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Sell, Sell, Sell... The Central Bank Madmen Are Raging
Submitted by David Stockman via Contra Corner blog,
The global financial system has come unglued. Everywhere the real world evidence points to cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.
Yet overnight two central banks promised what amounts to more monetary heroin and, presto, the S&P 500 index jerked up to 2070. That is, the robo-traders inflated the PE multiple for S&P’s basket of US-based global companies to a nose bleed 20X their reported LTM earnings.
And those earnings surely embody a high water mark in a world where Japan is going down for the count, China’s house of cards is truly collapsing, Europe is plunging into a triple dip and Wall Street’s spurious claim that 3% “escape velocity” has finally arrived in the US is soon to be discredited for the 5th year running. So it goes without saying that if “price discovery” actually existed in the Wall Street casino, the capitalization rate on these blatantly engineered earnings (i.e. inflated EPS owing to massive buybacks) would be decidedly less exuberant.
In truth, nothing has changed about the precarious state of the world since yesterday. Except….. except the Great Bloviator at the ECB made another fatuous and undeliverable promise—- this time that he would do whatever he “must to raise inflation and inflation expectations as fast as possible”; and, at nearly the same hour, the desperate comrades in Beijing administered another sharp poke in the eye to China’s savers by lowering the deposit rate to by 25 bps to 2.75%.
Let’s see. Can it possibly be true that European growth is faltering because it does not have enough inflation? Or that China’s fantastic borrowing and building boom is cooling rapidly because the People Bank of China (PBOC) has been too stingy?
The answer is not on your life, of course. So why would stocks soar based on two overnight announcements that can not possibly alleviate Europe’s slide into recession or the collapse of China’s out-of-control investment and construction bubble?
It can’t be a case of debatable data. Europe’s real GDP is no higher today than it was in the third quarter of 2006. Self-evidently, the temporary slowdown in consumer inflation during recent months owing to plunging oil prices and the transient impact of exchange rates cannot possibly explain this long-standing trend of going nowhere.

Indeed, during this same period, Europe’s CPI has risen by nearly 20%. Where is it written or proven that an average of 2% annual inflation causes economic growth to grind to a halt? There is not a shred of evidence for that proposition—so Draghi’s pledge to restore 2%/year shrinkage in the value of the wages and bank accounts of European households cannot possibly mean more growth, more profits and more S&P market cap.

In fact, the whole clamor about “deflation” and Draghi’s overnight pledge to do whatever it takes to get inflation rising quickly has to do with a transient blip in the price index during the last 12-18 months. But is this the first time that a shift in the global commodity cycle and the euro exchange rate has caused a temporary dip in short-run consumer price trends? The historic data indicate a resounding no.

In fact, the only manner in which weakening inflation could possibly impact short-run real GDP growth is if European consumers were to sharply raise their savings rate, waiting for lower prices tomorrow. This is the hackneyed claim of the Keynesian money printers, of course, but where’s the evidence? After a temporary surge in Europe’s personal savings rate during the Great Recession, it has regressed to its recent historical average, and has remained on the flat line, even as inflation rates have decelerated since 2012.
The idea that the hard pressed households of France, Italy, Spain and even Germany have gone on a buyers strike and are hoarding cash is a flat-out lie. But it is one that suits the convenience of the desperate Keynesian apparatchiks pulling the levels in Brussels and Frankfurt. And, yes, it also makes for the kind of headline policy announcements that robo-traders can snatch with blinding dispatch.

No, the problem in Europe is not too little inflation in the short-run; it is staggering levels of taxes, public debt and interventionist dirigisme that represents a permanent, debilitating barrier to growth. Draghi already has driven deposit rates through the zero bound at the ECB deposit facility, and now its spreading rapidly through the banking system to businesses and consumers.
So precisely who will finance this soaring mountain of public debt at negative real returns when the fast money is flushed out of the ECB’s now plummeting euro? The “algos”, needless to say, didn’t get to that question during this mornings frenzied buying.

Likewise, last night”s signal from China was a warning to take cover, not to get all giddy in the casino. The People’s Printing Press of China has been on a rampage for this entire century, and has expanded its balance sheet by an incredible 9X since the year 2000.
Now, even the hapless masters of red capitalism taking shelter in Beijing recognize that this colossal money printing spree has fueled fantastic levels of over-building, over-investment and mind-boggling real estate speculation throughout the land.
