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Central Bankers Would Rather Blow Up the Entire System Than Admit Failure

Phoenix Capital Research's picture




 

The Keynesian economists managing or advising the world’s Central Banks have always averred that they could pull us out of the weakest recovery in the post-WWII era if they were allowed to have their way.

 

Their “way” involves rampant debt monetization, also called Quantitative Easing or QE. Indeed, the primary argument from the Keynesians as to why QE has thus far failed to generate a rip-roaring recovery is that none of the QE programs in place were large enough.

 

Japan is where the Keynesian economic model rubber hit the road. In April 2013, the Bank of Japan announced a staggering $1.4 trillion QE program.

 

In today’s world of Central Banking madness, $1.4 trillion no longer sounds like an insane amount. So let me put this number into perspective…

 

$1.4 trillion is…

 

1)   The equivalent of 24% of Japan’s total annual economic output.

2)   Enough to fly every human being in Japan to California for a 2-week vacation.

3)   The equivalent of writing a check for $11,200 to every man, woman, and child in Japan.

 

Moreover, with $1.4 trillion, you could…

 

1)   Buy Australia’s entire economy for a year.

2)   Fund NASA for the next 82 years.

3)   Treat every person on the planet to a $200 five star-dinner at one of New York’s top restaurants.

 

The program has been a complete failure. Japan’s GDP growth accelerated for only two quarters before turning down again. The misery index in Japan has hit a 33-year high as households were crushed by riding prices.

 

Even exports, which were supposed to be the primary beneficiaries of a weakening Yen, have tanked. According to CLSA, real exports remain 16% below the 2008 peak in real terms. Sony, the once great electronics giant of Japan slashed its profit outlook by 70% and canceled its dividend for the first time in 50 years.

 

In simple terms, Abenomics has failed to revitalize Japan. In very specific terms a single QE program equal to over 24% of Japan’s GDP FAILED to generate sustainable growth in GDP, jobs, or even exports.

 

So what did the Bank of Japan do?

 

It increased its QE efforts.

 

It is now clear that Central Banks will do absolutely anything but admit failure. Japan has proven point blank than QE does not create growth. Instead of admitting this, the Bank of Japan has chosen to increase QE.

 

This is only going to usher in the next round of the Great Crisis that much faster. Only this time around, entire countries will go bust, NOT just banks.

 

Don’t let the second round of the financial crisis crush your portfolio… we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.

 

You can pick up a FREE copy at:

http://www.phoenixcapitalmarketing.com/roundtwo.html

 

Best Regards

Phoenix Capital Research

 

 

 

 

 

 

 

 

 

 

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Sun, 11/02/2014 - 13:19 | 5404163 Midnight Rider
Midnight Rider's picture

The central bankers incorrectly insist that if they weren't doing what they were doing, the economic situation would be even worse, thus they are helping. It is this failed logic that will untimately crush the system. Monetary policy does not work to heal what is ailing the world's economies. There are structural problems that until fix will never resolve these issues. So, as the central bankers appear to be unable to look beyond the level of the equity markets, we will be destined to endure an massive implosion at some point.

Sun, 11/02/2014 - 17:50 | 5404761 Midnight Rider
Midnight Rider's picture

Just to add some detail - current central banker actions are causing a massivie disincentive to pursue the structural reforms that are the only answer to turning the world's economies around. Basically it reads - rather than do the hard things to benefit the entire economy, we will do the easier push-button thing to enrich a very small portion of the economy, at the expense of the majority remainder.

Sun, 11/02/2014 - 08:58 | 5403573 VAD
VAD's picture

From the CB's point of view, blowing up the system is not failure but a side-effect of their narcissism and single-minded greed.  They don't give any fucks how bad things get for the rest of us.  "Keeping the economy going" is not really any of their concern.  We're just useless eaters after all.

Sun, 11/02/2014 - 07:49 | 5403502 Comte d'herblay
Comte d'herblay's picture

How naive.

You don't know the definition of, "Going Bust".

When you owe more than own, you have "gone bust".  

