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The Crazy-Making Fed
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The Federal Reserve's communications and policies are a form of crazy-making double bind.
Systems theorist/anthropologist Gregory Bateson developed (with others) the concept of double bind, a psychological and social conflict in which contradictory demands generate a form of schizophrenia:
Unlike the usual no-win situation, the subject has difficulty in defining the exact nature of the paradoxical situation in which he or she is caught. The contradiction may be unexpressed in its immediate context and therefore invisible to external observers, only becoming evident when a prior communication is considered. Typically, a demand is imposed upon the subject by someone who they respect (such as a parent, teacher or doctor) but the demand itself is inherently impossible to fulfill because some broader context forbids it. For example, this situation arises when a person in a position of authority imposes two contradictory conditions but there exists an unspoken rule that one must never question authority.
The Federal Reserve's communications and policies are a form of crazy-making double bind. No wonder the economy and everyone participating in it are beset by various manifestations of mental and physical illness.
On the one hand, the Fed insists the economy is expanding and all is well. If this is true, then the Fed should allow interest rates to normalize, i.e. be unleashed from the Fed's financial prison and allowed to rise to whatever the market of borrowers and lenders sets as fair in the current climate.
But the Fed also insists that it cannot allow rates to rise. If this is true, then it means the economy is weaker than the Fed would have us believe.
These are contradictory, but the Fed would have us believe both conditions are true. The Fed's job as the authority figure is to convince us the economy is expanding at a healthy clip, but interest rates cannot be allowed to rise because the economy is fragile and ill.
This makes no sense, but the Fed insists on maintaining this crazy-making double bind because the stock market depends on both conditions being true at the same time: the economy must be expanding so profits can loft ever higher, but the economy must also be weak and ill so the Fed will continue its policies of zero interest rates (ZIRP) and free money for financiers that have pumped trillions of dollars into "risk-on" assets like stocks.
If either of these contradictory conditions is erased, the stock market will tumble,as neither a weak, recessionary economy nor zero interest rates (ZIRP) alone is sufficient to maintain the stock market's current sky-high valuations: profits must continue rising and rates must stay zero to enable carry trades, stock buy-backs, and all the other financial finagling that has driven stocks into the stratosphere.
The Fed is attempting to bridge the schizophrenic contradictions of its policies and communications by blaming the "poor labor market". Just as in families that choose one child--usually the "misbehaving" or "rebellious" one--to be the scapegoat for all the family's sociopathologies, the Fed has designated the labor market as the scapegoat for the economy's schizophrenia: If only the labor market was as strong as the rest of the economy, we could allow rates to normalize.
But this is as bogus and crazy-making as everything else the Fed says and does: how can an economy in which wage-earners are losing purchasing power and jobs growth lags population growth be expanding as robustly as the Fed claims?
The Fed's crazy-making double bind serves to enforce obedience without overt coercion. Nobody made you buy those risk-on assets, buddy; if the bubbles all pop, you've got nobody to blame but yourself.
But this is crazy-making in the extreme, as the Fed has done everything in its considerable power to push everyone into speculative risk-on assets while funneling a steady skim to the big banks at the expense of savers and households.
The ultimate Fed crazy-making double-bind is this: you can't live without us, your financial Overlords who keep you safe from recession and the volatility of creative destruction, but you can't be free or prosperous with us in control.
And so the crazy-making continues, a steady drip of contradictory communications and claims, one masterful display of schizophrenic-inducing propaganda after another, month in, month out, year in, year out.
Thus we can anticipate Crazy-Maker in Chief Janet Yellen will lace her speech at the Jackon Hole confab with enough contradictory contexts and explanations to maintain the nation's sad schizophrenic malaise. And like all the other poor souls trapped in a double bind, we will love our servitude to the Fed even as it slowly strangles our clarity, purpose, liberty and ability to navigate an unmanipulated world.