The fact that—despite their better judgment—-they have had to once again open the monetary spigot is evidence that China’s addiction to the printing press is terminal, and that a hard landing is only a matter of time. No one told the algos that, either.

The real downward trajectory in China is tracked by the canary in the iron ore pit. Like almost everything else, China’s iron and steel industry is massively overbuilt. It has 1.1 billion tons of capacity but in the order of 600 million tons of sustainable “sell-through” demand. That is, need for steel for use in consumer products and capital replacement, not the current one-time construction binge.
Stated differently, China’s excess steel capacity is greater than the combined output of the US, Japan and the EC combined. Accordingly, when its real estate and construction bubble finally collapses, the world market will be inundated with cheap steel and every manner of goods made from it, including automobiles. During the current year alone, China will export more steel than the US industry will produce, and it is just getting started on the greatest “dumping” campaign the world has ever seen.

In short, there is a tidal wave of industrial deflation coming down the pike—- owing to two decades of world-wide central bank financial repression that has fueled vast malinvestments in mining, manufacturing, transportation and trade. That, in turn, will trigger a monetary race to the bottom by the central banks—a race that is already underway owing to Japan’s Halloween Massacre of the yen. Soon the rest of East Asia—and especially China— will have to join the exchange rate plunge or find their export based economies hitting the shoals.
Then will come more desperate maneuvers from the ECB, as even the German export machine falters in the face of collapsing growth in China and competitive devaluation all around the world. Stated differently, last night’s central bank announcements were the starting guns for a monetary implosion that will soon shock financial markets and real production, trade, employment and incomes on a world-wide basis.
Someone should reprogram the algos. Otherwise, one of these days they will snatch a headline which says sell, sell, sell!
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Oh please, oh please, oh please ....
It would be better if instead of giving their freshly inked dollars to the banks through ZIRP and the subsequent QE, they at least built roads, or gave us all piano key neckties...
“cooling growth, faltering investment, slowing trade, vast excess industrial capacity, peak private debt, public fiscal exhaustion, currency wars, intensified politico-military conflict and an unprecedented disconnect between debt-saturated real economies and irrationally exuberant financial markets.”
OK fine.. but what is the downside?
..just in case anybody has not noticed.. the price of tools and steel parts (from Asia) have been deflating while the cost of food, energy (electricity) and government have been necessarily skyrocketing.
A trade war and a currency war at the same time, might as well throw in a good old-fashioned hot war and make it a complete set....
All of China's over capacity and ghost cities and such can be explained as pre-positioning for a major war they expect to win
I love it -- the apocalypse hat trick !
"The People’s Printing Press of China has been on a rampage for this entire century, and has expanded its balance sheet by an incredible 9X since the year 2000."
Also just how will this "Force" the chinese to treat gold? Why would the chinese, who are operating exactly like the US (only 9X instead of 6X) not want gold to be manipulated just like the US?
Could we be entering a phase where the CBs of the world take turns manipulating GOLD and selling control back and forth?
Real question as I have lots of PMs and am loading up more.
A hot war with Russia can cold for a very, very, very long time.
I say again...avoid the debt sheeple. Incomes are still collapsed. Should be interesting to see how the "fat tax" works out here.
Sell...sell...sell...WHEN and WHAT.
I´ve begun to hate these neverending Sméagols that never can give a date. You´ve suckered a lot of people - even the likes of Hugh Hendry. You are all probably right but these pieces of infotainment are completely useless unless you spell out the approximate date of the long awaited collapse and the direction of countermeasures to be taken. Put your money where your mouth is!
I stopped believing your snakeoil after 2010. There is something weird about selling both fear and greed at the same time.
I think we are firsthand witnesses to manipulation.
OK sparky, then give me an exact date for the next earthquake, volcano or hurricane. You can predict the coming but not the time or place. You might want to read up on chaos theory.
Of course there will be a crushing earthquake in SF. Last time that happened was 1905 and ever since people have been going about their lives without major problems. A lot of profitable companies have been started...and so on. By this reasoning no one should ever have bought a single share in Apple or Genentech. Right?
Telling people that there will be a wipe-out quake along the San Andreas fault ...in the 22nd century or 23rd century or 24th century is really useless information. When will the Yellowstone caldera blow? Just because it´s there and all science tells us it will eventually will blow you shouldn´t live in the U.S....?
