This Marked the Beginning of the End for the Central Banking System As We Know It

Phoenix Capital Research's picture

Global Central banks’ reputations are on borrowed time.


ALL of the so called, “economic recovery” that began in 2009 has been based on the Central Banks’ abilities to rein in the collapse.


The first round of interventions (2007-early 2009) was performed in the name of saving the system. The second round (2010-2012) was done because it was generally believed that the first round hadn’t completed the task of getting the world back to recovery.


However, from 2012 onward, everything changed. At that point the Central Banks went “all in” on the Keynesian lunacy that they’d been employing since 2008. We no longer had QE plans with definitive deadlines. Instead phrases like “open-ended” and doing “whatever it takes” began to emanate from Central Bankers’ mouths.


However, the insanity was in fact greater than this. It is one thing to bluff your way through the weakest recovery in 80+ years with empty promises; but it’s another thing entirely to roll the dice on your entire country’s solvency just to see what happens.


In 2013, the Bank of Japan launched a single QE program equal to 25% of Japan’s GDP. This was unheard of in the history of the world. Never before had a country spent so much money relative to its size so rapidly… and with so little results: a few quarters of increased economic growth while household spending collapsed and misery rose alongside inflation.


This was the beginning of the end. Japan nearly broke its bond market launching this program (the circuit breakers tripped multiple times in that first week). However it wasn’t until late 2014 that things truly became completely and utterly broken.


We are, of course, referring to the Bank of Japan’s decision to increase its already far too big QE program, not because doing so would benefit the country, but because it would bring economists’ forecast inline with governor Kuroda’s intended inflation numbers.


This was the “Rubicon” moment: the instant at which Central Banks gave up pretending that their actions or policies were aimed at anything resembling public good or stability. It was now about forcing reality to match Central Bankers’ theories and forecasts. If reality didn’t react as intended, it wasn’t because the theories were misguided… it was because Central Bankers simply hadn’t left the paperweight on the “print” button long enough.


At this point the current financial system was irrevocably broken. We simply had yet to feel it.


That is, until, a few weeks ago, when the Swiss National Bank lost control, breaking a promise, and a currency peg, losing an amount of money equal to somewhere between 10% and 15% of Swiss GDP in a single day, and showing, once and for all, that there are problems so big that even the ability to print money can’t fix them.


Please let this sink in: a Central bank lost control. This will not be a one-off event. With the Fed and other Central banks now leveraged well above 50-to-1, even those entities that were backstopping an insolvent financial system are themselves insolvent.


The Big Crisis, the one in which entire countries go bust, has begun. It will not unfold in a matter of weeks; these sorts of things take months to complete. But it has begun.


If you’ve yet to take action to prepare for the second round of the financial crisis, 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:



Best Regards


Graham Summers


Phoenix Capital Research




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Armed Resistance's picture

If congress (through the constitution) has the ability to coin "money" and set the "weights and measures" relative to the currency, why do they need to subcontract a third party to do so while charging interest on the "printed" fiat currency?  

The answer as we all know as that this has been done by design.  And when you can create money out of thin air you can control all levels of politics, and all levels of force to support your operation.  Each day the people continue to wake up to realize that what they thought was so has only been an illusion, and the retribution that will follow for the bankers, congress and the media who has supported the lies and the manipulation will make the civil war look tame.  

We entered the Fourth Turning in 2008, with the coming crisis likely hitting it's pinnacle sometime between 2015 and 2020.  For those who bash the "Paul Revere's of the Blogoshere" as to be inaccurate are missing the reset from a macro level.  When a currency can appreciate 30% in five minutes and the price of a commodity can plunge 60% in 6 months, the "re-set" has already begun.  Factor in referendums in Scotland, Catalonia, Switzerland, and Greece in a five month span and it's easy to see the hive has not only been kicked, but is buzzing and beginning to mobilize.

So to that I will say enjoy these days we have, even under the interventions and manipulations.  Over the coming months and years you will look back and long for them during times of incredible despair.  And as a point of reference, the past three American Fourth Turnings were WW2, The Civil War, and the American Revolution.  There will be glory for a free people on the other side, but between now and then- May God help us all!

New World Chaos's picture

They dare not say they worship lucifer, or themselves

Jack Daniels Esq's picture

Blame the dumb black muslim

TheScam's picture

If i had a dime for every time Zerohedge wrote this is the beginning of the End i would be rich! Propaganda page with fake quotes and fake news

usednabused's picture

So, then wtf are you here for?  Don't let it hit you in the ass on the way out.

rksleung1's picture

If I recall, Mr. Summers began preaching the market crashing in 2011. It's already 2015. Isn't it a bit irresponsible to preach this everyday and come back and say "I TOLD YOU SO" when the market really drops?

