Dylan Grice Explains How "Crackpot" Central Bankers Are Destroying Society

Tyler Durden's picture

From Dylan Grice of Edelweiss Holdings

Would the real Peter and Paul please stand up?

In a previous life as a London-based ‘global strategist’ (I was never sure what that was) I was known as someone who was worried by QE and more generally, about the willingness of our central bankers to play games with something which I didn’t think they fully understand: money. This may be a strange, even presumptuous thing to say. Surely of all people, one thing central bankers understand is money?

They certainly should understand money. They print it, lend it, borrow it, conjure it. They control the price of it… But so what? What should be true is not necessarily what is true, and in the topsy-turvy world of finance and economics, it rarely is. So file the following under “strange but true”: our best and brightest economists have very little understanding of economics. Take the current malaise as prima facie evidence.

Let me illustrate. Of the many elemental flaws in macroeconomic practice is the true observation that the economic variables in which we might be most interested happen to be those which lend themselves least to measurement. Thus, the statistics which we take for granted and band around freely with each other measuring such ostensibly simple concepts as inflation, wealth, capital and debt, in fact involve all sorts of hidden assumptions, short-cuts and qualifications. So many, indeed, as to render reliance on them without respect for their limitations a very dangerous thing to do. As an example, consider the damage caused by banks to themselves and others by mistaking price volatility (measurable) with risk (unmeasurable). Yet faith in false precision seems to us to be one of the many imperfections our species is cursed with.

One such ‘unmeasurable’ increasingly occupying us here at Edelweiss is that upon which all economic activity is based: trust. Trust between individuals, between strangers, between organisations… trust in what people read, and even people’s trust in themselves. Let’s spend a few moments elaborating on this.

First, we must understand the profound importance of exchange. To do this, simply look around you. You might see a computer monitor, a coffee mug, a telephone, a radio, an iPad, a magazine, whatever it is. Now ask yourself how much of that stuff you’d be able to make for yourself. The answer is almost certainly none. So where did it all come from? Strangers, basically. You don’t know them and they don’t know you. In fact virtually none of us know each other. Nevertheless, strangers somehow pooled their skills, their experience and their expertise so as to conceive, design, manufacture and distribute whatever you are looking at right now so that it could be right there right now. And what makes it possible for you to have it? Exchange. To be able to consume the skills of these strangers, you must sell yours. Everyone enters into the same bargain on some level and in fact, the whole economy is nothing more than an anonymous labor exchange. Beholding the rich tapestry this exchange weaves and its bounty of accumulated capital, prosperity and civilization is a marvelous thing.

But we must also understand that exchange is only possible to the extent that people trust each other: when eating in a restaurant we trust the chef not to put things in our food; when hiring a builder we trust him to build a wall which won’t fall down; when we book a flight we entrust our lives and the lives of our families to complete strangers. Trust is social bonding and societies without it are stalked by social unrest, upheaval or even war. Distrust is a brake on prosperity, because distrust is a brake on exchange.

But now let’s get back to thinking about money, and let’s note also that distrust isn’t the only possible brake on exchange. Money is required for exchange too. Without money we’d be restricted to barter one way or another. So money and trust are intimately connected. Indeed, the English word credit derives from the Latin word credere, which means to trust. Since money facilitates exchange, it facilitates trust and cooperation. So when central banks play the games with money of which they are so fond, we wonder if they realize that they are also playing games with social bonding. Do they realize that by devaluing money they are devaluing society?

To see the how, first understand how monetary policy works. Think about what happens in the very simple example of a central bank’s  expanding the monetary base by printing money to buy government bonds.

That by this transaction the government has raised revenue for the government is obvious. The government now has a greater command over the nation’s resources. But it is equally obvious that no one can raise revenue without someone else bearing the cost. To deny it would imply revenues could be raised for free, which would imply that wealth could be created by printing more money. True, some economists, it seems, would have the world believe there to be some validity to such thinking. But for those of us more concerned with correct logical practice, it begs a serious question. Who pays? We know that this monetary policy has redistributed money into the government’s coffers. But from whom has the redistribution been?

