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"The Fed Is Heading For Another Catastrophe... Central Banking Has Lost Its Way" Stephen Roach Warns

Tyler Durden's picture




 

Authored by Stephen Roach, originally posted At MarketWatch via Project Syndicate,

America’s Federal Reserve is headed down a familiar — and highly dangerous — path. Steeped in denial of its past mistakes, the Fed is pursuing the same incremental approach that helped set the stage for the financial crisis of 2008-2009. The consequences could be similarly catastrophic.

Consider the December meeting of the Federal Open Market Committee, where discussions of raising the benchmark federal funds rate were couched in adjectives, rather than explicit actions.

In line with prior forward guidance that the policy rate would be kept near zero for a “considerable” amount of time after the Fed stopped purchasing long-term assets in October, the FOMC declared that it can now afford to be “patient” in waiting for the right conditions to raise the rate. Add to that Fed Chair Janet Yellen’s declaration that at least a couple more FOMC meetings would need to take place before any such “lift-off” occurs, and the Fed seems to be telegraphing a protracted journey on the road to policy normalization.

This bears an eerie resemblance to the script of 2004-2006, when the Fed’s incremental approach led to the near-fatal mistake of condoning mounting excesses in financial markets and the real economy. After pushing the federal funds rate to a 45-year low of 1% following the collapse of the equity bubble of the early 2000s, the Fed delayed policy normalization for an inordinately long period. And when it finally began to raise the benchmark rate, it did so excruciatingly slowly.

In the 24 months from June 2004, the FOMC raised the federal funds rate from 1% to 5.25% in 17 increments of 25 basis points each. Meanwhile, housing and credit bubbles were rapidly expanding, fueling excessive household consumption, a sharp drop in personal savings, and a record current-account deficit — imbalances that set the stage for the meltdown that was soon to follow.

The Fed, of course, has absolved itself of any blame in setting up the U.S. and the global economy for the Great Crisis. It was not monetary policy’s fault, argued both former Fed Chairmen Alan Greenspan and Ben Bernanke; if anything, they insisted, a lack of regulatory oversight was the culprit.

This argument has proved convincing in policy and political circles, leading officials to focus on a new approach centered on so-called macro-prudential tools, including capital requirements and leverage ratios, to curb excessive risk-taking by banks. While this approach has some merit, it is incomplete, as it fails to address the egregious mispricing of risk brought about by an overly accommodative monetary policy and the historically low interest rates that it generated.

In this sense, the Fed’s incrementalism of 2004-2006 was a policy blunder of epic proportions.

The Fed seems poised to make a similar — and possibly even more serious — misstep in the current environment. For starters, given ongoing concerns about post-crisis vulnerabilities and deflation risk, today’s Fed seems likely to find any excuse to prolong its incremental normalization, taking a slower pace than it adopted a decade ago.

More important, the Fed’s $4.5 trillion balance sheet has since grown more than fivefold. Though the Fed has stopped purchasing new assets, it has shown no inclination to scale back its outsize holdings. Meanwhile it has passed the quantitative-easing baton to the Bank of Japan and the European Central Bank, both of which will create even more liquidity at a time of record-low interest rates.

In these days of froth, the persistence of extraordinary policy accommodation in a financial system flooded with liquidity poses a great danger. Indeed, that could well be the lesson of recent equity- and currency-market volatility and, of course, plummeting oil prices.

With so much dry kindling, it will not take much to spark the next conflagration.

Central banking has lost its way. Trapped in a post-crisis quagmire of zero interest rates and swollen balance sheets, the world’s major central banks do not have an effective strategy for regaining control over financial markets or the real economies that they are supposed to manage. Policy levers — both benchmark interest rates and central banks’ balance sheets — remain at their emergency settings, even though the emergency ended long ago.

While this approach has succeeded in boosting financial markets, it has failed to cure bruised and battered developed economies, which remain mired in subpar recoveries and plagued with deflationary risks. Moreover, the longer central banks promote financial-market froth, the more dependent their economies become on these precarious markets and the weaker the incentives for politicians and fiscal authorities to address the need for balance-sheet repair and structural reform.

