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Former Central Banker Admits "[They] Are Making It Up As They Go Along"

Tyler Durden's picture


Submitted by Tim Price via Sovereign Man blog,

A few weeks ago, William White (former economist at the Bank of England, the Bank of Canada, and Bank of International Settlements) made a frank admission.

And while we search for assets whose prices are less obviously distorted by malign government intervention, it’s refreshing to hear a mea culpa from a member of the economics “profession”.

White said:

The analytical underpinnings of what we [mainstream economists] do are actually pretty shaky. A reflection of that fact, is that virtually every aspect you can think of with respect to monetary policy, about best practice, has changed and changed repetitively over the course of the last 50 years. So, this stuff ain’t science.


“Think about what’s happened recently. One, its completely unprecedented. People are making it up as they go along. This is hardly science – building on the pillars of the past.


“Secondly, what they’ve been making up as they go along actually differs across central banks [The Bundesbank, for example, is fighting the threat of high inflation, whereas the Fed is more concerned about the prospect of deflation]. They can’t even agree amongst themselves about what’s the best way to do things.


I’m becoming more and more convinced that all of the models we use are basically useless.


“It’s surprising that we’ve had this huge crisis that the mainstream didn’t predict. It’s gone on for years, which the mainstream absolutely didn’t predict. I would have thought this was a basis for a fundamental rethink about what we used to think we believed. But that hasn’t happened.


“The policies that we’ve followed – on the monetary side at least – since 2007 are just more of the same demand-stimulating policies that we’ve been following, I think, erroneously, for the last 30 years.


We’ve got the potential to do so much harm by not getting the creation of fiat credit and money right. We’ve got the capacity to do so much harm that we should be focusing much more on making sure that doesn’t happen.”

Doctors at least have the Hippocratic Oath: first, do no harm. If only economists and central bankers had a similar ethic.

But they don’t. So they continue ‘making it up as they go along’, as Mr. White suggests, applying failed ideas with impunity and continued authority to an unquestioning public.

Warren Buffett famously compared financial markets to the card table, observing that if you’ve been playing poker for half an hour and you still don’t know who the patsy is, then you’re the patsy. It seems we are all patsies now.

You can listen to the full interview here:


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Mon, 03/03/2014 - 14:42 | 4502583 Flakmeister
Flakmeister's picture

Because the growth paradigm has been derailed...

This is a brave new world...

Mon, 03/03/2014 - 14:45 | 4502613 TruthInSunshine
TruthInSunshine's picture

William White slyly tries to attribute to incompetence what I see as malice.

Mon, 03/03/2014 - 15:00 | 4502691 krispkritter
krispkritter's picture

This is a guy desperately in need of a nail gun...

Mon, 03/03/2014 - 15:06 | 4502726 Manthong
Manthong's picture

LIBOR, Fourex, gold, re-hypothication, uncapitalized synthetics, Force Majeure…

Yeah, it’s malice alright.

..get the rope.

Mon, 03/03/2014 - 15:15 | 4502783 FL_Conservative
FL_Conservative's picture

That's because the central bankers' hypocratic oath is to "First, make a dollar from everyone involved."

Mon, 03/03/2014 - 15:25 | 4502813 SoberOne
SoberOne's picture

Unfucking questioning public? Ayfkm?? Ron Paul, C4L and many others are fucking questioning this thievery! 

Mon, 03/03/2014 - 15:44 | 4502918 Colonel Klink
Colonel Klink's picture

Theirs is "first tell no truth about the nature of the scam".  Then it's make a buck.

Mon, 03/03/2014 - 15:15 | 4502784 Al Huxley
Al Huxley's picture

For his sake I hope he doesn't live near any steep embankments.

Mon, 03/03/2014 - 15:16 | 4502789 krispkritter
krispkritter's picture

For our sake I hope he does...

Mon, 03/03/2014 - 15:58 | 4503034 TruthInSunshine
TruthInSunshine's picture

If the liar hopes to salvage even 1/8th ounce of honor, he will request an expedited 21 nail gun salute.

Mon, 03/03/2014 - 17:01 | 4503385 orez65
orez65's picture

"by not getting the creation of fiat credit and money right.""
This guy doesn't even know what money is!!
Federal Reserve, and Central Banks in general, can create NOTES NOT MONEY!!!!!
Just look at any US Dollar denomination at center top. It says FEDERAL RESERVE NOTE, not Federal Reserve MONEY!!!!
Poop head!!!

Mon, 03/03/2014 - 15:11 | 4502754 eclectic syncretist
eclectic syncretist's picture

Exactly!!! Thank you! Any fool can understand that an economic system controlled by an entity that is allowed to counterfeit value will not persist. It is inherently unsustainable, and will ultimately result in tragedy. Central banksters have to pretend this is not what they are and instead must constantly lie to the populace.

Mon, 03/03/2014 - 16:58 | 4503362 BeetleBailey
BeetleBailey's picture


Fuck him. These wankin bankers need some douchebag to deflect and confuse.

This cunt is one of them.