The simple answer is that we don’t and can’t know, at least not on an amount per person basis. This is unfortunate and unsatisfactory, but it also happens to be true. Had the extra money come from taxation, everyone would at least know where the burden had fallen and who had decreed it to fall there. True, the upper-rate tax payers might not like having a portion of their wealth redirected towards poorer members of society and they might not agree with it. Some might even feel robbed. But at least they know who the robber is.

When the government raises revenue by selling bonds to the central bank, which has financed its purchases with printed money, no one  knows who ultimately pays. In the abstract, we know that current holders of money pay since their cash holdings have been diluted. But the effects are more subtle. To see just how subtle, consider Cantillon’s 18th century analysis of the effects of a sudden increase in gold production:

If the increase of actual money comes from mines of gold or silver… the owner of these mines, the adventurers, the smelters, refiners, and all the other workers will increase their expenditures in proportion to their gains. … All this increase of expenditures in meat, wine, wool, etc. diminishes of necessity the share of the other inhabitants of the state who do not participate at first in the wealth of the mines in question. The altercations of the market, or the demand for meat, wine, wool, etc. being more intense than usual, will not fail to raise their prices. … Those then who will suffer from this dearness… will be first of all the landowners, during the term of their leases, then their domestic servants and all the workmen or fixed wage-earners ... All these must diminish their expenditure in proportion to the new consumption.

In Cantillon’s example, the gold mine owners, mine employees, manufacturers of the stuff miners buy and the merchants who trade in it all benefit handsomely. They are closest to the new money and they get to see their real purchasing powers rise.

But as they go out and spend, they bid up the prices of the stuff they purchase to a level which is higher than it would otherwise have been, making that stuff more expensive. For anyone not connected to the mining business (and especially those on fixed incomes: “the landowners, during the term of their leases”), real incomes haven’t risen to keep up with the higher prices. So the increase in the gold supply redistributes money towards those closest to the new money, and away from those furthest away.

Another way to think about this might be to think about Milton Friedman’s idea of dropping new money from a helicopter. He used this example to demonstrate how easy it would theoretically be for a government to create inflation. What he didn’t say was that such a drop would redistribute income in the same way more gold from Cantillon’s mines did, towards those standing underneath the helicopter and away from everyone else.

So now we know we have a slightly better understanding of who pays: whoever is furthest away from the newly created money. And we have a better understanding of how they pay: through a reduction in their own spending power. The problem is that while they will be acutely aware of the reduction in their own spending power, they will be less aware of why their spending power has declined. So if they find groceries becoming more expensive they blame the retailers for raising prices; if they find petrol unaffordable, they blame the oil companies; if they find rents too expensive they blame landlords, and so on. So now we see the mechanism by which debasing money debases trust. The unaware victims of this accidental redistribution don’t know who the enemy is, so they create an enemy.

Keynes was well aware of this insidious dynamic and articulated it beautifully in a 1919 essay:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. … Those to whom the system brings windfalls… become “profiteers” who are the object of the hatred…. the process of wealth-getting degenerates into a gamble and a lottery.


Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Deliberately impoverishing one group in society is a bad thing to do. But impoverishing a group in such an opaque, clandestine and underhanded way is worse. It is not only unjust but dangerous and potentially destructive. A clear and transparent fiscal policy which openly redistributes from the rich to the poor can at least be argued on some level to be consistent with ‘social justice.’

Governments can at least claim to be playing Robin Hood. There is no such defense for a monetary driven redistribution towards recipients of the new money and away from everyone else because if the well-off are closest to the money, well, it will have the perverse effect of benefitting them at the expense of the poor.