A new approach is needed. Central banks should normalize crisis-induced policies as soon as possible. Financial markets will, of course, object loudly. But what do independent central banks stand for if they are not prepared to face up to the markets and make the tough and disciplined choices that responsible economic stewardship demands?

The unprecedented financial engineering by central banks over the last six years has been decisive in setting asset prices in major markets worldwide. But now it is time for the Fed and its counterparts elsewhere to abandon financial engineering and begin marshaling the tools they will need to cope with the inevitable next crisis. With zero interest rates and outsize balance sheets, that is exactly what they are lacking.

 

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Wed, 12/24/2014 - 09:20 | 5587834 TeamDepends
TeamDepends's picture

Central banking has not lost its way, it is right on schedule. They will pull into the Neo-Feudalist station in the near future, according to plan.

Wed, 12/24/2014 - 09:23 | 5587843 negative rates
negative rates's picture

When ur always wrong, but never in doubt, what other outcome is there?

Wed, 12/24/2014 - 09:28 | 5587859 GetZeeGold
GetZeeGold's picture

 

 

Serves the Fed right for not listening to the BIS.

 

I say....screw'em.

 

Hell.....maybe the EPA could do a better job. Let's give those guys a shot.

Wed, 12/24/2014 - 09:41 | 5587888 negative rates
negative rates's picture

Once we clean up the house the Fed built, we'll all be set for life.

Wed, 12/24/2014 - 10:06 | 5587976 kliguy38
kliguy38's picture

He's a doomer. He's a conspiracy nut. He's a silver stacker. He's a goldbug. He's a prepper. He hates our freedom.

Wed, 12/24/2014 - 10:22 | 5588027 max2205
max2205's picture

Stop their strategy. ......yeah right....

Wed, 12/24/2014 - 10:39 | 5588089 General Decline
General Decline's picture

Team Depends (first post above) is exactly correct. It knows exactly what it is doing. It's marching the world right into full-rippin' Zionism. Understand that, and the workings of this insane world becomes a lot more clear.

Wed, 12/24/2014 - 10:43 | 5588105 johngaltfla
johngaltfla's picture

THIS time it is different. In other words we're totally fawked when it crashes. No Keynesian reindeer games to save the political elites. We will be going back to the dark ages and fast until the next technological leap causes a shift in economic struture in the failing aging Western economies.

Wed, 12/24/2014 - 10:52 | 5588127 General Decline
General Decline's picture

The elites will be just fine. I'm guessing they've thought through every possible permutation of the out come and are preparred. Id like to think they have missed some important detail which will cause them great difficulty, but I'm thinking otherwise.

Merry Cristmas everyone!

Wed, 12/24/2014 - 11:59 | 5588421 Ahoy Polloi
Ahoy Polloi's picture

Looks like someone better chisel a working copy of the Mahabarata onto a Tycho Monolith before everything goes tits up [again]

Wed, 12/24/2014 - 18:40 | 5589685 MalteseFalcon
MalteseFalcon's picture

FED policy went in the wrong direction when Greenspan gave his "irrational exuberance" speech in 1996.  All Greenspan had to do was reduce the margin available for stocks.  No need to adjust interest rates.  But he refused and when the tech bubble happened, he had to increase interest rates to pop it and the bubble crashed with  disastrous results.

Since then the FED has simply been doubling down on the same mistake.  The doubling down is completely counter to previous FED behavior and will ultimately lead to a historic catastrophe.

Completely foreseeable and unnecessary.

There are several villains, but Greenspan is #1.

Wed, 12/24/2014 - 22:42 | 5590138 livefreediefree
livefreediefree's picture

Thanks for the perspicacious historical perspective. The longer view is good.

Wed, 12/24/2014 - 10:51 | 5588132 McCormick No. 9
McCormick No. 9's picture

In this coming collapse, 450 nuclear power plants starved of vital spare parts means there will never be another "unitil".

Wed, 12/24/2014 - 12:17 | 5588493 Antifaschistische
Antifaschistische's picture

so....we're really worried about repeating 2009?   a catastrophie?   HARDLY!!   I'm not the least bit worried about a 2009 repeat.    I'm worried about 2009 x 10

....and i know it's coming, unfortunately...I'm too young and it will probably happen in my lifetime.

