For Central Bankers, 512 Times Just May Be The Charm

Tyler Durden's picture

Despite "the most inappropriate monetary policy in history," and warnings of bubbles, Bloomberg notes that South Korea’s 'surprise' rate cut overnight was the 511th reduction worldwide since June 2007 (and show no signs of stopping the Einsteinian madness). Behind the stepped up stimulus: another swoon in the global economy barely five years after it fell into its deepest recession since World War II. Citi's G10 Macro surprise index shows that the major economies began coming in below forecasts in the middle of March and the index is now near its weakest since last August.

Maxed-out budgets mean governments are also struggling to aid their economies and Central Bankers are growing impatient. As Philly Fed's Charles Plosser told Bloomberg TV today that it is "disturbing" to him that "more and more is being expected of central banks." PIMCO's El-Erian explained recently that "central banks are our best friends because "they can only get to their macro objectives by goping through the markets."

Hope remains that fundamentals will catch up to these actions - but as the chart below shows, it is not. Still, the burden remains on the CBs, "we are expected to solve all the world's problems," Plosser added, "our fiscal authorities are not doing a very good job in any country."

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The Thunder Child's picture


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ersatzteil's picture

Stick to power-of-two's, next benchmark is reduction 1024!

NotApplicable's picture

They've basically went double or nothing eight times now. Surely nine will do the trick.

observer007's picture

The International Banking Cartel


A look at the International Banking Cartel led by the Bank for International Settlement (in Basel, Switzerland) known as the bank of central banks (58 central banks) and The US Federal reserve System.

Governments at the service of the major banks, the best example: the Obama administration and the history’s biggest bail out of the same institutions that caused the Great Recession.

Must see Video:

DormRoom's picture

Have Central Bankers looked at the gini coefficient [1]  for their respective countries in the years covering their flexibile policies?  All that QE and ZIRP, but prosperity has remained ellusive for so many.  Even if you land a job the rentier class make atleast 30x your salary, and that gulf is growing, aided by the Fed.



SKY85hawk's picture

Did Plosser just hint at QE* coming to an end? 


honestann's picture

To connect two different articles together...

If the predators-that-be are indeed running out of ways to generate enough physical gold to cover orders, they might find no viable way out except raising interest rates.  The one way to convince fools to accept fiat, fake, fraud, fiction, fantasy, fractional-reserve debt-notes is... to pay fiat interest on them.

Since in the end, the predators-that-be can print infinite fiat, there might be a possibility they panic at their inability to deliver gold, and raise interest rates to attract marginal gold holders back into fiat.  And that should work, unless they wait too long, until the non-delivery of physical gold causes a panic they cannot easily reverse.

I'm not ready to buy this theory yet, but it certainly is possible.  The huge downside is, the predators-that-be start paying much higher interest on the trillions in debt they refinance every year, plus the trillion-plus of new debt they borrow every year.  However, they may decide they can pay a higher interest rate because, after all, they're paying with fiat created out of thin air, and "debt/deficits don't matter" and "they don't care how many future generations they enslave".

Interesting dynamics.  Somewhere the predators-that-be are definitely looking for a way to prevent gold from going off the charts due to their rapidly increasing inability to deliver physical gold.

On the one hand, some of them are certainly thinking, they can let gold and silver prices shoot past the moon, and just have the entire mainstream media to laugh it off, explain why nobody gives a damn how much barbaric relics cost anyway, and warn everyone that "danger, danger, gold is in a bubble, the sky is falling".

On the other hand, some of them must be wondering by now, the only sure-fire way to kill the price of gold and silver before they explode... is to pay seriously high interest (4%~5%) on saving accounts denominated in fiat.  That would indeed send some non-trivial percentage of gold holders into fiat, thereby dropping the price.

I am starting to wonder about this.

polo007's picture

Since the financial crash of 2008 the western economies (US, Euro zone and Japan) have been using quantitative easing (QE). QE is not new. It was also used extensively in the 1930's. Japan has been using forms of QE for over a decade. But when one looks at the velocity of money and the money multiplier the money is not getting into the broader economy. But it is getting into the stock markets largely through the large money center banks that are the major beneficiaries of QE. Rising stock market valuations help the money center banks balance sheets. It is believed for the US at least that QE is primarily to help prop up the banking systems in the US, the Euro zone and Japan. The banking system remains saddled with huge amounts of debt that is either toxic or uncollectable.