A lot of people have lost a lot of money worrying about the inevitable. Death.
Actually this constant , and yes I mean constant , selling of fear (and greed at the same time) is simply not logical. If you even can´t nail down the likely decade with some kind of statistical certainty - then you may just as well play with a Tarot deck.
And yes - you can have all the single facts right. The problem is that economics is not a science and I strongly suspect that NO ONE really knows. Really , inferring future events from statistical massaging of econometrics withour prospective randomized trials and other tested tools for controlled experiments. It´s simply not the scientific method. And Krugman can say whatever he wants about that.
This also goes to the discussions that have being going on the background for some time...ZH just came out of nowhere and does not really serve anyone...? We see this typical lack of multiple views also in geopolitical questions where Putin suddenly is this months flavor. For sure he may be better than Obama - but trust me he´s not all that you currently make him out to be. And for some strange reason Chinese politics are never really discussed (my last stab in the dark in that direction got deleted).
You know I´m starting to feel that there is a meme being planted and critical thinking is important.
Better yet just buy and hold. Forget about it...it will all be there with profit when you choose to retire. The market always goes up over the long run.
I have to agree with you. ZH has been extremely bearish about the stock market since the site came online in early 2009, which was coincidentally a great entry point for the US stock market.
I like ZH because they're pretty quick to report on market and political actions but you always have to take in mind that it's very biased news. For instance, when Martin Armstrong predicts doom, revolution or a stock market crash you'll probably see a message on this site, but when the same guy predicts the Dow may see 26,000 by September 2015 while gold is expected to crash further you don't hear a word about it.
Kinda like the opposite of the regular financial press, no?
More like a complement to it.
If you want to make Americans poorer and even more dumbed down - the strategy of neverending fear and simplified selling of distrust fits nicely.
Today as every week there´s another posting on student debt and the uselessness of college studies. And yes - we see a lot of that in reality - a college degree in how to run a petting zoo will impoverish you. But the blanket method of making everyone abstain from all education...? They Also never give any smart stratgies to how to try to manage the situation.
Americans as obese fear-ridden dumbed down basement-living forties-somethings? Only if you if you agree to it by your own volition. The right education is still worth it´s weight in gold. Higher education is not for everyone but doesn´t mean it should be stopped completely.
They only way to destroy America is to make the americans do it by themselves. I think you already have gotten a taste of that strategy with your current president.
Charts, Charts and more Charts. Surely no more. Please make it stop........Faaaaaarrrrrkkkkkk........
NO MOAR MOAR MOAR CHARTS!!
MAKE YOUR LITTLE BRAIN EXPLODE!!
Unsustainable debt levels, overcapacity all over the world, competitive devaluations, low growth, high unemployment, poor demographics in rich countries, increased tensions and conflicts between the West and Russia - that is the toxic mess the world find itself in. All the surreptitious buying of US stocks and futures by the Fed will not be able to levitate the US stock market for much longer.
And US debt is still rising $1 trillion a year from its current level of $17.94 trillion. And US unfunded liabilities are rising at $7 trillion a year from the current base of at least $130 trillion. There is no chance that US debt is ever paid down. Default is the only option. Though it looks like that the Japanese bond market collapse is far more imminent.
As usual, Stockman is superb with coherent facts and inescapable logic.
Yep, they've created a monster they think they can control, but like Doctor Frankenstein their creation will escape their control.The world will look much different after the dust settles but things will get very bloody first.
Curiously
Yet it will look a lot like what Orwell described in '1984'.
1984 is what it will look like if things DON'T change.....
True.
But for every 10 people who get together to change things, 2 will be governement agents.
Sorry.
Only if you agree to it. Use your 2nd amendment and just say...no. You may die. Yes. But if you feel it´s better to be a slave to debt and corruption and jackboot thuggery - well then don´t stand up for you rights.
Life is dangerous and always ends with death. No matter what.
Thank you for your pep talk, but I have always believed in "death before dishonor,"or, in this case, 'slavery." I was confronted with that choice almost 50 years ago, chose death but did not die (obviously) and ever since then my life has gotten better and world's has gotten worse.
How do you interpret that? (insanity is not an acceptable answer)
Mayne I am an egocentric - but to me it sounds that the world (yours that is) has gotten better and better. Put in another way - how can you as a single individual assume full responsibility fer the whole world. Maybe it becam a worse place because too many accepted slavery as the best way out. I don´t know. I only now what fits me best and will not accept being robbed,raped or in any other way go silently into the night. Odds are high you may loose but you will surely loose if you don´t resist.