Wed, 12/24/2014 - 14:10 | 5588949 smlbizman
Wed, 12/24/2014 - 09:43 | 5587893 SAT 800
SAT 800's picture

I was gonna say; the bright side of this anouncement is that they had a way to begin with; it's news to me.

Wed, 12/24/2014 - 09:53 | 5587929 wmbz
wmbz's picture

Ed Zackery!

The un-fed is right on target, they could not be happier! The banksters are where they want to be, above all laws and able to fleece all depositors at will.

Those mother fuckers are way beyound happy wth the ongonig events!

Merry Christmas! Now sit down shut up ad do as you are told!

Wed, 12/24/2014 - 10:13 | 5587996 weburke
weburke's picture

yup

Wed, 12/24/2014 - 10:20 | 5588016 scrappy
scrappy's picture

Cops shot, kids shot, brinkmanship internationally.

Yes it is ALL Theatre, ALL the time.

The BRICS system will not save us, it is a setup.

We best get a hold of things here at home.

Do not worship the golden calf or their "system"

(The gold is mostly gone)

http://whispersfromtheedgeoftherainforest.blogspot.de/2011/10/history-of...

If we do not unite here in the US, we are toast.

Hence TPTB massive efforts to divide us, anyway they can.

(they know it's our only chance) - Make any sense now???

Wise up folks, quick.

Think Deeper.

Wed, 12/24/2014 - 15:29 | 5589253 angel_of_joy
angel_of_joy's picture

The BRICS "system" is not (and never was) intended to save our butts, but THEIRS ! They couldn't care less what happens to North America, and I suspect they won't suffer much to see us crashing and burning, especially if it's gonna be on our own doing... We are on our own, with a dumbed down population, and idiotic leaders detached from reality, in charge. Have a Merry Christmas !

Wed, 12/24/2014 - 10:23 | 5588031 ZenStick
ZenStick's picture

A new approach is needed. Central banks should...

Oh, this guy is serious. Thought he was joking.

Had to see who this Roach guy is: http://graphics8.nytimes.com/images/2012/02/17/business/dbpix-people-roach/dbpix-people-roach-articleInline-v2.jpg

He's got the zombie-in-a-suit thing going pretty well.

Wed, 12/24/2014 - 11:08 | 5588201 saveUSsavers
saveUSsavers's picture

cut the crap posting! He's one of the smartest around, despite YOU never heard of him.

Wed, 12/24/2014 - 13:39 | 5588812 HardlyZero
HardlyZero's picture

Roach is one of the smartest (and most enjoyable) around, seriously.   He is not a friend or afraid of the banks.

His attitude and approach to Central Banks is similar to Jim Grant or Ron Paul.

Somehow he survived stints at major institutions and remains teaching now at Yale.

http://som.yale.edu/stephen-roach

http://en.wikipedia.org/wiki/Stephen_S._Roach

 

See here short snippets...on VPRO "The Day of the Dollar (Roel van Broekhoven, Backlight 2005)"

https://www.youtube.com/watch?v=AuPgdZeAFjA

Wed, 12/24/2014 - 09:22 | 5587835 TruthTalker
TruthTalker's picture

They will not change course because to do so will bring on the collapse that much sooner - they have painted themselves into a proverbial corner - stock up boys and girls

Wed, 12/24/2014 - 11:32 | 5588284 GeorgeHayduke
GeorgeHayduke's picture

Don't count on them taking responsibility for their stupid actions anytime soon. These folks serve the people who never have to take the hit for a bad decision. That is how they set this sytem up years ago. They will not take the their due downfall until they've thrown everything and everyone else into the raging fire first. Such is the nature of their thinking.

Wed, 12/24/2014 - 09:26 | 5587847 Motorhead
Motorhead's picture

And who's that chump-ass clown who said gold was going to $2,000 by the 31st of December 2014?

Wed, 12/24/2014 - 09:48 | 5587911 GetZeeGold
GetZeeGold's picture

 

 

Cat's got a week left......at least give him that.