Take the past few decades. Prior to the 2008 crash, central banks set interest rates according to what their crystal ball told them the future would be like. They were supposed to raise them when they thought the economy was growing too fast and cut them when they thought it was growing too slow.

They were supposed to be clever enough to banish the boom-bust cycle, and this was a nice idea. The problem was that it didn’t work. One reason was because central bankers weren’t as clever as they thought. Another was because they had a bias to lower rates during the bad times but not raise them adequately during the good times. On average therefore, credit tended to be too cheap and so the demand for debt was artificially high. Since that new debt was used to buy assets, the prices of assets rose in a series of asset bubbles around the world. And this unprecedented, secular and largely global credit inflation created an illusion of prosperity which was fun for most people while it lasted.

But beneath the surface, the redistributive mechanism upon which monetary policy relies was at work. Like Cantillon’s gold miners, those closest to the new credit (financial institutions and anyone working in finance industry) were the prime beneficiaries. In 2012 the top 50 names on the Forbes list of richest Americans included the fortunes of eleven investors, financiers or hedge fund managers. In 1982 the list had none.

Besides this redistribution of wealth towards the financial sector was a redistribution to those who were already asset-rich. Asset prices were inflated by cheap credit and the assets themselves could be used as collateral for it. The following chart suggests the size of this transfer from poor to rich might have been quite meaningful, with the top 1% of earners taking the biggest a share of the pie since the last great credit inflation, that of the 1920s.

Who paid? Those with no access to credit, those with no assets, or those who bought assets late in the asset inflations and which now nurse the problem balance sheets. They all paid. Worse still, future generations were victims too, since one way or another they’re on the hook for it.  

So with their crackpot monetary ideas, central banks have been robbing Peter to pay Paul without knowing which one was which. And a problem here is this thing behavioral psychologists call self-attribution bias. It describes how when good things happen to people they think it’s because of something they did, but when bad things happen to them they think it’s because of something someone else did. So although Peter doesn’t know why he’s suddenly poor, he knows it must be someone else’s fault. He also sees that Paul seems to be doing OK. So being human, he makes the obvious connection: it’s all Paul and people like Paul’s fault.

But Paul has a different way of looking at it. Also being human, he assumes he’s doing OK because he’s doing something right. He doesn’t  know what the problem is other than Peter’s bad attitude. Needless to say, he resents Peter for his bad attitude. So now Peter and Paul don’t trust each other. And this what happens when you play games with society’s bonding.

When we look around we can’t help feeling something similar is happening. The 99% blame the 1%; the 1% blame the 47%. In the aftermath of the Eurozone’s own credit bubbles, the Germans blame the Greeks. The Greeks round on the foreigners. The Catalans blame the Castilians. And as 25% of the Italian electorate vote for a professional comedian whose party slogan “vaff a” means roughly “f**k off ” (to everything it seems, including the common currency), the Germans are repatriating their gold from New York and Paris. Meanwhile in China, that centrally planned mother of all credit inflations, popular anger is being directed at Japan, and this is before its own credit bubble chapter has fully  played out. (The rising risk of war is something we are increasingly worried about…) Of course, everyone blames the bankers (“those to whom the system brings windfalls… become ‘profiteers’ who are the object of the hatred”).

But what does it mean for the owner of capital? If our thinking is correct, the solution would be less monetary experimentation. Yet we are likely to see more. Bernanke has monetized about a half of the federally guaranteed debt issued since 2009 (see chart below). The incoming Bank of England governor thinks the UK’s problem hasn’t been too much monetary experimentation but too little, and likes the idea of actively targeting nominal GDP. The PM in Tokyo thinks his country’s every ill is a lack of inflation, and his new guy at the Bank of Japan is revving up its printing presses to buy government bonds, corporate bonds and ETFs. China’s shadow banking credit bubble meanwhile continues to inflate…

For all we know there might be another round of illusory prosperity before our worst fears are realised. With any luck, our worst fears never will be. But if the overdose of monetary medicine made us ill, we don’t understand how more of the same medicine will make us better.