By that definition, so many countries and individuals and corporations are already and have been for a long long time, :Gone Bust:.

All that remains is for those with a claim against those entities to act. IF they don't act then you continue on, just as hunnerts of thousands of them, and us, do.

And who is going to make a claim on Japan? 

 

Sun, 11/02/2014 - 05:48 | 5403431 GreatUncle
GreatUncle's picture

The psychology that needs to be understood.

The central bankers and those that operate the economic mechanism ONLY DO IT FOR THEMSELVES.

It is how they maintain the lifestyle they believe is their entitlement by right and stuff everybody else.

If the system was to fail and fiat collapsed all their measurable worth in the fia collapses also.

By contaminating gold, silver or any other resource with derivatives and funny paper all traded in fiat they left no place uncontaminated for them to safely store their ill gotten gains.

On that it will only be QE until it busts and QE is hidden in the lending of leveraged fiat where for every 20 lent 19 or so are created to keep the inflation / growth statistics going.

2008 was a game changer all the QE revealed how much was being created by banks through leverraged lending that was to offset the deflation of economies we are alredy in.

FED tapering bullshit like the UK government QE just moved back into the bank lending process to be continued out of sight out of the sheeps mind with Merv the Swerv relaxing the rules on the level of leverage before Carney took over so he didnt have too.

HERE IS THE QUESTION MR BANKER, IF THE LEVEL OF QE REQUIRED IS GREATER THAN THE 20 OR 30 TO 1 THEN THE SYSTEM STARTS TO CONTRACT SO IF ANYTHING EXPECT FUTURE LEVERAGES FAR HIGHER. OR THE FED CAN JUST KEEP PULLING THE DIFFERENCE AS QE OUT OF THE MAGICIANS HAT FOREVER.

THe last point I feel is more pertinent than the rest and for poor people with no assets suggest you buy a gun and plenty of bullets as an investment because you are the category they will be destroying and made to suffer first.

Sat, 11/01/2014 - 23:09 | 5403049 eyesofpelosi
eyesofpelosi's picture

Staring into the sun can blind you, but in this case that rising sun of Japan is a crystal ball that forecasts the economic near future of most of the world. 

 

Sat, 11/01/2014 - 23:06 | 5403044 Sambo
Sambo's picture

A single bundle of US$1 bills worth 1.4 trillion will circle the Earth 3.8 times!

Sat, 11/01/2014 - 22:53 | 5403019 Sambo
Sambo's picture

Very few want the choas that will ensue if the entire centrally controlled banking system collapses. That is why it is still up and running. There is no political will to do what is right.

Sat, 11/01/2014 - 22:56 | 5403022 Sambo
Sambo's picture

Typo error....chaos....it is chaos....chaos. What else can it be?

Sat, 11/01/2014 - 22:38 | 5402975 Paracelsus
Paracelsus's picture

I remember when Nick Leeson brought down Barings Bank working out of Singapore.He was trading JGB's and kept doubling down,and then doubling down,etc.  Just like a Casino.Twenty-five thousand puts of 25k each.The point I want to make here is that after the Kyoto earthquake the gov't just left the collapsed freeways as is.

If reconstruction had occurred with immediate contracts the JGB futures he had might have risen and he might have been able to trade his way out his hole (position).This was a while ago.Japan might have been able to survive the current mess if they refused to prop up the Zombie banks.As I understand it they also have a very monolithic political structure which is conservative towards change. Hopeless....

One last point: If those JGB's were to pay for repair of infrastructure,at least they would have had something to show for it (something "concrete").

Sat, 11/01/2014 - 20:43 | 5402727 tumblemore
tumblemore's picture

yup

Sat, 11/01/2014 - 20:19 | 5402671 Sages wife
Sages wife's picture

Okay, QE 1, QE 2, Twist, QE 3.  I think I've figured what's next; "     ".  That's right, disappearing ink.  The  fools accept payment, and 24 hrs later they have endless copy for their devices, and/or washrooms.  Solves the currency volume thing.  Just have to figure a clever cyber compliment.  Wait a minute...........!