 

Remember there's a holiday in there.

 

Although I think anyone trying to predict the price of gold right now is absolutely insane. Except for Jon Nadler....he could maybe do it.

Wed, 12/24/2014 - 09:27 | 5587856 aliki
aliki's picture

"lost its way" implies it was initially on the correct path. printing $$$ solves nothing. GDP at 5% in the U.S.? yeah, the obama-conomy is so awesome that he just lost the senate & repubs haven't had this tight a grip on the house in about 100 years. not that i expect much out of them either but just like the 3-card monti that goes on at the fed, the politicians just continue to get shuffled around & still nothing changes. just keep believing the steve liesmans of the world - no inflation created by the fed barring needing to eat, fill up your gas tank (price at the pump going from $1.00 to $5.00 & then back to $3.00 is still a 200% increase over a 15 year period), go to college, drive on a toll road, go to a movie, go to a ballgame, cross a bridge/tunnel, healthcare - outside of that, no inflation anywhere.

in other news, here in jersey, christie just bailed-out AC. more $$$ we are flushing down the drain. same clown who brought us the revel (which just went out of business about a year after openning). only time ill ever agree with larry summers is when he said "government shouldn't be in the VC business." i guess the next trade should be buy everything russia because the fed will just bail them out next. can't let anyone fail these days.

Wed, 12/24/2014 - 09:29 | 5587863 buzzsaw99
buzzsaw99's picture

Central banking has lost its way.

No, it hasn't. There are moar billionaires than ever.

Wed, 12/24/2014 - 09:43 | 5587897 SAT 800
SAT 800's picture

That too.

Wed, 12/24/2014 - 11:25 | 5588261 Vincent Vega
Vincent Vega's picture

And 'moar' unsecured, unrepayable debt than ever.

Wed, 12/24/2014 - 09:37 | 5587877 NoDebt
NoDebt's picture

"Central banks should normalize crisis-induced policies as soon as possible. "

Yes, please.  I have a sandwich bet riding on this this and I'm losing big and losing fast.

In other news, there's a new PSA out encouracing children to steal their parents' guns and turn them in to their teachers.  And they said it could never happen here.

https://www.yahoo.com/parenting/monumentally-stupid-anti-gun-psa-urges-k...

Wed, 12/24/2014 - 09:42 | 5587892 negative rates
negative rates's picture

Does your dad make good money?

Wed, 12/24/2014 - 10:26 | 5588046 Ahoy Polloi
Ahoy Polloi's picture

Holy fucking shit!

 

A whole school full of kids walking around with guns in their backpacks [on a mission to turn them in to Saul Alinsky disciples]

 

What could POSSIBLY go wrong?

Wed, 12/24/2014 - 11:39 | 5588323 e_goldstein
e_goldstein's picture

 the silicone chip inside her head gets switched to overload...

Wed, 12/24/2014 - 09:36 | 5587879 aliki
aliki's picture

speaking of the revel - it just shows how the public sector has NO BUSINESS openning a business. my girl and i walked in there when it first openned - we were on the escalator going up a level and i remember looking out the enormous, glass cylinder they had that ran up the front of the hotel (which is directly on the ocean). i said to my girl "did they even consider how much this place is gonna cost to heat in the winter & cool in the summer being that its basically a magnet for the elements?" during that year it was disclosed they had a sweet-heart deal with the utilities (shocker). guess the utilities could only subsidize them so much because there is no way on planet earth the revenues they were bringing in X 3 could = covering their bills in the winter & summer months. guess nobody decided to read the blueprints and put 2 & 2 together being their were building a monster on the ocean that swallowed up with windows.

Wed, 12/24/2014 - 09:55 | 5587942 Last of the Mid...
Last of the Middle Class's picture

central banking did exactly what they wanted it to do. Anything else opens the door for plausible denial. They raped the country for the super rich period.

Wed, 12/24/2014 - 10:08 | 5587977 Last of the Mid...
Last of the Middle Class's picture

fox is off of dish for whatever reason so watched chris matthews on msnbc last night for about 5 min. Didn't know whether to laugh or cry, haven't seen that BS in 5 years or so. His spittle flying performance was nothing short of legendary propaganda for the left. Every incident was twisted and distorted. there is no way any of that could be interpreted as anything but.