Peptalk. Didn´t intend it to be. Really. I am not big on telling others what to do. I just get exasperated at this currently permeating attitude that everything is hopeless. Everything will crash. I am doomed to become an obese 40ies-something living in moms and dad basement.
This is the off-spring of the people that took out Peleliu , Iwo and Okinawa...?
My opposition to tis line og thought started when yeta another doom and gloom factoid recently was put up. I stopped believing in that 2010. Selling fear and greed at the same time is not good advise - it´s manipulation. Even if the stockmarket crashes by 50% tomorrow I will still be better off than in 2009. If i had sat on the sidelines or actively fought the Fed I would now have been destitute and a smarter individual (whom I suspect is the real snakeoil vendor) would have all my possesions in the form of stocks in companies , etc.
I don´t know if I answered your question. But that´s the way I seee it.
Obviously, the world hasn't gotten better and better, but I think I am a better human being than I was earlier in my life. As a child I always had my eye on the ball -- not the baseball or the football -- but on truth, fairness and justice. I drifted away from them in college and my early career, but with some assistance found my way back to them by the end of my third decade.
I don't conflate slavery with debt slavery. As many who read zh do.
It became worse place because of the First Law of Nature: Diminishing Returns. In the spring the rose bush sends out little buds that grow from the light and water provided to the bush. The bud starts to grow petals and flourish and becomes a beautiful flower for a few weeks. And then diminishing returns set in, the rose decays and its petals are blown in the wind.
This is what the earth is. What you and I are. We aren't separate from nature -- we are Nature in its highest form. We are governed by the same rules that govern potato bugs and fruit flies.
I had a good friend in NYC during the VietNam War, which we both violently hated. One night in late '67, on drugs, he leapt off the roof of the brownstone he lived in. Nothing but cement and wrought iron picket fences below. Because he ran off the roof and didn't just jump, he landed on a parked car and was taken to the hospital.
Not long after that I dropped out the more conventional way, and moved to San Francisco, a little too old to be a flower child. When I went back to New York to visit friends, I saw my friend who didn't look or move or act and differently than he had before he jumped. He had a small scar on his chin where he had caught some glass from the automobile's rear window, which he referred to as his Heidelberg dueling scar.
And he told me a couple of things:
First, that he would never know if he woke up in on the same plane as he jumped off the roof on. Was he dead in the world we had shared and was everything since then, a creation of the force of the universe itself that no one could possibly know? And that included me as I spoke with him.
Not the me from the Earth before his jump, but some duplicate me, a clone, upon which the Universe held a copyright.
Second, on his way home from a party the night he jumped, where he had gotten very stoned, he had heard 'voices' in his head who said that he was responsible for the war in Viet Nam and that when got home, he had to go up on the roof. He said that he did that and remembered nothing after climbing up a ladder that accessed the roof.
Finally, he told me that he was released from the hospital on January 25, 1968, and a couple of days later the Tet Offensive began.
Speaking of Snake Oil Salesmen, I was all in cash at the end of '08 and have been all in cash ever since. I missed the entire move from 6500 to 17,700 and really don't care. I have slept like a babe for 6 years and have denied myself nothing.
I believe the market will continue to go up until one day either the military will proscribe the buying and selling of stocks and derivatives. You will receive stock certificates (remember them?)in the mail and all option expiration dates will get the yellow flag.
The other scenario is that a Russian Topol will actually hit the corner of Wall and Broad taking out the Trading Floor of the NYSE and all of its banks of computers.
The arch enemy of capitalism, was never communism, Thom. Its real nemesis was always diminishing returns.
:o)
Why wory about the inevitable? Better to concern yourself with what you can do for yourself and avoid ...and so on. Avoiding bring Gruberized- Do not listen to illogical lies
My life is fine, even with jumbo CD rates at 0.55%.
I feel it's everybody else I'm worried about, but I know how easy it is to deceive yourself about something like that. :o)
But when it comes to giving a date instead of the ordinary Jewish waltz he is completely useless. My dog is better at predicting.
If it's predictions you want, there is no shortage of them all over the internet. What Stockman does so well is write clearly about the current situation, supporting his assertions and opinions with well-organized facts, and explaining the historical events that got us here.