Sat, 11/01/2014 - 20:18 | 5402666 lasvegaspersona
lasvegaspersona's picture

With QE they don't buy the good stuff. They buy bonds that no one else wants. This makes failure...successful! It assures that what should have become worthless will have value and at the same time almost ensures that anything that could win in the market place never gets a chance to show up....the perfect Keynesian world I guess.

Sat, 11/01/2014 - 19:12 | 5402491 Son of Captain Nemo
Son of Captain Nemo's picture

This should help explain the psychology of these motherfuckers in the CBs and those in the U.S. military who bend over and grease up to do their daily bidding rather well!

Tip of the hat yet again to P.C.R.

 

Sat, 11/01/2014 - 18:43 | 5402426 Son of Captain Nemo
Son of Captain Nemo's picture

Yes indeed!...

Blowing "themselves up" and everyone else for that matter in the form of starting WWIII when they know they can't control all the viable energy in Eastern Europe and the Middle East which is playing itself out as we speak is fast approaching!

Question is will the boyz and girlz in uniform in the U.S. that have been used like the worst whores these last 13 years continue securing the agenda for these perfect psychopathic assholes of starting wars they know they can't finish -this time meeting superior force with the likes of Russia and China?... Are they that stupid?...

I certainly believe they are, but one can always hope I'm wrong!!!

Sat, 11/01/2014 - 18:02 | 5402325 Joebloinvestor
Joebloinvestor's picture

All governments are watching the social networks for the rise of the barter system, which gives Mr. Taxman conniptions.

Sat, 11/01/2014 - 17:32 | 5402253 bwh1214
bwh1214's picture

Krugmans story on Japan 10.31.14.  

 

Let him never forget these words, and that he more than anyone else has allowed public opinion to support such nonsense. 

 

TOKYO — For almost two decades, Japan has been held up as a cautionary tale, an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.

I was one of those critics; Ben Bernanke, who went on to become chairman of the Federal Reserve, was another. And these days, I often find myself thinking that we ought to apologize.

Now, I’m not saying that our economic analysis was wrong. The paper I published in 1998 about Japan’s “liquidity trap,” or the paper Mr. Bernanke published in 2000 urging Japanese policy makers to show “Rooseveltian resolve” in confronting their problems, have aged fairly well. In fact, in some ways they look more relevant than ever now that much of the West has fallen into a prolonged slump very similar to Japan’s experience.

The point, however, is that the West has, in fact, fallen into a slump similar to Japan’s — but worse. And that wasn’t supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us. On the contrary, Western policies since 2008 have been so inadequate if not actively counterproductive that Japan’s failings seem minor in comparison. And Western workers have experienced a level of suffering that Japan has managed to avoid.

What policy failures am I talking about? Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economywith a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010. Japanese fiscal policy didn’t do enough to help growth; Western fiscal policy actively destroyed growth.

Or consider monetary policy. The Bank of Japan, Japan’s equivalent of the Federal Reserve, has received a lot of criticism for reacting too slowly to the slide into deflation, and then for being too eager to raise interest rates at the first hint of recovery. That criticism is fair, but Japan’s central bank never did anything as wrongheaded as the European Central Bank’s decision to raise rates in 2011, helping to send Europe back into recession. And even that mistake is trivial compared with the awesomely wrongheaded behavior of the Riksbank, Sweden’s central bank, which raised rates despite below-target inflation and relatively high unemployment, and appears, at this point, to have pushed Sweden into outright deflation.

The Swedish case is especially striking because the Riksbank chose to ignore one of its own deputy governors: Lars Svensson, a world-class monetary economist who had worked extensively on Japan, and who had warned his colleagues that premature rate increases would have exactly the effects they did, in fact, have.

So there are really two questions here. First, why has everyone seemed to get this so wrong? Second, why has the West, with all its famous economists — not to mention the ability to learn from Japan’s woe — made an even worse mess than Japan did?