Fuck YOU "Willard" White.....Jimmy Dean was better....at least the bastard asked the right questions....


Mon, 03/03/2014 - 14:48 | 4502624 freewolf7
freewolf7's picture

Making it up as you go? So are we.
We don't know how you'll fall, but we're prepared for all options.

Mon, 03/03/2014 - 15:05 | 4502722 TheGardener
TheGardener's picture

At least doctors are covered under their oath to : ‘making it up as they go along’.

The main fault of voodoo economists is they had no oath
to give and bullshit along and need no license to prescribe
deadly medicine , as long as it is bitter and death is sweet they get tenure.

Mon, 03/03/2014 - 14:42 | 4502587 TeamDepends
TeamDepends's picture

Stop the presses!

Mon, 03/03/2014 - 15:05 | 4502723 krispkritter
krispkritter's picture

No way. Yellin's got her cankles to the floor on the pedal and printing for all she's worth...oh you meant, nevermind.

Mon, 03/03/2014 - 14:43 | 4502599 The Most Intere...
The Most Interesting Frog in the World's picture


Mon, 03/03/2014 - 14:43 | 4502601 NOTaREALmerican
NOTaREALmerican's picture

The only model that matters is creating believable bullshit to extract power (as measure in loot) from the lesser-evolved dumbasses.

The smart-n-savvy people win by leading the dumbasses to slaughter.  And dumbasses are led with bullshit.

Mon, 03/03/2014 - 14:46 | 4502618 Kayman
Kayman's picture

William White was found in his bathtub this morning, having committed suicide with a double tap to the back of the head.  The gun has not yet been found but authorities are certain it soon will be.

Mon, 03/03/2014 - 14:53 | 4502658 Dick Buttkiss
Dick Buttkiss's picture

I heard he also stabbed himself in the back, just to make sure.

Mon, 03/03/2014 - 14:54 | 4502665 NotApplicable
NotApplicable's picture

Nah, this is just another "limited hangout."

You might notice he denounced the incoherent models, yet didn't connect them to the obvious dots of government "stimulus," allowing him to ignore the fact that Keynesian Theory is nothing but permission for governments to spend, and spend, and spend.

Because as we all know, without a "borrower of last resort," we be doomed!

Mon, 03/03/2014 - 14:50 | 4502644 DaddyO
DaddyO's picture

Haven't you figure out which tier you belong in?



Mon, 03/03/2014 - 14:53 | 4502659 logicalman
logicalman's picture

Problem is that a lot of non-dumbasses who question everything they do will get sucked down by the surrounding idiots.

The big trick is going to be avoiding the aforementioned fate.

The criminal and sneaky win, by the way, not neccessarily the smart-n-savvy.

Mon, 03/03/2014 - 14:54 | 4502664 NOTaREALmerican
NOTaREALmerican's picture

Re:  The criminal and sneaky win, by the way, not neccessarily the smart-n-savvy.

I think you are using "judgemental words" on the smart-n-savvy. 

Mon, 03/03/2014 - 14:44 | 4502602 Saratoga
Saratoga's picture


Mon, 03/03/2014 - 14:45 | 4502609 machineh
machineh's picture

Gold, bItCHeZ!

Mon, 03/03/2014 - 15:09 | 4502735 Mad Mohel
Mad Mohel's picture

Yes, indeed gold bitchez! For 5000 years it was not made up as they went along. It keeps the straight, straight and shines a golden light on the crooked.

Mon, 03/03/2014 - 14:46 | 4502620 fooshorter
fooshorter's picture

Utter Bullshit. 

Do you really believe this? These fuckers plan things decades in advance. 

I would laugh if it wasn't so sad.

Mon, 03/03/2014 - 15:08 | 4502736 NotApplicable
NotApplicable's picture

Planners and CB figureheads are two ENTIRELY different jobs. Bernanke, for instance, didn't plan shit, as he likely has no clue about what to do. His function was ceremonial decoration, like a well-placed potted plant.

Part of the plan is to allow the figureheads to "make up shit as they go," knowing all too well what the outcomes cannot help but to fail as planned.


Mon, 03/03/2014 - 15:44 | 4502914 fooshorter
fooshorter's picture

Yes the visible and vulnerable figures that the public sees are probably told miniminal need to know, but to your point there defienetly two classes of operators. Too much of liability to have the public side know anything more. 

That being said, I still this article is clever horseshit, it basically says central planners are along for the ride with the rest of us when the opposite is quite true.

Mon, 03/03/2014 - 14:47 | 4502623 no more banksters
no more banksters's picture

"The economic schools, completely controlled by this system of power also, impose the new economic doctrine, using the fear of inflation. Therefore, governments officially proceed in cuts and cruel austerity measures while, unofficially, are funding every activity in favor of this system of power that prints and controls US dollar flow. At the same time, this system creates financial crises and loading nations with more debt, by circulating virtual huge capitals through computers, securing that money flow to the real economy will be limited in order not to lose value."