Thom, if you're an investor you should avoid anyone who claims he can predict the future. You'll do better by reading people who can recognize the present for what it is, and then making your own investment decisions.
Still...you have to admit that was a pretty funny comment.
"Still I remain tied to the mast.". On the other hand the ship isn't sinking...
We all know the current situation. There´s no shortage in that department.
So what do we do? Sell everything and see the buyer get a great deal and good profits on what used to be our assets. Sell and buy physical PM and see them being monkey-hammered and later confiscated?
No one can predict even near-future time events but I feel we are seeing a tad too much of these descriptions without underlying even intutive thinking on the right approach on handling them. Because future events will have to be handled.
If I had a a lot of cash - even leant to me at exactly 0% interest I would be very happy for every gloom & doom porn fluff piece because that would scare the shit out of the sheeple and increase the speed and degree on the Pareto process where 80% of vereything would end upp in he hands of 20%. Maybe now 95% in the hands of the 5%. Or even more extreme.
I would buy (not on debt) and own and hold and hold and hold and hold. And would invoke the Constitution especially 2nd amendment when some slick character tries to take it by force (if I was American).
You were once bequeathed a great gift from the founding fathers and you should aim to keep it , because otherwise you will loose it i no-time.
You don´t even begin to comprehend the envy and worry such a legislation creates in countries like China , Russia and pretty much ROW where the people is the property of the state. Nothing more.
THE ROBOTS WILL HAVE THE LAST WORD !
https://www.youtube.com/watch?v=s2ZdJtJo4Ok
I know who I want for President in 2016.
Or 2015.
Or for the remainder of 2014.
Ofcourse i will do my best to serve the Public... but i am abit of a Jerk
Hahahahahaha
https://www.youtube.com/watch?v=_n5E7feJHw0
Careful. You may get exactly what you want. Just as the idiots (Gruber´s words) who rooted for ACA. Chumps! Libtard chumps!
Increasing the overcapacity of credit cannot mitigate an overcapacity of production.
The overcapacity of merchantilist dumping regimes are not historically purged by domestic monetary interventions but by foreign kinetic interventions.
One peaceful way to preclude merchantilist/monetarist dumping is to enforce tariffs and reciprocal trade barriers.
A less peaceful way to expunge overcapacity is to simply destroy it.
Pan back from the little blue ball we live in and none of it means a thing.
Pan in to the faces of your "2 children maybe 3" and it means everything.
That's why us pessimists have to tone it down a couple of notches.
It would be nice if the incredibly beautiful little blue ball didn't turn brown.
I harken back to the '90's Asian Tiger
In spite of our unhappiness living in a managed world, I believe we will look back and asked why they didn't try a little harder in their management.
Yes it is unfair that those closest to the Fed get the biggest benefit but we all benefit from an ongoing system that delivers all the necessities and niceties of life. Read Ferfal or When Money Dies or even The Road for a glimpse of our possible future. We would not just be going back a hundred years to live a more primative lifestyle of horse drawn Prius and better cell phones. We might be suddenly pitched into a world with 7 billion mouths and far fewer bowls of rice and loaves of bread.
At some level the leadership appears to understand the risks but the only preparations I see are those that protect the leadership. I see no effective programs to feed the starving masses that have been cast out of their place in a technical society into a world that needs agrarian skills.
The neurosurgeon and the rocket scientist are just nerds in a world without operating rooms and NASA.
The world exists in its current state because of the existence of government and rulers, not because of their absence.
Get rid of government and kill off all the unemployed psychopaths one by one.
Don´t fly small airplanes and do stay out of parking garages and such
The manipulation only stops when the currency crashes.
Stockman is dead on acerbically accurate and scathingly truthful about what is ultimately the debasement of labor and lives by mad central bankers, their rabidly greedy bankster masters, and complicit politicians back-stabbing their own populace.
It is a recipe for absolute disaster and human tragedy - being pursued with genocidal zeal by sociopaths who call themselves "leaders".
I like to keep this handy tool for reference. http://www.multpl.com/
I am concerned that David Stockman does not to have seemed to have got it.
There is too much political pressure against raising taxes to the correct level, so the additional "taxes" must be achieved via inflation.
Success!!!
Onward and upward!!!!