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[KR642] Keiser Report: Saudi America
Posted on August 19, 2014 by Stacy Herbert
Read more at http://www.maxkeiser.com/#YUPxQOXPyYhZCFlF.99
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e.t.f.
I am fed up with the Fed
oy vey
if you want the truth vou vont get it vrom us
its all about the interest
pay up or we start a var or repo vour country
ve hab to be insane to do dis banking crap
veee just dont vant you to know vee dont know vhat vee are doing
sheeeeeeeech
"The Fed's crazy-making double bind serves to enforce obedience without overt coercion."
Hasn't the Fed's "covert" coercion of the current asset bubbles been (a.k.a Ben) QE and now backdoor purchasing?
We do only one thing and we do it well......we print.
We shall go on to the end. We shall print in France, we shall print on the seas and oceans, we shall print with growing confidence and growing strength in the air, we shall defend our fiat, whatever the cost may be. We shall print on the beaches, we shall print on the landing grounds, we shall print in the fields and in the streets, we shall print in the hills; we shall never surrender,
The global economy is in contraction, everywhere. The disease is systemic, only a complete bone marrow transplant can heal.
Means the patient will be holed up in hospital for years to come as they are cured.
However the Central Banks will instead keep feeding it painkillers and sucking the blood out...until the patient dies.
It's much worse then that. The patient will be kept alive with minimal substance. Look around the world. The western nations are the only ones to boast such high living standards. But they are NOT a necessity. These current standards will slowly but surely be pried from our incapacitated grasp until we reach the degree of global wage parity and near if not completely equal trade balance.
It's a cruel bitch but that's how is gonna be
Of course, reality is a very different animal than the fraud perpetrated by the Fed. Lies will always drive you crazy:
The result of many years of changes made to the official inflation measures is a substantially understated inflation rate. John Williams (www.shadowstats.com) provides inflation estimates based on previous official methodology when the Consumer Price Index still represented the cost of a constant standard of living. The 1.26% inflation measure used to deflate first quarter nominal GDP is unrealistic, as Americans who make purchases are aware.
A reasonable correction to the understated deflator gives a much higher first quarter contraction. The two main causes of inflation’s understatement are the substitution principle introduced during the Clinton regime and the hedonic adjustments ongoing since the 1980s that redefine price rises as quality improvements. Correcting for excessive hedonic adjustments gives a first quarter real GDP contraction of 5%. Correcting for hedonic and substitution adjustments gives a first quarter real GDP contraction of 8.5%.
Realistic economic analysis is a rarity. The financial press echoes Wall Street, and Wall Street economists are paid to help sell financial instruments. Gloomy analysis is frowned upon. Even negative quarters are given a positive spin.
Years of understatement of inflation has resulted in years of overstatement of GDP growth. Thinking about the many years of misstatement, we realized that the typical computation in nominal terms of the ratio of debt to GDP is seriously misleading.
Consider that debt is issued in nominal terms and repaid in nominal terms (except for a few Treasury bonds with inflation adjustments). However, nominal wealth or nominal GDP overstates real economic strength. The debt is growing, but both the nominal and real values of the output of goods and services are not keeping up with the rise in debt.
http://www.paulcraigroberts.org/2014/07/08/deteriorating-economic-outloo...
The fed prints, and says that a corrupt system, led by the corrupt, for the corrupt, prospers even though the fed's primary activity, printing, is a telltale that everything is not okay. This is not schizophrenic, it's just a sign that the focus has shifted from trying to solve an unsolvable problem to maintaining appearances.
Everyone here should quit bitching, and enjoy this while it lasts. You never had it so good. When it gets ugly, it will get very ugly, very quickly. Ferguson is nothing but a block party, compared to what's coming.
Agree. It is free money while it lasts. It would be stupid not to help yourself to the free money of a corrupt, controlled market.
You can say that again
"Everyone here should quit bitching, and enjoy this while it lasts."
I'll enjoy it while it lasts, AND continue to bitch, AND laugh when the people responsible for it are blowing their brains out in front of their children.