JoWazzoo's picture

Liquidity Trap Black Hole.  And at the Central Banks there likely combined is not more than a handful of the ass clowns that know what the phrase pushing on a string means.  Imagine all these Keynesian/Krugmanite/Klowns thinking they are doing something beneficial.  Patooey!

disgruntled housewife's picture

Canadian courts rule in favor of the Bank of Canada (operates in same vein as Bank of North Dakota.) Canadian governments tell the media mums the word. See for details

rudyspeaks's picture

Hey! Earth to guys-who-slept-through-Econ 101! QE is no more Keynsian economics than roller derby is the Bolshoi ballet. Do the assigned reading if you want to be in the class discussion. QE is monetary policy, Keynsianism is fiscal. Giving money to the bankers is simple robbery and doesn't stimulate spending among the general population who remain broke. How could it? BHO's promise that banks would lend it out was never serious since no one had any $  to pay it back. If you're that in the weeds on simple concepts it's time to re-educate!

donsluck's picture

Let's get basic(er), the money wasn't "given" to the bankers, it was LENT to the bankers.

lordkoos's picture

It's pretty much a gift when you get the money at ZIRP and then loan it out at credit card rates.

PiratePiggy's picture

If they refuse to be audited, you know there is facism and corruption. Guaranteed.

steelrules's picture

Jubilee everyone, fastest way to take 1/2 the worlds wealth away from the 1% that hold it. Also the only way to stop the coming Mad Max scenario.

kchrisc's picture

Considering that fraudulent-reserve banking, "printing," is theft, the only "exit" is for the banksters to give back all that they have stolen.

The people will accept gold, or silver, with short comings being paid off with heads.

The banksters need to repay us.


A "short coming" paid off with one's head, still leaves one "short."

andrewp111's picture

Well, how can entire countries go bust? At least major powers the size of the USA or the EU? There aren't very many ways.

-- hyperinflation of the currency to worthlessness.

-- hypredeflation of the currency with ever increasing negative interest rates. This was never possible in previous eras, but is now that money can be purely electronic.

-- foreign powers change the game and bust the system. For example, what if oil was re-denominated in gold and protected by an enemy nuclear arsenal?

-- Outright military conquest.

donsluck's picture

-- global descent to totalitarianism.

John C Durham's picture

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The events of a take over by Bolshevik forces of Russia was built up, in the brains of every Western citizen, into the ultimate terrible and evil social possibility. But, the truth always was that there wasn’t “a dimes worth of difference” between the economic positions of Franklin, Hamilton, Washington, Lincoln, FDR or Kennedy and Marx! All subscribed to the “Labor Value Theory”, discovered by Marx in the work of Franklin who also made his discovery, partly in works of others but ultimately, within his own brain where he synthesized that principal into writings found in his Collected Works, Volume II.

Politically, all of these men were Republicans (Republic is a word History best defined, distilled really, in our own Constitutional Preamble:”We do establish this Constitution”…for The GENERAL Welfare…”). After Marx gave America some growing time, he observed what anyone could have observed in the nation’s early years, the nation’s middle years and our beloved nation’s current time, ie, sadly, a DICTATORSHIP of financial elites!

These observations of America, caused Marx to hope for the establishment in every nation on Earth, a Republican form of government that more certainly regulated its financial elites. His conclusions were never tested in Russia or China or in any other nation…that is…until the present time! The BRICS nations, led by Russia and China, are actually putting into effect, in a growing effort, the essential political economy ideas of the U.S. Constitution, its core founders, its greatest Presidents, but also, that one time greatest foreign born fan of America, Karl Marx.

Coldfire's picture

Entire countries' central banks going bust. There, fixed it for ya. And the Fed is a private cartel so the "country" it happens to infest does not own it. So cry me a river when the Fed goes tits up. Can't happen soon enough.

Gab Timov's picture

Isn't Phoenix the name of the planned one world currency?

Irishcyclist's picture

It is the end of the beginning (of the end), to paraphrase Churchill.

runnymede's picture

"The Big Crisis, the one in which entire countries go bust, has begun. It will not unfold in a matter of weeks; these sorts of things take months to complete. But it has begun."

It 'has begun' the day Keynes was adopted. And it's all still here. Wake me when the boat starts to list--AKA the supply lines get disrupted.  Until then QEQEQEQEQEQEQEQEQE

donsluck's picture

A la the port of Oakland, CA?

GreatUncle's picture

The only real misery is the poverty felt by the poorest with no assets in a central banker driven inflated economic mechanism.

Under such a thought the only ones the poorest should blame for their dire situation is the banker who steadily YOY destroys their wealth.

optimator's picture

I stopped reading at the first error.  The U.S. is not their country.