/s
raise taxes? Are you nuts. You are paying around 40%+ property, sales, FIca, income state and fed, etc. The problem is an ever expanding system of taking for 5 million new illegals, free unlimited meducation(all the pain killers you could want), unlimited military spending, Free Food and housing for 40% of the country, subsizes for crops, stocks, renewables, etc. We don't have a TAX problem...we have a SPENDING PROBLEM!
Example...NYC didn't have an income tax before 1966...now 3.65% that is just the city...the state takes another almost 9% for a total of almost 13% just for the local...then the federal which is 40%...then a sales tax....you are taking home maybe 40% of your income....unless you are very rich or very poor.
The correct level is ABSOLUTE ZERO.
Stockman produces some mediocre dribble bit on this occasion it's like the end of the script writers strike!
Nailed it. Pay your money and take your chances. Times are changing.
I suspect the "BIG BANG" at the beginning of time was actually a debt debacle like what we going to see when this BUBBLE POPS!
No, but the physical system of the Universe does have some eerie similarities to the financial world. Conventional theory states that a hyperinflation smoothed out and greatly expanded space right after the Big Bang. Supposedly, the Universe was created from nothing, as the negative energy of the Gravitational Field exactly balances the positive energy of everything else - sort of like the way banks create money from nothing which is balanced by debt of the same magnitude. The hyperinflation is what gave a Universe created from nothing an indefinately long lifetime. One thing nature has no direct analogy for is interest rates - as far as we know.
Don't you the think the bubble has altready 'popped', but is in 'bubble-pop' denial?
That middle chart of debt to GDP is FRIGHTENING!
I'm still taking deep breaths
When I read that figure, 2.75%, I started to get sexually aroused and had to take a cold shower.
sorry to interrupt the serious discussion.
Bloomberg story says five of 16 listed Chinese banks raised their one-year deposit rates to the ceiling of the regulatory benchmark, in a mixed response to the lower rates the government announced. They called the move "unusual' the boomberg link below;
http://www.bloomberg.com/news/2014-11-23/five-of-16-listed-china-banks-r...
When rape is imminent ....
Relax and enjoy!
Kkkkkkkkkkkkkkkkkkkkk!
the down side of deflationary strain now in evidence world wide : overcapacity; as Marx said, the ultimate destination of capitalism; and ultimate strangle-hold on society when its a Monopoly system, as it has no solution to its own disease. Monopolies don't like alternate solutions.
When 90% of US corporate profits are distributed as dividends or in buy back of own stock to keep the market afloat you know we have hit the asymptote.
When 85% of CD money printed at ZIRP feeds the Casino in speculative carry trades : ESSENTIALLY A ZERO SUM GAME ROBBING THE PUBLIC LEDGER OR PENSIONS OR FUTURE GROWTH DROWNing IN DEBT, you know that its ALSO hit an asymptote in private banking cum CB.
So if the real economy is in a box canyon as is the financial wizardry of global capitalism, where do the mice run to?
I have been looking at 3x Leveraged Gold miner ETF's like NUGT and JNUG, which we can get into to ride the wave up. They have 600% increase if they get back to $1350 gold, and crazier if we get back to $1800 gold. If you want to ride the ride down before gold comes around, look at JDST 3x Leveraged Gold Bear Miners.
So SHORT steel and chinese steel sectors, but beware more PBOC currency devaluations which will show with pull backs.
Anyone have any ETF's, or Chinese Stock in mind? Maybe an inverse ETF?
You can't fool mother nature. The planet is reaching it's carrying capacity and the system "knows" it. The mindless pursuit of growth is done for.
In a sane world sustainability would be a much higher priority. Sustainability means planning our future in a way that we do not set ourselves up to crash and burn at some future date. Long-term planning has not been something politicians excel at or are even good at. Our system is geared at getting politicians reelected and fulfilling the most pressing needs of today.
Things like profit, greed, and quenching our unrelinquishing desire for growth are placed in front of longer term issues and needs. Mapping out a logical and sustainable long-term plan requires delving into some rather hefty philosophical questions like what brings real happiness. (This is not an endorsement of the carbon tax as much as a call for better planning and less waste) More on this important topic in the article below.
http://brucewilds.blogspot.com/2014/04/planning-sustainable-future-for-mankind.html.
The "irrationally exuberant financial markets" are due to those who enjoy being closer to the SOURCES of "money" made out of nothing being excited while taking advantage of that. It continues to be ridiculous to deliberately ignore the systems of enforced frauds that make "money" out of nothing, while offering superficial, solely psychological interpretations about those phenomena!