Wed, 12/24/2014 - 10:10 | 5587985 lester1
lester1's picture

Reaganomics is a failed economic policy. Trickle down is a failure..

 

The FED fuels Reaganomics to keep it going.

 

End the FED so Reaganomics can finally die!!

Wed, 12/24/2014 - 10:16 | 5588006 lordbyroniv
lordbyroniv's picture

The left hate Reaganomics but love Keynesian economics.

 

Which is funny....because near as I can tell...

 

they are practically the same thing.

Wed, 12/24/2014 - 11:28 | 5588271 Buckaroo Banzai
Buckaroo Banzai's picture

"We are all Keynesians now." -- Richard Milhouse Nixon

Wed, 12/24/2014 - 10:10 | 5587988 alexmark2013
alexmark2013's picture
Bill Holter's warning: “I suspect what is going to break are the derivatives, the $303 trillion in derivatives that the big banks have, and it will crash the world. " http://investmentwatchblog.com/bill-holters-warning-i-suspect-what-is-going-to-break-are-the-derivatives-the-303-trillion-in-derivatives-that-the-big-banks-have-and-it-will-crash-the-world/
Wed, 12/24/2014 - 11:42 | 5588331 Bearwagon
Bearwagon's picture

You really think that those buttfuckers from ISDA will admit any form of a credit event, ever?! Oh, man, how I wish you were right ...

Wed, 12/24/2014 - 10:18 | 5588021 yogibear
yogibear's picture

Now the taxpayer is on the hook for failed derivatives. This time 100's of trillions in bailouts.

And the housing schemes are back. No money down fog on a mirror.

Why worry when nobody is prosecuted?

 

 

 

Wed, 12/24/2014 - 11:10 | 5588208 saveUSsavers
saveUSsavers's picture

Plus 8-yr SUB-PRIME AUTO LOANS

Wed, 12/24/2014 - 10:25 | 5588041 wrs1
wrs1's picture

There is no bubble in housing or commodities so where is the bubble that is waiting to pop?  Guess we know the answer to that and where all the efforts of the Fed will go to keep that bubble floating.  I would imagine killing oil is more fed related than anything else, the Saudi's being the puppet of the fed.

Wed, 12/24/2014 - 10:55 | 5588147 SmallerGovNow2
SmallerGovNow2's picture

lack of demand is what is "killing oil"...

Wed, 12/24/2014 - 10:38 | 5588090 Latitude25
Latitude25's picture

$300 trillion in derivatives/ 170,000 tons of gold worldwide/32,000 ounces per ton = $55,000 per oz

Wed, 12/24/2014 - 13:03 | 5588647 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

I wish...!! 

I'd build a castle with a moat full of alligators to protect my stacks...!!!

Wed, 12/24/2014 - 10:50 | 5588129 lakecity55
lakecity55's picture

Wow, the last scam worked so well, let's do it again!

Wed, 12/24/2014 - 11:05 | 5588192 observer007
observer007's picture

#Ferguson

Police say officer in Berkeley, Missouri, fired several times at suspect who aimed gun at him in gas station

latest:

http://tersee.com/#!q=ferguson&t=text

Wed, 12/24/2014 - 11:43 | 5588334 The Count
The Count's picture

Pointing a gun at a police man...and then getting shot?! This is how nature takes idiots out of the gene pool.

Wed, 12/24/2014 - 11:11 | 5588202 The Count
The Count's picture

FED policy, immigration policy, political correctness policy...

 

These are all related even though it's not easy to connect the dots. But just like it usually is, follow the money to find out what is really going on. 

And it all can be traced to high finance. The strategically placed ex-Goldman hit men (think Drahgi) is a big tipp-off. To make it simple (so a caveman can get it)...the world has been made slaves by borrowing more than can be paid back. The banking 'Godfathers' want their money back, with interest, and without growth (even if totally bogus) that wont happen. So the numbskulls in politics think they can create that growth by more deficit spending and importing bodies (European Immigration is more out of control than ours). Get yer bug out bags in shape!

