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Central Banks Are Losing Control
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, in early January 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 last month. 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.
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Best Regards
Graham Summers
Phoenix Capital Research
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"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."
This is NOW. They are screwed and they know it. They and the entire world of FED STOCKED ACADEMIA should know it.
The article is correct in it's point that what CB's are doing defies all economic logic.
The article is incorrect in suggesting that the CB's are losing control.
Unfortunately, the CB's still control the game.
When they lose control of the game, which they will because they could not control the same game in the past, that is when the merde will hit the fan and the fallout will make 1929 and 1987 look like a picnic in comparison
Central banks are in FULL CONTROL. Only when the gold price begins to accelerate higher will we know the Central Banks have lost control.
stateside
When CB's can no longer supress the price of PM's. Seems they can and will. What can change that?
Phoenix has the ashes part down pat!
I am predicting Dow 25,000, (some day), please send me $100 to find out how YOU can profit from this upcoming rally.
The hard part about predicting the end of the world is that it's only going to happen once in our lifetimes. If then.
Your friend,
Summer Dog
They can create money out of thin air...how can they ever be insolvent? They'll just create what ever they need. Silly to think there are some underlying fundamentals that have to be balanced. When you can create money out of thin air debts dont matter, there is no such thing as 'levered' and there are no ratios of debits to credits. The amount in the plus column is always infinity.
bingo! when you write the rule book, you are never a criminal
are there soup lines in switzerland, are refugees pouring out of the country, is there a run on the banks? if the CB made such a horrid mistake where are the consequences?
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
Put me down for $100 on the 'over'...
Months to complete. LMFAO. How many years has it been?
I think we got about six months to go. Think The Shemitah.
http://www.silverdoctors.com/does-this-seven-year-cycle-of-economic-cras...
Zion bankers are self-fulfilling this seven year cycle. They'll be outta dodge when shit goes down this year.
its different this time
I just figured I'd stop by and see if you happened to inject something new into your writings since I stopped reading them a few years ago for lack of new material.
Guess not.
Trevon could be Yellen's child......
Watch out! The last time I challenged Graham's bullshit Sky-is-Falling predictions, I was booted from ZeroHedge. So perhaps now that I have said it, say goodbye to the Pearly One.
I wish journalists would spice up the QE saga by calling it "voluntary nationalization". After all, when communist states force company shareholders to give up theirs shares to the state, we call this "nationalization" of industry.
QE does exactly this. The state acquires shares from shareholders. The only difference is that QE pays prices the shareholders find too good to turn down, hence the nationalization is voluntary.
Be that as it may, the end result is the same: the state takes ownership of the economy. Communism.
Is QE voluntary communism? Are all the bankers and shareholders finally deciding that the state should own and run everything?
Or, is state only buying worthless shares in companies that are already dead, leaving private shareholders in charge of the remaing productive part of the economy?
It has to be one or the other, and both conclusions are grounds for revolution.
The headline is so wrong. It really is pissing me off when people tell you an absolute lie to sell their product. The central banks are losing control really?? They have more control now than ever before. I'm glad there are only 3 comments, hopefully that is an indication of the lack of esteem the authors drivel is garnering.
Mr. Summers, I propose this experiment: Wish in one hand, and shit in the other and see which one fills up first. Do you need a translation?
"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."
How can an entity the conjures money out of thin air be insolvent? They can't be audited, so no one really knows how much debt they have. What will stop them from writing that off and printing a shitload more money?
"What will stop them from writing that off and printing a shitload more money?"
Nothing. I'm sure the > 50:1 is an under estimate. This is the plan. No more new clothes for the Emperors.
WHY?
WHERE IS THE ROTHSCHILD VS ROTHSCHILD STORY, AND WHY WOULD IT BE CENSORED?
WHAT WAS SAID THERE TO CAUSE THIS DISTURBANCE IN THE FORCE?
IF INDEED THIS TURNS OUT TO BE A CENSORSHIP OF FREE SPEECH HERE ON ZH, THEN THIS HEART FEELS SAD TO THINK SO, AND THUSLY THAR BE NO INSPIRATION TO POST HERE ANY MOAR. THE JOB OF PLANTING TRUTH SEEDS HERE CAN ONLY BE SUCCUMBED BY BABYLONIAN SATANIC ROTHSCHILD ZIONIST CENSORSHIP.
PLEASE TYLER, SAY IT AIN'T SO. PLEASE TELL THE LISTENING AUDIENCE THAT YOU ARE NOT CENSORING THE TRUTH IN THE STORY OF ROTHSCHILD, VS ROTHSCHILD.
MIGHT BE BACK SOME DAY IF YOU REPOST THIS VITALLY IMPORTANT AND TRUTH REVEALING STORY.
SELAH!
"WHERE IS THE ROTHSCHILD VS ROTHSCHILD STORY?"
Why don't you post it for the benefit of participants?
Wow. Caps often?
I don't understand why people get so excited about caps. Who cares. I can read either lower case or upper and most fonts with ease. The whole caps nazi thing is odd. Everybody wants me to be just like them...
Dear Mr Summers
I have been following your advice since 2009, and to put it bluntly, have had my arse handed to me.
You have been wrong in EVERY prediction you have made.
Thanks to you, shorting stocks since 2010 and going long gold since 2012, has reduced my portfolio from $750,000 to $30,000.
Please stop these inane, insane posts!
Insincerely yours,
Mr Economist
@ Clueless Economist: Really? REALLY?!?!? You lost $720,000 dollars over three years, all on the advice of Graham Summers? And you never questioned anything, just kept on keepin' on? What's that old saying about doing the same thing over and over but expecting a different result? Insanity.
You gotta be nuts!
You had shit paper and you still have shit paper, it is all worth zero unless it is gold in hand. Just because a lot of ass holes have not figured that out does not mean it is not true. Everything will go to zero you just started early, cheer up.
I agree, if I lost 720,000 dollars and it went down to 30,000 I deserve it to do so. This moron followed this guy all in. Hell he had a good retirement account right there and he kept on going for three years. At what point did you think this was a bad idea. 600,000 dollars, 500,000 dollars. I would have been out at 600,000 and felt lucky at that.
As long as we're working under the current monetary system it is inevitable that the central banks will lose control.
Here's a good overview. http://debtcrash.blogspot.com/2015/02/history-and-introduction.html
but we all may not live to see that day