We do know that the financial market analogue to trust is yield. The less trustful lenders are of borrowers, the higher the yield they demand to compensate. But interest rates, or what’s left of them, are at historic lows. In other words, there is a glaring disconnect between the distrust central banks are fostering in the real world and the unprecedented trust lenders are signaling to borrowers in the financial world. Of course, there is no such thing as “risk-free” in the real world. Holders of UK cash have seen a cumulative real loss of around 10% since the crash of 2008. Holders of US cash haven’t done much better.

If we were to hope to find safety by lending to what many consider to be an excellent credit, Microsoft, by buying its bonds, we’d have to lend to them until 2021 to earn a gross return roughly the same as the current rate of US inflation. But then we’d have to pay taxes on the coupons. And we’d have to worry about whether or not the rate of inflation was going to rise meaningfully from here, because the 2021 maturity date is eight years away and eight years is a long time. And then we’d have to worry about where our bonds were held, and whether or not they were being lent out by our custodian. And of course, this would all be before we’d worried about whether Microsoft’s business was likely to remain safe over an eight year horizon.

We are happy to watch others play that game. There are some outstanding businesses and individuals with whom we are happy to invest. In an ideal world we would have neither Peters nor Pauls. In the imperfect one in which we live, we have to settle for trying hard to avoid the Pauls, who we fear mistake entrepreneurial competence for proximity to the money well. But when we find the real thing, the timeless ingenuity of the honest entrepreneurs, the modest craftsmen and craftswomen who humbly seek to improve the lot of their customers through their own enterprise, we find inspiration too, for as investors we try to model our own practice on theirs. It is no secret that our quest is to find scarcity.

But the scarce substance we prize above all else is trustworthiness. Aware that we worry too much in a world growing more wary and  distrustful, it is here we place an increasing premium, here that we seek refuge from financial folly and here that we expect the next bull market.

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CH1's picture

And yet, everyone keeps playing their game.

Why should they bother changing?

BobPaulson's picture

People respond to rewards, and sometime smart people respond to penalties. Clearly not enough of either out there for the human race to change behaviour. Either that or the rewards aren't direct enough. If your dog is good and pees outdoors, you can't give him a biscuit an hour later or he won't know why you gave it to him. If he pisses on the floor and you hit him, he usually just thinks you're being mean.

DoChenRollingBearing's picture

Since almost all of us are not one of them, it is our own responsability to inform ourselves and take care of our own.

Almost every ZH reader of more than 5 minutes knows, in general, who to blame.

But, it is our turn now.  Don´t play their game.  Save money.  Buy gold.  Be productive, be cautious...

notbot's picture

Dylan Grice is one of the few really clear thinkers right now, and he communicates it so well. Anything he writes is worth reading, great post Tyler. He and Seth Klarman seem to capture it best.

Unfortunately, no one in power will listen, but i agree, our own responsibility to our family (and clients) is to understand and position accordingly.

Manthong's picture

Do not presuppose good intent to those who repeatedly hurt you.

indygo55's picture

They make it so obvious.


“The few who understand the system, will either be so interested from its profits or so dependent on its favors, that there will be no opposition from that class.” – Mayer Amschel Bauer Rothschild


mick_richfield's picture

I am coming for you, Mayer.

I am the little mammal, and you are the dinosaur, with your eggs in the nest.

It's a new world, and it's not yours.

Half_A_Billion_Hollow_Points's picture

I wish we had more Dylan Grice material.  

Antifaschistische's picture

Nailed it Dylan...

When trust breaks down then TPTB force you to buy the insurance.   Insurance that is 3 times as expensive as it has to be beacuse of all the insurance fraud.

I can't even return a cable to Best Buy, because I bought it 32 days ago...even though they still sell the identical item on the shelf....all the stupid rules because of retail fraud and return scams by scum who can't make money in any other fashion.