Fed should be meeting in Ferguson not Jackson Hole so they can have a first hand view of how well their 'policies' are working
And here I thought they were just a bunch of liars. I must lack the subtlety to see the underlying genius in all of this.
Marveling at the den of pirates.
of course it makes no sense. don't listen to what they say, just watch what they do.
As someone here said a few months back -
Never forget that master planners are masters at backing themselves into a corner......
Timing of course is always the problem.
The term "the new normal" has not been used much as of late, but going forward it may be about to return. Many investors and the public at large may be about to realize that central banks can only do so much through printing money and lowering interest rates. Both these actions carry with them some very strong and nasty side effects.
Markets have become very distorted as money has flowed into risky assets in search of higher yields. It could be we are about to see the markets morph into a "realizing market", one that grinds slowly downward. Another possibility is that at some point the wisdom of buying every pullback changes and the market simply drops like a stone. More on what the future might hold in the article below.
http://brucewilds.blogspot.com/2013/06/realistic-expectations-for-econom...
Also notice anything high yield, even MLPs goes DOWN HARD on any selloff because the bastards have bought ALL ON MARGIN !
There's a 'new normal' every week as the double-blind goes triple, quadruple, etc. and they continue to flush the fiat world in a drowning last gasp.
The Federal Reserve is attempting to accerate the dollar's destruction and make true that all fiats go to 0.
As I stated last night, if I could counterfeit at NIRP or ZIRP. I would spend the rest of my life in prison.
These criminals walk around without any recourse. RICO laws are just for the little enslaved population. Whatever skin color, we're all little niggers to the banking community.
WHAT IS HAPPENING IS QUITE RATIONAL..... if YOU were the fed, would you end the money printing PONZI SCHEME before you took the last buck off the table ???????
What should happen is a THOROUGH AUDIT OF THE FED.... LET'S FOLLOW THE MONEY TRAIL .... then we know the facts ... not the horseshit we are being fed....
Esum: Occam's razor, its the simplest question. Audit the fred and fllow the money -100% correct
Oh, they need an "audit" all right...
the ONLY thng that will cure this economy is W A R .... just ask FDR
That's why ISIS was created. New buggy man, new venue to increase debt spending. At the end of the spending spree, most will die by bullet. Stop focusing on the monkey voted figureheads. Go to the top of the food chain.
Once removed, terrorism ends. These are very sick individuals.
If the USD goes into a nose dive, they become poor. Stage 2, continue terrorism attacks until they can move their money into another currency.
Take the sick fucker's out. The mother earth will be renewed. Do your job alphabet soup. This is not rocket science. Start at the top of the ponzi scheme. Shall I tell you the name? Hint, not Rothschilds. Call NSA, the phone call records will create faintness and disbelief.
Not a joke. Take these fucking sickos out.
Not Rothchilds? If not them then who? Come on now. Lets see who you mean.
The Fed is a FINANCIAL TERRORIST decimating savers (pillaging them for $50Bil/yr in lost interest on savings) to reward the TBTF Primary Dealer Speculators that OWN THEM.
the beatings will continue until morale improves
Interesting, no?
The fed is a rolling contradiction, and what they're best at is not taking responsibility for past mistakes and confusing the future with outlandish economic performance!!
Whats even more amazing is that Janet Yellen goes in front of Congress, lies, and Congress never calls her out or asks her hardball questions. They actually praise her for her "work"
I miss the days when Ron Paul and Alan Grayson would rip Bernanke a new one.
Yet everyone just plays along.
Crazy-making is right. You have to be schizo to be able to play both sides of this coin. No accident there. Everything you have been sold, told, and taught influences the way your mind perceives events. Do not for a second underestimate the games afoot here
"And like all the other poor souls trapped in a double bind, we will love our servitude to the Fed even as it slowly strangles our clarity, purpose, liberty and ability to navigate an unmanipulated world".
Errmm, no.
DavidC
Well, this is why death camps were invented.