In that context, I REPEAT some of what I commented previously about this article:
http://www.zerohedge.com/news/2014-11-21/broken-market-chronicles-third-year-row-most-shorted-names-generate-highest-return
The Broken Market Chronicles: For The Third Year In A Row, The "Most Shorted Names" Generate The Highest Return
"The fundamental problem with central-planning" is that system developed due to the successful application of the methods of organized crime to the political processes, in order to make and maintain the MAD Money As Debt system, where privately controlled banks get to make the public "money" supply out of nothing as debts, which fraud is enforced by governments, whose control was previously captured through the persistent application of those methods of bribery, intimidation, as well as assassination of those who could not otherwise be bribed or intimidated.
"The fundamental problem with central-planning" IS THAT WORKS AS THE APPLICATION OF THE PRINCIPLES AND METHODS OF ORGANIZED CRIME TO CONTROL CIVILIZATION, AND INDEED, WAS THE FOUNDATION OF NEOLITHIC CIVILIZATION.
THAT IS MANIFESTING AT AN EXPONENTIAL RATE, AS THE RESULT OF HOW THOSE SYSTEMS WERE BUILT TO CONTINUE TO AUTOMATICALLY OPERATE.
The degree to which the "market is broken" is the degree to which there is a breakdown in the dynamic equilibria between the various systems of organized lies operating robberies, where the banksters have become so dominate that they have almost totally been able to effectively privatize the public powers to rob, and to kill to back up that robbery, while the vast majority of the political puppets and manipulated muppets do not understand that, because they have been conditioned to not want to understand that.
There is no way to stop money being measurement backed by murder. Any "solutions" based on that ideal are NOT possible, and therefore, guaranteed to actually continue to backfire badly, and cause the opposite to happen in the real world. Most people who promote those impossible ideals of some "return to free markets" are deliberately delusional, while some are perhaps only thoroughly cynical.
There are NO realistic resolutions outside of the FACTS that money is measurement backed by murder. People who continue to be "successful" within systems based on enforced frauds are actually trapped up within the vicious spirals of the history of those sorts of social systems. There is not nearly enough consistent and deeper analysis of "the fundamental problem with central-planning," because there is an entrenched attitude of deliberate ignorance regarding how and why that is due to ORGANIZED CRIME!
That the international banksters operate through government enforced frauds is something that the majority of mainstream morons barely have any clues about regarding the deeper nature of, while those few to do figure out the ways that those enforced frauds actually operate as the foundation of our political economy then are almost always reactionary revolutionaries, who promote bogus "solutions" based on realizing impossible ideals about "free market capitalism" ...
We ARE facing "broken markets unlike anything seen in history!" However, those are merely the more blatantly obvious manifestations of the basic nature of Neolithic Civilization social pyramid systems, built on being able to back up lies with violence. That was the real foundation of the ability to develop the degree of "central-planning" that we now observe ... as well as why that kind of "central-planning" is accumulating systemic risks beyond reckoning!
Better realistic resolutions of those problems would require developing better evolutionary ecologies within our general energy systems. However, any such more realistic resolutions would have to be based upon accepting how and why the methods of organized crime made and maintained the civilization that we are currently living inside. Natural selection drove the kinds of artificial selection systems that surround us, which have become based on the maximum deceits and frauds. More radical truths, for more real, revolutionary resolutions of those problems, have to provide better systems of artificial selection, which were still consistent with the natural selection pressures that made and maintained the currently existing systems, where "the fundamental problem with central-planning" was ORGANIZED CRIME, which has become so dominate that it gets to pretend that it is not!
Regarding Stockman's idea that "there is a tidal wave of industrial deflation coming down the pike," I also REPEAT some of what I commented upon this article:
http://www.zerohedge.com/news/2014-11-18/why-qe-may-lead-deflation-long-run
Why QE May Lead to DEFLATION In the Long Run
In the MAD Money-As-Debt systems:
Money is created when debts are created.
Money is destroyed when debts disappear.
Too much money created out of nothing is inflation.
Too much money disappearing to nothing is deflation.
In the long, long run, the results tend to be runaway inflation, becoming hyper-inflation. However, the increasing whipsaw effects drive wilder and wilder oscillations between deflation and inflation. After all, there is NOTHING behind any of that but the ability to back up lies with violence, since the whole system is fundamentally ENFORCED FRAUDS.