Mon, 03/03/2014 - 14:54 | 4502628 Save_America1st
Mon, 03/03/2014 - 14:49 | 4502633 fijisailor
fijisailor's picture

But doctor I didn't want heart surgery.  All I wanted was a vasectomy.

Mon, 03/03/2014 - 14:50 | 4502643 tahoebumsmith
tahoebumsmith's picture

They all keep smoking the pipe which causes such hopium pipe dreams. meanwhile the debt keps piling up, trillion after trillion. What do we have here? It's called a ponzi scheme to keep the dream alive and it's backfiring big time. When the next crisis hits. none of these geniuses will be any where to be found...

Mon, 03/03/2014 - 15:00 | 4502656 Kaiser Sousa
Kaiser Sousa's picture

heres today chart.....


once again, price down on the London open, London Close, Crimex open, Crimex close, and the Globex open...

and heres the entire intra day chart from all of 2013...u c something???????




Mon, 03/03/2014 - 14:58 | 4502680 Cacete de Ouro
Cacete de Ouro's picture

This is the same William White who said that "the intermediate objectives of central bank cooperation" included "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful."

White's lecture, given while he was "Economic Adviser, Head of Monetary and Economic Department, BIS" is titled "Past and future of central bank cooperation" and was presented at the Fourth BIS Annual Conference, 27-29 June 2005 - celebrating 75 years of the Bank for International Settlements, 1930-2005.


Mon, 03/03/2014 - 15:00 | 4502693 Save_America1st
Save_America1st's picture

yeah, well, but...

I'm rubber and you're glue...

~ W.White

Mon, 03/03/2014 - 15:10 | 4502742 ebworthen
ebworthen's picture

Maybe since 2005 his attitude and insights in things have changed, I know mine have.

And, he is an insider and knows how they operate - an epiphany perhaps.

Mon, 03/03/2014 - 15:04 | 4502712 Dr. Engali
Dr. Engali's picture

It appears that people are moving out of the TWTR safety trade into that risky asset class gold.

Mon, 03/03/2014 - 15:14 | 4502775 Chuck Knoblauch
Chuck Knoblauch's picture


Mon, 03/03/2014 - 15:18 | 4502793 Al Huxley
Al Huxley's picture

You would think war and civil unrest would be a huge boon to twitter - ah, if only they had a way to make money...

Mon, 03/03/2014 - 15:46 | 4502927 Save_America1st
Save_America1st's picture

banner advertisements for civil war and WWIII?  win-win!!!

Mon, 03/03/2014 - 15:04 | 4502713 detached.amusement
detached.amusement's picture

Well hey, when you can sit there and claim correlation IS causation and mark to fantasy any model they feel like presenting to the general public...with NO accountability...

Mon, 03/03/2014 - 15:09 | 4502729 Aquarius
Aquarius's picture

As I have been saying (and writing) for years now:

"Economic Theory" is nothing but "Political Expediency".

And, the Great Global Economic Collapse that is coming is being paralleled in concert by the Demise of the USA through its incompetent forays into the affairs of other Nations and Peoples, at the direct cost to its own Nation and its Peoples.

One question now presents itself (but, which has been left unanswered on the table for many years now):

Will the Peoples of the USA permit that nasty knot of "neocons" to manipulate World War III with Russia, united through International Agreements, with China and Iran or,

will the fallout of Fukushima's nuclear radiations, with all it potentials for 'open-air criticality' and the radiation poisoning of masses of millions of its Peoples, as

both events, or just one event, jointly or singularly destroy what is left of what was once a great Nation; a bastion of hope and freedom and the flag of Liberty and Light for all Mankind?

How times have changed. Sigh.


Ho hum

Mon, 03/03/2014 - 15:15 | 4502776 NOTaREALmerican
NOTaREALmerican's picture

Re: a bastion of hope and freedom and the flag of Liberty and Light for all Mankind?

Maybe if more Americans realized the country was and is just another society run by sociopaths we could cut-through the rest of the Red and Blue Team bullshit and create a society that acted in the bests interests of the majority of the population.

Societies and countries can exist for one purpose: bullshit or reality.   Reality is boring.  Which is why the sociopaths love slow-motion eagles and flags as much as the dumbasses who worship them.

Mon, 03/03/2014 - 15:27 | 4502830 denverdolomte
denverdolomte's picture

Well said.


"Maybe if more Americans realized the country was and is just another society run by sociopaths we could cut-through the rest of the Red and Blue Team bullshit and create a society that acted in the bests interests of the majority of the population."

Mon, 03/03/2014 - 15:26 | 4502828 joego1
joego1's picture

That one sentence could be a paragraph.

Mon, 03/03/2014 - 15:13 | 4502768 Chuck Knoblauch
Chuck Knoblauch's picture

FED's hardest job is to match fantasy with reality. That's a tough job.

Mon, 03/03/2014 - 15:15 | 4502780 duckduckMOOSE
duckduckMOOSE's picture

So, basically not only is the Emperor not wearing new clothes, he is in fact naked.

Consensus reality. Weeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

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