When trust breaks down...society moves to the "every man for himself" mentality very quickly.  And it only takes a small minority of "untrustworthy" to take us there.  Example:  One robbery in the entire neighborhood and 20 people get alarms installed, 15 families buy a dog, 12 dads buy their first gun and locksmiths install 40 new deadbolts.

Trust is the key economic engine.  Without it, there would be no accounts payable or receivables..because everything would be done in cash only.

It's ironic, that the moral fabric of society is being trashed daily and yet, it is a key component to any economic engine.   Creativity, Work Ethic & Trust.   America used to have all three.

fomcy's picture

"-According to the U.S. Census Bureau, more than 146 million Americans are either “poor” or “low income” at this point."

The Chart That Proves That The Mainstream Media Is Lying To You About Unemployment

"a lil over 130mil men living in the usa, only 58mil are hard at work, and 20mil are working under the table. the rest are not working at all. (approximate estimations according to the us census)

yea, the unemployment rate of 18% is total BS. I didn’t even count adult women. the real rate is about 45% unemployment."


Freddie's picture

the Italian electorate vote for a professional comedian whose party slogan “vaff a” means roughly “f**k off ”

Hey Krugman and Bernake - F Off!

DoChenRollingBearing's picture

LOL!  Beppe and his "grilli" would likely do a better job than all the other pols in Italy since WWII.

CaptainSpaulding's picture

Voll voll voll in the hay Bitchez

JustObserving's picture

Calling them "Crackpot" absolves them of criminality and corruption.  Grow a pair and call them what they are -  criminals who steal from the poor to give to the rich.

SheepDog-One's picture

Yea really, 'crackpots' gives them a free pass, as if they're just well meaning but wrong-headed crazy professors or something.....they're criminal maniacs worse than any James Bond villain ever.

McMolotov's picture

"Crackpot" implies they're off their rocker, as though they did a bunch of looney shit and lucked into all this fabulous wealth and power they (and their well-connected friends) enjoy.

I call bullshit. If they're bumbling "crackpots," so was Capone and so are the largest drug cartels.*



* For whom, incidentally, they launder money...

DOT's picture

Should be "crack pipe", no?

Lordflin's picture

This was ground to be my point. While there is much in the article that would be useful to those new to an understanding of our monetary system... The implication of innocence on the part of the perpetrators is exceedingly misleading.

This brings up another subject... There are times when it seems ZH is wasting my time addressing concepts that I would suspect most of the readership already understands... these interspersed midst articles of a more sophisticated nature. And yet, I refer newbies to this site all the time. Perhaps a separate section could be maintained where articles of a more fundamental and educational value could be maintained for folks attempting to master the basics. Just a thought...

francis_sawyer's picture

all is proceeding according to plan...


- Now either you're going to believe that is TRUE [which, by nature, allows for the concept of 'evil masterminded tribesman' at the controls ~ because all you need to determine that is to observe where benefts accrue & who gets the shaft]...

- Or, that there is no, nor ever has been, some organized or masterminded conspiracy... Which draws the conclusion that the overwhelming & almost mathematically unattainable presence of tribesmen [which constitute TODAY'S structure], are, [across the board], just a bunch of greedy blithering hacks suffering from a severe bout of nepotism...

spastic_colon's picture

PS - the potential gold "conspiracy" regarding repatriation has as much to do with Germany repaying us from WWI as anything, they just want their collateral back.

Ident 7777 economy's picture

Shucks ... I was looking forward to a video to go with the story ...

Sandmann's picture

When the government raises revenue by selling bonds to the central bank, which has financed its purchases with printed money, no one  knows who ultimately pays.

Which rather undermines the whole principle of Democratic Accountability as our Western political model is predicated upon the Legislature being Elected and Representative of Taxpayers to control The Executive and its Spending.  Charles I was executed in 1649 as the end-result of his attempts to raise money and impose taxes without approval of the Legislature.