Making "money" out of nothing in the first place is THE PROBLEM, compounded by it being privately controlled banks which are legally allowed to do that! Since that system was due to the ways that the methods of organized crime dominated the political processes, but that basic social fact was deliberately denied and/or ignored as much as possible, THAT PROBLEM of a monetary system based on "money" being created by debts and being destroyed when debts disappear, seems like it is never going to be well-understood by enough people, since they would have to move beyond their delusions regarding what money is, and/or should be, to face the facts that money IS measurement backed by murder, which has developed to become based on the maximum possible frauds and deceits.
The economic systems whipsaw themselves more and more, because of the wilder and wilder oscillations between too much money made out of nothing, then too much money disappearing back to nothing. That volatility itself can cause more bankruptcies, or business not being done, which causes more money to disappear, which is deflationary. Paradoxically, the systems respond by potentially compounding that by making more money out of nothing, as more debts, through whatever excuses they can find as fit to rationalize (which tend to favour the banksters and their buddies the most, of course.)
Since the established systems can always find more excuses to make more money out of nothing as debts, while many more who previously could and would undertake going more into debt are no longer able and willing to do so, the longer, long term outcome tends to be that the wilder oscillations between inflation versus deflation eventually ends in runaway hyper-inflation, as the last phase of the crazy collapsing into chaos.
It was typical for people like Greenspan and Bernanke, along with many other mainstream economists, to offer silly, superficial, solely psychological explanations for situations, because they deliberately ignore that everything was actually based on ENFORCED FRAUDS, which were the SOURCE of the public "money" supply, that drove all of the other sets of incentives following that to automatically become more criminally insane, since everything was based on being able to back up legalized lies, with legalized violence.
Those established systems have been making some fantastic profits, for a few, who were nearer the SOURCES of the "money" made out of nothing, but at the cost of driving runaway social polarization and destruction of the natural world to the point of criminal insanities, for those systems have become like a metastasizing cancer, or a parasite killing its host.
I agree with much of what you say, but things are so distorted it is hard to say exactly how this will play out. Money flows, currency changes, how unpaid debts are handled,and where wealth is held will all come into play. Things are such a mess we are in uncharted waters that it makes a major world war another ugly possibility.
For a while I was one of the people concerned we would see the world tumble into a massive deflationary cycle as debts went unpaided and credit collapsed. Now I have come to think inflation is getting closer every day. This would mean the "major deflationary period" is mostly behind us and it has not been disinflation as much as inflation being kept in check because of several factors, including where the money flowed, weak demand, dropping velocity of money, and the onetime benefit of lower interest rates.
Before you discount the possibility that we will move directly from where we are into stagflation then hyperinflation please consider that hyperinflation paves the way for governments and those in power to make a transition to a replacement currency and a reset of the whole system. It will be interesting what "they do" with energy prices during the coming year.
http://brucewilds.blogspot.com/2014/11/deflation-i-think-not.html
I must agree with that, AdvancingTime:
"... things are so distorted it is hard to say exactly how this will play out ... Things are such a mess ... we are in uncharted waters that it makes a major world war another ugly possibility ..."
Such a war would probably get started by "accident" after yet another false flag attack, provoking the established systems to have some kind of psychotic fit. No rational person can fully imagine the degree to which the established systems have become runaway criminal insanities!
A series of severe social storms could be like hurricanes, where the wind blew stronger in one direction, calmed, and then blew stronger in another direction, over and over ... The only thing we know for sure is that more and more energy is being pumped into the established systems of enforced frauds, while how that finally blows through is yet a great mystery, since that is certainly taking us through "uncharted waters!"
If the economy was healthy and balanced we would not be experiencing slow growth while massive amounts of money are being printed and poured into the system. The crux of our problem remains in the fact that both people and governments have lived beyond their means by taking on debt they cannot repay. Over the last several decades we have created entitlement societies built on the back of the industrial revolution, technological advantages, capital accumulated from the colonial era, and the domination of global finances.
Promises were made on the assumption that the advantages we enjoyed would continue in both Europe and the US. Ever greater prosperity and entitlements were to be sustained through debt financed consumption growth. In that eerie fantasy world, debt fueled consumption was to be the catalyst to bring about evermore growth. Debt does matter and the following article delves deeper into why kicking the can down the road will ultimately fail.
http://brucewilds.blogspot.com/2014/08/modern-monetary-theory-is-wrong-d...