And Merry Christmas!

Wed, 12/24/2014 - 11:14 | 5588230 geno-econ
geno-econ's picture

Roach, Bernanke  and Madoff should get together and write a book on contemporary economics, It would be a best seller, Title of book "How Ponzi Scheme Work Until They Don't " 

Wed, 12/24/2014 - 11:19 | 5588246 DonGenaro
DonGenaro's picture

"lost its way" ??:

one cannot lose what was never possessed

Wed, 12/24/2014 - 11:24 | 5588258 Buster Cherry
Buster Cherry's picture

Rinse & Repeat.....

 

Happy Festivus all.

Wed, 12/24/2014 - 11:28 | 5588272 BeerMe
BeerMe's picture

Central Banking has lost its way.  Haha!  That's my humor for the day.  Fuck central banking.

Wed, 12/24/2014 - 11:40 | 5588319 Polymarkos
Polymarkos's picture

Return to Free Banking! End the Fed!

 

We should allow many different types of currencies, each backed by private institutions. Get gubbamint OUT of the money printing game.

Wed, 12/24/2014 - 11:46 | 5588357 Polymarkos
Polymarkos's picture

Return to Free Banking! End the Fed!

 

We should allow many different types of currencies, each backed by private institutions. Get gubbamint OUT of the money printing game.

Wed, 12/24/2014 - 11:29 | 5588274 The Most Intere...
The Most Interesting Frog in the World's picture

"While this approach has succeeded in boosting financial markets, it has failed to cure bruised and battered developed economies, which remain mired in subpar recoveries and plagued with deflationary risks."

Deflation is not a risk, it is a requirement at this point.

Wed, 12/24/2014 - 11:38 | 5588310 Polymarkos
Polymarkos's picture

The Fed IS NOT making a mistake.

 

The Fed is EXECUTING A PORTION OF A PLAN.

 

This is INTENTIONAL. This is done at the behest of the Deep State Oligarchy.

Wed, 12/24/2014 - 11:51 | 5588386 Armed Resistance
Armed Resistance's picture

So right! Here's the best overview written a year ago:

If one wishes to truly understand the actions behind private Federal Reserve policy, one must come to terms with a fundamental reality - everything the Fed does it does for a reason, and the most apparent reasons are not always the primary reasons. If you think that the Fed simply acts on impulsive stupidity or hubris, then you haven't a clue what is going on. If you think the Fed only does what it does in order to hide the numerous negative aspects of our current economy, then you only know half the story. If you think the Fed does not have a plan, then you are sorely mistaken...

Central Bankers and their political proponents espouse a globalist ideology, meaning, they are internationalists in their orientation and motivations. They do not have loyalties to any particular country. They do not take an oath to any particular constitution. They do not have empathy for any particular culture or social experiment. They have their own subculture, with their own "values", and their own social hierarchy. They are a kind of "tribe" or "sect"; a cult, if you will, that views itself as superior to all others. This means that when the central bankers that run the Fed act, they only act with the intention to support and promote globalization, not the best interests of America and Americans.

The process of globalization REQUIRES the dissolution of the U.S. economy, as it exists today. Period. There is no way around it. America can no longer remain a superpower in the face of what globalists call "harmonization". The dollar can no longer maintain its petro-currency status or its world reserve status if total centralization under a new global currency is to be achieved. Globalists believe that America must be sacrificed on the altar of "progress", and diminished into a mere enclave, a feudal colony of a greater global system. The globalists at the Fed are no different.

Once this driving philosophy is understood, the final conclusion is obvious - the Fed exists to destroy the U.S. financial system and the U.S. currency mechanism. That is what they are here for.