The answer to the first question, I think, is that responding effectively to depression conditions requires abandoning conventional respectability. Policies that would ordinarily be prudent and virtuous, like balancing the budget or taking a firm stand against inflation, become recipes for a deeper slump. And it’s very hard to persuade influential people to make that adjustment — just look at the Washington establishment’s inability to give up on its deficit obsession.

As for why the West has done even worse than Japan, I suspect that it’s about the deep divisions within our societies. In America, conservatives have blocked efforts to fight unemployment out of a general hostility to government, especially a government that does anything to help Those People. In Europe, Germany has insisted on hard money and austerity largely because the German public is intensely hostile to anything that could be called a bailout of southern Europe.

 

I’ll be writing more soon about what’s happening in Japan now, and the new lessons the West should be learning. For now, here’s what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.


Sat, 11/01/2014 - 19:19 | 5402499 fleur de lis
fleur de lis's picture

The sooner Japan severs the ties with the central banker parasites and starts to take care of itself and its inhabitants the better off they will be. They have a solid cultural tradition of monetary savings and low or no debt. The modern system of crushing debt is foreign to them. It will be difficult at the start but if they can tell the central bankers to buzz off and return to their own sensible roots they will recover. Dealing with parasites always comes to a bad end.

Sat, 11/01/2014 - 18:13 | 5402353 Fred Hayek
Fred Hayek's picture

It takes an immense pretentiousness to make mistakes on the scale of a Krugman. Men simply trying to adhere to reality are unable to scale the olympian heights of falsehood attained by Krugman.

Sat, 11/01/2014 - 17:28 | 5402248 Joebloinvestor
Joebloinvestor's picture

When the CME allowed them to participate, any wonder why PM's blew up?

They will destroy the PM market first.

Sat, 11/01/2014 - 16:44 | 5402109 CHX
CHX's picture

CBs will blow up the entire system and then balme someone else.

 

There, fixed it for ya PCR.

Sat, 11/01/2014 - 16:43 | 5402106 deagle44
deagle44's picture

might as well create money and spend it into the economy if inflation is low and unemployment is higher than desired.

Sat, 11/01/2014 - 16:46 | 5402121 kaiserhoff
kaiserhoff's picture

Why hell yes.  Why should anyone pay taxes, or work a real job?

Let's just print some damn money, and all be rich and fat and stoopid forever.

What could go wrong?

 

Sat, 11/01/2014 - 17:03 | 5402174 deagle44
deagle44's picture

technically in our current economic system taxes are not needed, it would just be more difficult to manage.  As far as nobody working that would severaly limit the supply of goods and services which would cause massive inflation.  So that wouldnt work.  

Remember, inflation isnt just "printing" money, you also need to include velocity of money and supply of the good or service.

Sat, 11/01/2014 - 18:38 | 5402410 Steverino
Steverino's picture

dp

Sat, 11/01/2014 - 18:39 | 5402408 Steverino
Steverino's picture

if nobody worked then "technically" there would be no supply of goods or services to have inflated prices...

Sat, 11/01/2014 - 17:09 | 5402188 kaiserhoff
kaiserhoff's picture

Please inform you Junior High Civics teacher that she sucks at maff,

  and get out into the real world once in a while, if you don't want to freeze and starve in the dark.

Sat, 11/01/2014 - 17:14 | 5402196 deagle44
deagle44's picture

nm

Sun, 11/02/2014 - 09:25 | 5403611 Thanatos
Thanatos's picture

Are you part of that 4-Chan DEAGLE Website Population Projection Hoax?

http://www.deagel.com/country/forecast.aspx

 

I saw that in an "urgent" e-mail and LOL'd.

Fucking DEAGLE ... I spent too many seconds in /K on 4-Chan for that one to fly by unnoticed.

It's getting thick and deep these days.

 

As far as the article... Yep, things are headed for the future.

 

Sat, 11/01/2014 - 17:15 | 5402173 deagle44
deagle44's picture

double post

Sat, 11/01/2014 - 17:25 | 5402242 Rememberweimar
Rememberweimar's picture

Parasite Obolinite to meet with Federal Jew Reserve Counterfeiters on Monday to discuss ways of stealing what little we the people have left away from us for good...
http://www.reuters.com/article/2014/10/31/us-usa-fed-obama-yellen-idUSKB...