It has been remarkably easy for the Executive to work with the Central Bank to undermine the whole notion ogf Accountability. It is simply unbelievable that Voters and Taxpayers have been herded into pens to be shorn, sheared and fleeced, quite so easily and with so little resistance

slightlyskeptical's picture

Bank leverage has come down significantly according to the latest reports. This reduces money supply. Since we are in an employment and wage recession, less money is not what is needed. So I agree the fed needs to print. However, unless that printing offers relief to those that really need it, it is doomed to fail. Part time jobs simply replace welfare, so ultimately no more gets spent by consumers, though Govt spends less. Biz to biz is said to make up for it, but ultimately these businesses will need consumers to buy in order to continue investment. Quite simply there needs to be a redistribution of wealth if we ever want to get a better economy. If the elite have all the money how can the consumer spend it?

I think we need to gear all the printing to relieve consumer debt. Improved cash flow for the consumer will mean more spending, more jobs, higher wages, more taxes paid and less Govt debt. Kick it off by buying all outstanding mortgages and refinance them at a near break even level. This should give all households an extra couple hundred dollars each month.

Fed is currently buying newly originated mortgages instead. This allows the banks to earn a risk free profit off the backs of all Americans. We need to take the new mortgage finance market away from the banks and investors. We need to let the American Dream fund Americans and not private money creating enterprises. Have Social Security and Govt pension plans fund this market. The risk is way overstated as a 4% mortgage pays back 170% of principal over 30 years. Thus you could have 40% non-performing mortgages and the program at worse would have profits equal to the market value of the non-performing collateral. You also have social security benefits as leverage for collections thus the default rate would be extremely low over time. Add certain provisions and your bases would covered very adequately. So instead of us paying taxes to fund interest on Treasuries that SS, etc. hold we would instead be funding them directly through the interest on our mortgage payments.

The added benefit of doing this is that the funds printed all get paid back. So the inflationary effects will decline as time passed. At the same time bank leverage would shrink enough to offset the above inflationary effects. It could all be out into effect painlessly, except to the banks who are swimming naked.


toys for tits's picture

The government shouldn't be in the home lending business in any manner, whether through originating or guaranteeing loans.  One reason is because the government is an inefficient monopoly and the costs of these programs would be diluted among all taxpayers.

The other thing you're wrong about is the FED printing money.  As Dylan points out, it is a temporary fix and debases society.  It's like putting guaze on someone with a cut major artery, it'll look like the bleeding slowed but is still dangerous.

The only way to fix this crap, which will never happen, is to allow the crash of 2008 to heal itself without this massive monetary intervention.  The destruction we're now facing is much more devestating and severe.

StychoKiller's picture

I blame the skools for discouraging independent thinking over the decades of public edukation.

duo's picture

Robbing Peter (Schiff) to pay (Hank) Paulson?

ziggy59's picture

Yes all are to blame and no one will pay except the masses, in more than one way in this global clusterfuck of corruption

falak pema's picture

they are not destroying society they are saving the world from depression and armageddon by spreading out the pain over all of first world and over multi generations; doing <God's work!

Penitence from overconsumption is future salavation; so you do penitence for your souls while we continue to consume...

"Its to save western civilization fellas! Our way of life, over the long haul."

Will you believe them now? Whats a few trillion here or there from YOUR pockets, when THEY ensure that the movers and shakers can start the gravy train again and perform "trickle down economics" as before! 

We defend the free market like nobody else does! 

Shizzmoney's picture

We defend the free market like nobody else does!

Their version of "the free market" is an open invitation to freely rape our economical asses.

Jack Sheet's picture

spare us your bullshit, if you please.

Half_A_Billion_Hollow_Points's picture

The price will stay low until the day spot goes to zero and comex defaults.  Then we'll have a big party after a traditional process known as price discovery.