This is why the dollar has lost 98% of its value since the Fed was established in 1913. This is why the Fed deliberately engineered the derivatives bubble crisis through the implementation of artificially low interest rates. This is why their response to the crisis was to create yet another massive bubble in stocks and bonds through QE stimulus. This is why the Fed is cutting stimulus today.
- Brandon Smith, December 21, 2013

Wed, 12/24/2014 - 11:57 | 5588416 geekz_rule
geekz_rule's picture

on point, but I will add this: I dont see the goal as globalization per se, unless we see globalization as what it is. it really is just Monopolization; a polite term for "we own the world"

Wed, 12/24/2014 - 21:29 | 5590018 bunnyswanson
bunnyswanson's picture
The Protocols of the Elders of Zion National Park By November 14, 2014 Haaretz, the left of center Israeli broadsheet, discusses the recent joint appearance by leading Democratic donor Haim Saban and leading Republican donor Sheldon Adelson at the Israeli American Concil where they discussed, among much else, teaming up to buy the New York Times Co. so that Israel can finally get some fair coverage in the U.S. Anshel Pfeffer writes in Haaretz:

 

"It was like a scene out of “The Protocols of the Elders of Zion.” Two immensely wealthy Jews, key financiers of the main political parties of the world’s superpower, discussing how to wage war on the enemies of the Jews, and control the media and presidents. Only, instead of taking place at the dead of night in a Jewish cemetery in Prague, they were sitting on stage in a Washington, D.C hotel conference room, in full view and making no attempt to hide their intentions."

 

http://www.unz.com/isteve/the-protocols-of-the-elders-of-zion-national-p...

Wed, 12/24/2014 - 11:43 | 5588339 rejected
rejected's picture

Before they were called the Federal Reserve they were called counterfeiters and money changers and were summarily hung. Out of the millions of people that have occupied this land since it's founding, only one (Jackson) had the moral sense to eliminate them. Now they're back like a plague and we revere them. We anal-ize their every offering in hopes it means they will release more fake wealth. Today they are attached so deeply the nation host will probably have to be sacrificed to kill them or the nation host will be sacrificed to please them. Either way it's doom for the nation that makes these criminals gods rather than felons.

Wed, 12/24/2014 - 11:46 | 5588363 moneybots
moneybots's picture

"In this sense, the Fed’s incrementalism of 2004-2006 was a policy blunder of epic proportions."

 

It accomplished just what Greenspan wanted it to do- create a housing bubble.  How was it a blunder, if it accomplished Greenspan's goal?

Wed, 12/24/2014 - 11:54 | 5588397 reader2010
reader2010's picture

No, this is the social violence from the leisure class by design. You're either a slave or slave-owner.

Wed, 12/24/2014 - 11:52 | 5588400 moneybots
moneybots's picture

"Central banking has lost its way. Trapped in a post-crisis quagmire of zero interest rates and swollen balance sheets..."

 

It isn't post crisis.

Wed, 12/24/2014 - 11:59 | 5588422 Rip van Wrinkle
Rip van Wrinkle's picture

"But now it is time for the Fed and its counterparts elsewhere to abandon financial engineering..."

 

Not a fucking chance.

Wed, 12/24/2014 - 11:59 | 5588426 moneybots
moneybots's picture

" It was not monetary policy’s fault, argued both former Fed Chairmen Alan Greenspan and Ben Bernanke; if anything, they insisted, a lack of regulatory oversight was the culprit."

 

Greenspan had the power to regulate lending standards, so fault still lies with Greenspan.

Wed, 12/24/2014 - 12:06 | 5588451 TheABaum
TheABaum's picture

Greenspan had no power to rid the banking system of the CRA, which became the catalyst for the securitization of loans. He's not faultless, but there's plenty of fault with Henry Cisneros, who reivigorated the CRA.

Wed, 12/24/2014 - 12:03 | 5588439 pndr4495
pndr4495's picture

Clinton , Greenspan , Rubin , Weill , Summers , Levitt ( SEC Commisioner Levitt was ) , Rainer ( representing the CFTC ) Gramm - Commodity Futures Modernization Act of 2000 - as we see clearly , there were representatives of the SEC and the CFTC in crucial meetings , some meetings recorded publicly , while others were not.  People are waking up not only to the recklessness of these individuals but also waking up to the INEFFICIENCY of awarding a franchise to issue this country's money to a cartel , a cartel interested only in advancing its own welfare , nobody else's - period

Wed, 12/24/2014 - 12:12 | 5588476 Stormtrooper
Stormtrooper's picture

The real solution is much simpler than all the gibberish in the article.  Central banks should be terminated and a nations monetary policy should be left to the citizens and the government of that country, not the Rothschilds, Warburgs, etc.