Sat, 11/01/2014 - 18:17 | 5402365 deagle44
deagle44's picture

link doesnt work, got another one?

Sat, 11/01/2014 - 18:17 | 5402364 deagle44
deagle44's picture

link doesnt work, got another one?

Sat, 11/01/2014 - 16:38 | 5402091 Sudden Debt
Sudden Debt's picture

People should really see how the young japanese people live... In little rooms a few square meters large, totally broke and if thye work they push 12 hours a day for a minimum wage.
Way worse than what we have for now but that will also come.

Sat, 11/01/2014 - 16:13 | 5402036 Conax
Conax's picture

They get everyone in debt over their heads, kill the productive sector, shear the sheep of real estate, businesses and anything else worth a buck, then everyone that produces must begin again, somehow. The older people just die off for lack of energy and will to start over.

Satan laughing spreads his wings.

Sat, 11/01/2014 - 16:08 | 5402026 VWAndy
VWAndy's picture

Justice in thier courts?

Sat, 11/01/2014 - 16:05 | 5402017 WTFRLY
WTFRLY's picture

AE 9/11 Truth researchers plan lawsuit to seek release of 500,000 documents held by FEMA, NIST

 

http://wtfrly.com/2014/11/01/ae-911-truth-researchers-plan-lawsuit-seek-...

Sat, 11/01/2014 - 16:04 | 5402015 VWAndy
VWAndy's picture

As if the central banks are well meaning. Wake up. This is how they intend to make themselves godlike. The gods of fiat.

 

 

Sat, 11/01/2014 - 15:40 | 5401959 limacon
Sat, 11/01/2014 - 15:33 | 5401947 DeadFred
DeadFred's picture

Think of the ebola outbreak if you allowed all the Liberians to take have their $200 dinner in New Yoek with all the others in the world. I say three cheers for anything that hastens the end of this farce.

Sat, 11/01/2014 - 15:24 | 5401940 kaiserhoff
kaiserhoff's picture

Amen, but not just central bankers.  Plenty of guilt to go around.

Sat, 11/01/2014 - 14:57 | 5401896 Duc888
Duc888's picture

 

 

Psychopathy and hubris often run hand in hand.

Sun, 11/02/2014 - 01:12 | 5403221 Radical Marijuana
Radical Marijuana's picture

Yeah, Duc888, the banksters' plans appear to be to mass murder the majority of the world's population, in ways whereby the banksters will be able to survive and prevail to become even more in control over the survivors. Whether they will be able to succeed at doing that is an interesting question. However, there appears to be no reasonable doubts that they ARE going to try!

Sat, 11/01/2014 - 14:36 | 5401864 Joebloinvestor
Joebloinvestor's picture

SONY to announce a new product line of personal radiadiation monitors and encrypted communications aimed at the ISIS market.

Sat, 11/01/2014 - 14:30 | 5401853 KnuckleDragger-X
KnuckleDragger-X's picture

Reality is a problem, so it should be avoided at all cost....

Sat, 11/01/2014 - 14:30 | 5401851 Lordflin
Lordflin's picture

Blowing up the system constitutes success.

Sat, 11/01/2014 - 15:27 | 5401941 sleigher
sleigher's picture

Exactly.  Wasn't that the end game all along?  Liquidate everything and start over?  Not about the money so much as it is about control.

Sat, 11/01/2014 - 14:06 | 5401806 secretargentman
secretargentman's picture

What are we going to do tonight, Brain??

Same thing we do every night, Pinky!  .. TRY TO TAKE OVER THE WORLD!!!

Sat, 11/01/2014 - 17:23 | 5402236 Rememberweimar
Rememberweimar's picture

Parasite Obolinite to meet with Federal Jew Reserve Counterfeiters on Monday to discuss ways of stealing what little we the people have left away from us for good...
http://www.reuters.com/article/2014/10/31/us-usa-fed-obama-yellen-idUSKB...

Do NOT follow this link or you will be banned from the site!