Ruger556's picture

Well, I'd like to agree with you, but I can't.  We have a Foreign born, un-vetted muslim in the white house and somehow he was "freely" elected there.  Somehow the unions still back democrats even though they pushed NATFA through and destroyed millions of middle class union jobs (now they are looking to pass TPP).  

My friend, I think you are in denial 

prefan4200's picture

For the last time, Phoenix, the Swiss central bank didn't "lose control", it gained control with its actions.  The other central banks are the ones who have lost control.

JRobby's picture

Seems to me they protected Swiss exporters. I assume that it may be shocking to some to see a central bank act in the favor of its populous? Understandable.

Solon the Destroyer's picture

That's what they told the media. But it was just a PR job.

They were protecting the banking system which was busy extending loans to all and sundry throughout Europe.  These loans have more than payback risk, they have currency risk. Hence the peg.

They could give two fucks about hard-working exporters.  Stupid greedy banks on the other hand...

(nor can you actually protect exporters in this way, except in the short term)


Solon the Destroyer's picture

Please take a look at that Swiss yield curve sinking into a maelstrom of oblivion and tell me that the SNB gained control of the tiller?

The hubris of the central banks when they started this mess decades ago was that they could come up with an exit strategy.  Or what they had as an exit strategy would work.

There really is no way for the SNB to safely unwind their positions.

When they unpegged what they gained was the ability to not drive their own selves into bankruptcy.  Yes, a central bank can go bankrupt.

What they lost was the protection they were giving their commercial banking sector from experiencing its own bankruptcies and the thundering contagion this will ignite.

They were buying Euros desperately today in the hope that with more time the commercial banks can find some shelter in this storm but the winds look like they're going all Force 10 from Navarone.

One wrong tack by the good ship SNB and the franc is going to be worth less than a spoonful of seawater.

That's an amazing and shocking thought.

The loss of control by the SNB and the peril the Swissie is in should be the top story of every business report.  There should be no credibility for central banking left after the massive losses THE bastion of banking took when they unpegged.  Which is why what you're hearing from the MSM is mostly...



prefan4200's picture

@Solon - Long-term, this will likely be a good move for the SNB.  You can't expect to see the results in a couple weeks.  It is quite likely other central banks are punishing the Swiss for their rogue approach.  And, no, a central bank can't go bankrupt, a country does - if you need a primer on how central banks really work, read "The Creature from Jekyll Island".  And as for your comment about us hearing crickets from the MSM - that only proves my point, because the MSM is deliberately not reporting any of this, it doesn't fit their "narrative".  They probably don't understand it anyway, most of them are dolts and I speak from personal experience as I have known some of them and, no, I'm not naming names or they will never speak to me again - they are powerful people even if some of them aren't very bright.  Unfortunately, most of their audience is pretty doltish, too, or they would be seeking their news from more reliable and international sources....  We shall see in the long run, not in two weeks, if the Swiss hurt or helped themselves with this move.

Solon the Destroyer's picture

A Central Bank can absolutely go bankrupt.  I suggest you expand your reading beyond "Creature".  And if you knew more about banking, you would be addressing my comments on the yield curve rather than setting up straw men.

There is no way on this planet the other CBs are punishing the SNB.  They would have been the first to know the SNB was unpegging and it is likely taking a coordinated effort by all of them to keep the SNB afloat. There is contagion in their world too and the Bund in particular was directly threatened by the SNB's unpeg and the resulting repatriation this move entailed. 

You need to understand that the Swiss did not unpeg because they wanted to. They unpegged because they had to.

Gilnut's picture

Ummmmmm.  The SNB has been re-establishing the Peg unofficially for the past few days.  Who do you think has been buying EUR and causing the USD to drop?  SNB is in the position that many CB's will find themselves in soon.  Namely "damned if they do and damned if they don't".   Fed WILL raise rates later this year, not because of fundamentals but because it's the ONLY thing they CAN do.

Solon the Destroyer's picture

Exactly. Damned if they do, damned if they don't

Although it remains to be seen whether or not Yellen has the balls to try a rate raise.  I mean she looks like she has a pair, but are they big brave balls or little mincey faggot balls?

donsluck's picture

There is always the "do nothing and still get paid" option. It's worked for months now.

Joebloinvestor's picture

It will be the beginning of the end when they start prosecutions.


ebworthen's picture

"Banzai!'  Kamikazi pilot Kuroda aiming for the carrier.

"I'll be home soon...." he told his Wife and Children.

ZerOhead's picture



Prosecutions of those who jeopardize the continuing existence of the status quo.

amanfromMars's picture

Hi, Zer0head,

Prosecutions of those who and/or that which jeopardises and would be a considerably smarter challenge to the continuing existence of a corrupt and perversely ineffectual status quo, would be a rapidly self defeating persecution and real dumb move with a whole host of novel unintended virtual consequences for those and that drivering and supporting the venture/program/pogrom.