Wed, 12/24/2014 - 12:26 | 5588520 Thomas Aquinas
Thomas Aquinas's picture

It is not a policy disaster, rather it is a deliberate policy:

 

http://www.thirdworldtraveler.com/New_World_Order/NoneDareCallItConspira...

Wed, 12/24/2014 - 12:30 | 5588537 Government need...
Government needs you to pay taxes's picture

We know Russia/China are building a dollar alternative with appeal as the global reserve currency.  If they can create an investment biosphere where interest rates and risk are more fairly priced, then I can see the catalyst for the US Dollar getting devalued into oblivion.  Of course, capital controls would be implemented by our Dear Leaders, either in the form of 'sanctions', taxes (FATCA et al), or outright exchangeability and investment restrictions.  At that point, however, the outcome would be guaranteed.  This scenario is complicated by the fact that China and Russia have their own structural challenges to address.  I'm not convinced another round of industrialization is feasible, and China is typically a 'fast-follower' in technology.  Communism hasn't worked for periods greater than 30-40 years. 

Looking to 2015 with the US economy in mind, I expect the current gambit of artificially low commodity prices and mispriced risk will continue.  Disposible income will be incrementally pressured by new Preezycare costs, plus taxes at all levels of government.  I do not build a >15% equity correction into my base case.  Warning signs here would be rising commodity prices in the absence of rising disposible income.  The consumer is tapped out.  The Feds are happy that lower commodity prices have made room in the consumer budget for higher heathcare and tax expenses.  The assumption this low-commodity price trend will continue is shaky, as it is only somewhat in the Feds sphere of influence.  On the Hill, I dont think the average American will notice a difference in the way the legislative branch operates. I think equities are higher through 15 than 14, I dont expect a major US crisis, and I think the Feds kick the can down the street at least one more time.

Wed, 12/24/2014 - 12:59 | 5588626 Ewtman
Ewtman's picture

It bears repeating, we are in the beginning stages of the collapse of the largest debt bubble in the history of world...

 

http://www.globaldeflationnews.com/anatomy-of-a-bubble-how-the-federal-r...

Wed, 12/24/2014 - 13:11 | 5588686 TheABaum
TheABaum's picture

"Central banking has lost its way."

Central banking couldn't lose its way, because it never had its way. It rests on a noxious 19th century theory called "progressivism" that assumes that "experts" can be relieved upon to be omnscient, omnipotent incorrupt architects of social order. 

 

 

Wed, 12/24/2014 - 13:24 | 5588738 ben_bernanke
ben_bernanke's picture

More worry means higher asset prices. Simply put.

 

Only when there is nothing to worry about would stock asset holders need to worry.

Wed, 12/24/2014 - 15:14 | 5589208 mendigo
mendigo's picture

They have made sure that there is no alternative resting place for wealth.

I wonder if that is why it is desired to crush the ruble.

Wed, 12/24/2014 - 18:20 | 5589634 Prober
Prober's picture

Wish in one hand.

Shit in the other hand.

See which hand gets full first.

Wed, 12/24/2014 - 20:44 | 5589948 bunnyswanson
bunnyswanson's picture

Lost it's way my arse.  This is a business plan and the "Fed" has been warned for nearly a decade and choose to IGNORE it.  This is no mistake.  Just as 1929 was not mistake (also preceded by a credit extension called the Roaring 20s). 

Dismantle the Federal Reserve.  These men are con artists, not bankers.

Thu, 12/25/2014 - 01:11 | 5590348 rex-lacrymarum
rex-lacrymarum's picture

"....the real economies that they are supposed to manage."  What is this, the Soviet Union? That's the whole problem in a nutshell. No central planning agency can "manage" the economy.

"....begin marshaling the tools they will need to cope with the inevitable next crisis" -  a crisis that will be brought on precisely because these no-good bureaucrats keep "marshaling" their "tools" every time. 

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