DoChenRollingBearing's picture

(at) ebworthen and Half_

Yes and yes!  Many of us are waiting for that day...

ebworthen's picture

FedEx man came today with a rather heavy bar that was so very tangible.

orez65's picture

Yep, and 9% US Dollar inflation and 15% unemployment is kicking yours. 

Meat Hammer's picture

You must be new here.  We don't look to gold as an investment; we wear gold underwear to keep from losing our asses.  

Imminent Crucible's picture

Realprick uses the term "goldbug" without knowing what it means. He apparently thinks it's someone who daytrades gold futures around Nymex access open.

Gold bugs and gold hedgers don't care about 200 DMAs, let alone the 50 DMA. They don't trade. They just stack, and wait. Stack, and wait. Because they know, no matter how hot and bright the day, no matter how blue the sky, eventually the sun will go down and night will come.

I notice that, now that he's no longer with Societe Generale, Grice speaks his mind a little more freely and clearly.

ebworthen's picture

Yes, debasing society.

The monsters are back on the T.V. today.

There are also new bright shiny shapes on your computer (and sometimes in the mail) to display what you think is there.

Hedgetard55's picture

Bernanke knows EXACTLY what he is doing and it's effects. He doesn't care. All the "unemployment mandate" bullshit is mere smoke for the sheep and cover for the politicians who allow it to continue.

Anasteus's picture

Agree. It's virtually impossible for the Fed et al to not know what they are doing. Nothing of what's happening is being done by chance, mistake, or missing knowledge. They are actually damn smart, they know very well what they are doing and all is being accomplished consistently with expected outcome (until it's not). It's just our limited and naive point of view that makes us see 'inconsistencies', 'errors' and blame them for 'inability' to support and boost real economy.

It's the same trick all over again. If you briefly look at history you'll find that bankers have never been interested in economy. Their only interest was to deliberately create money at their sole discretion, blowing up and popping bubbles while making money out of the difference while, at the same time, forcing people into loans and hard work for less and less wages so that the money produced and grabbed was exchangeable for as much real products as possible. Bernanke is doing exactly the same thing his predecessors had been doing for centuries. The crucial thing to accomplish by every new descendant in this position is to trick people into trivializing and consequent forgetting this fact. Once achieved the whole game can be restarted once again and kept it running as long as it takes. There is no progress in here; it's always the same game being played upon the everlasting stupidity and unlearnability of mankind.

Our biggest problem is to accept the fact that such activity could be intentionally malevolent despite many indications we have at our disposal. Instead we tend to downplay the problem to something more acceptable for our mentality that we are able to cope with, such as mistake or missing competence. I think it's fully understandable but inaccurate.

flacorps's picture

Blaming bankers is easy. Neutralizing them is another thing altogether: it requires scoffing at conventionality, tax dodging and shifting one's wealth into physical precious metals.

All of these sound easy too. Until you try them.

Bastiat's picture

Interesting: it was recently reported here that the Fed purchased more than 100% of the debt issued last year, IIRC. Was it 50% or 100%?

SheepDog-One's picture

Isn't all they really need a 'controlling interest' of 51%?

Bastiat's picture

Oh Sorry I mis-read.  I was thinking of new debt issued in 2012, the chart is looking at all debt outstanding. 

Jack Sheet's picture

Check out the Edelweiss web site. Bermuda incorporated. You can chip in 500 000 USD "subscription" and they will put your money where their mouth is. Still 59% precious metals (not stated paper or physical). 1.4% USD asset allocation. Annual percent change in NAV is given (amongst others) in Ethiopian Birr. One of the directors is Greek. Couldn't find how much total AUM.

Haager's picture

Trust is actually in a bearmarket, some (Europeans) are trying to put up a (fake?) trustbubble. Economies there use helicopters and vacuum-cleaners - and the situation isn't improving.

jimijon's picture

Commerce == Trust and Cooperation.

Government == Trust and Coercsion.

Making everyone a Terrorist != Trust.