart
The Heart's picture

"its truly remarkable how rigged this game is, and how these central bankers worldwide are allowed to get away with it so easily, at the expense of all the hard working ppl."

It looks like things are going to start heating up in more ways than one and trouble is on it's way. Here we see some market trader betting 11.25 million dollars that something bad is going to happen in the next 60 days. (March 6-April 6) What do they know? Any guess as to who it is? Is it another insider, or zionist bankster trying to make a fast buck knowing the evil calamity is coming?

From the report by Art Cashin at Business Insider:

"Last week somebody put on a call spread on the VIX using the April 20 and 25 puts. They bought 150,000 contracts for a net of $75 per contract. That is an $11,250,000 bet that the VIX will move over 20 over the next 60 days."

And the story.

Some Trader Has Made A Very Big Bet That Something Very Bad Will Happen Within The Next 60 Days:


More related info:


And these folks know something too:


What is coming soon are the days of Purim on February 24-25 and this could be of concern. We also see the Ides of March coming and the typical attack month for the warmongering evil banksters. March 21-22 are the favored numerological dates, but the new moon around March 11th is more than likely the window of time they might use, the number eleven being important also. If God forbid something happens during this month, or the next, then surely the fear factor will be up in April.

“The VIX, the CBOE Volatility Index, also known as the fear indicator, uses the implied volatility of S&P 500 index options and is an index of the market’s forward looking view of volatility for the next 30 days.”

Paul Drokton on the John Stadtmiller's Intel report:

"they know that between now and April the banks are going to go tank."

Hr 1:

Hr 2:

Many people are leaving the country in a panic right now. There seems to be a rush to get out of the country as this is being written. For those poor people left to face the coming atrocities and war declared on the American people by their own govt after a false flag event, or something in Iran, or a chemical attack by al-cia-duh in Syria, please continue to prepare as fast as possible and be more vigilant than ever. It is a good time to neighbor up!

Praying for America.

Thu, 02/07/2013 - 17:23 | 3224200 10mm
10mm's picture

Pray hard The Heart,the timing is in sync with the DHS insider (Rosebud) that spring will be the dollar demise time frame.

Fri, 02/08/2013 - 07:52 | 3225374 10mm
10mm's picture

Negative.The article broke weeks ago,i just kept time frame the Bud called for in memory.It's all inline,continued can kicking on both sides of ailsle,events indicating it's all a go.No real progress on either side,it's going down with what im seeing so far.

Thu, 02/07/2013 - 14:49 | 3223652 youngman
youngman's picture

Gold and Silver had a strange day today.....it was like a fight of the HFT´s ......

Thu, 02/07/2013 - 15:00 | 3223686 redpill
redpill's picture

It's never anything but a fight of the HFTs anymore...

Thu, 02/07/2013 - 15:10 | 3223729 pomlad5
pomlad5's picture

the game is shrinking ......kaboooom.......

Thu, 02/07/2013 - 15:15 | 3223752 francis_sawyer
francis_sawyer's picture

my gold & silver NEVER have strange days... They just sit there at the bottom of the lake & mind their own business...

Thu, 02/07/2013 - 15:27 | 3223796 redpill
redpill's picture

At deep, completely unrecoverable depths, mind you.

Thu, 02/07/2013 - 17:24 | 3224202 jimmytorpedo
jimmytorpedo's picture

anyone want to buy a slightly used personal deep water submarine?

you can pick it up at francis sawyers cottage when i'm done

Thu, 02/07/2013 - 14:51 | 3223657 tenpanhandle
tenpanhandle's picture

In the game of musical chairs, just standing there is not an option, therefore, the dancing must continue. (They have taken all the chairs away but one).

Thu, 02/07/2013 - 15:18 | 3223766 davidsmith
davidsmith's picture

No it's a game of musical people: the chairs are circling, the people are standing still.  Result?

Thu, 02/07/2013 - 14:55 | 3223660 JustObserving
JustObserving's picture

What else can the Central Banksters do?  Their answer to currency fraud is more fraud.  Which Western nation will be the first to have hyperinflation?  It will probably be the UK since it takes a good 100 million pounds a year for the queen to keep up appearances.

Maybe a war or two will distract the sheeple.  A million or two dead muslims may buy a couple of years.  Nothing personal, you dead muslims, but business is business.

Now be a good citizen and buy the dip. Bernanke has your back.

Thu, 02/07/2013 - 15:01 | 3223687 beaglebog
beaglebog's picture

Might I recommend that you guys spend 14 minutes in the company of this Aussie politician .... as she reveals the Planned Totalitarian society that is being foisted upon us.

Includes proposals for 95% reduction in global population.


Incredible video. Worth every second of your time.


I wouldn't expect her to "live long and prosper".



Thu, 02/07/2013 - 15:24 | 3223785 smacker
smacker's picture

Agenda 21.

Thu, 02/07/2013 - 15:25 | 3223788 Harbanger
Harbanger's picture

Great video! Thanks.  Everyone needs to see this.  This woman is truly brave.

Thu, 02/07/2013 - 16:16 | 3223951 Accounting101
Accounting101's picture

A YouTube video? Well then, it must be true!

Thu, 02/07/2013 - 15:01 | 3223690 Dr. Engali
Dr. Engali's picture

 "There was a time when central bankers were extremely careful not to do anything that might endanger the currency's value too much – in other words, they were intent on boiling the frog slowly.And why wouldn't they? After all, the amount by which the citizenry is plucked via depreciation of the currency every year is compounding, so that the men behind the curtain extract more than enough over time. "

Exactly right. But they know we are at the endgame so they've turned it up to a full boil to bring that depreciation forward and loot what they can as fast as they can.

Thu, 02/07/2013 - 15:01 | 3223692 davidsmith
davidsmith's picture

Look for inflation to be caused by a disruption of the supply chain.

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